Young leaders in the mattress industry discuss what drives Gen Xers and millennials — and how they will shape the future of bedding
There’s a demographic change afoot in the United States–and in the mattress industry, too–that hasn’t been seen since the mid-1960s when the baby boom generation began to come of age. Bob Dylan’s 1964 anthem “The Times They Are A-Changin’ ” was that generation’s rallying cry. But its titular message is as apt now as it was then—as two new, closely aligned generations usher in massive changes to both the workplace and the marketplace.
Dubbed Generation X and millennials, these generations grew up in a vastly different world from that of their boomer parents and grandparents and are bringing attitudes and values forged by rapid technological advances with them wherever they go, including into the sleep products industry.
Demographic borders differ slightly depending on who is doing the defining, but Gen Xers generally are considered to be born between 1965 and 1980. The Pew Research Center, a nonpartisan think tank based in Washington D.C., expects their numbers to peak in 2018 at 65.8 million (the growth from current numbers driven by immigration). By 2028, they will outnumber boomers 64.6 million to 63.7 million, Pew says.
The Gen X numbers are notable, but it’s the sheer size of the millennial generation that has commanded the attention of everyone from demographers to social scientists to marketers. U.S. Census Bureau population estimates released earlier this year show that millennials—those born between 1981 and 1997—are now the country’s largest living generation. They currently number 75.4 million, as compared with 74.9 million baby boomers, and—again, fueled by immigration—their ranks continue to grow. Millennial immigrants, Pew says, enter the United States in greater numbers than those of any other generation. If the trend continues, the millennial population will peak at 81.1 million in 2036.
To help shed light on the impact that generational changes are having on the bedding sector, BedTimes talked to nine Gen X and millennial industry leaders. They considered the values that shape the way their generations approach relationships, work and buying decisions and discussed the impact that these beliefs are having on the way sleep products are manufactured and sold.
Finally, these young leaders, who range in age from 29 to 38 and come from all segments of the industry, considered the kinds of changes that they, themselves, hope to help implement. They unanimously agreed that change is not only inevitable, but crucial to the industry’s continuing stability and growth.
‘Know it all’ and know it now
At 29, Elana Stone is the youngest millennial voice in this conversation about change. She grew up in the bedding industry and now is vice president of marketing for BedMart Mattress
Superstores, a Portland, Oregon-based chain that her parents, Steven and Sherry Stone, founded in 1992.
Technology—and the immediate, virtually unlimited access to information that it provides—is a defining feature of her generation, Stone says. “My generation is undoubtedly the ‘smartest’ generation—not because of intelligence but because of access to information. We have to embrace this technology and the way people are interacting with it. All of the information that we need and the tools necessary to address that information are at our fingertips,” she says. “The speed of change that technology has brought can scare even me, but you can either be afraid or embrace it.”
Indeed, embracing technology has shaped the way these young industry leaders look at the world around them. Sam Malouf is founder and chief executive officer of Malouf, a Nibley, Utah-based producer of bed linens, pillows and other sleep accessories. At 36, he is a Gen Xer, but thinks of himself more as part of the millennials, who typically are considered the most tech-savvy generation.
“The digital aspect has made a wild difference in the way we view things. Because people can get information from a lot of different sources, there is an expectation of truth, transparency and full disclosure,” Malouf says.
Easy access to the digital universe has had a spillover effect: “There’s now an expectation of freedom—that we should not be caged in at all,” Malouf says.
This unprecedented fast and easy access to information also allows millennials, in particular, to nurture the high value they place on connections to other people, says Jill Johnson, the 31-year-old director of marketing for Tempur Sealy International’s Stearns & Foster brand. From her base in Lexington, Kentucky, she has no problem staying involved with people she cares about no matter where they are.
“First and foremost, millennials are socially connected,” Johnson says. “We see and breathe our lives on Facebook and Snapchat. For my generation, family is important, but we want to be a part of something greater and have strong connections with our friends, our ‘framily.’ ”
A purpose-driven life
Connections and the drive “to be part of something greater” were recurring themes in BedTimes’conversations with these young leaders. “Millennials often want to talk through things and look for purpose in their choices,” says 34-year-old Mark Kinsley, staff vice president of marketing for Carthage, Missouri-based Leggett & Platt Inc.’s Bedding Group.
John-Thomas (JT) Marino, the 30-year-old co-founder of Phoenix-based e-commerce player Tuft & Needle, takes the thought further. “Millennials are more purpose driven, I’d almost say righteous,” Marino says. “They are driven by the search for a bigger meaning and are concerned about what their impact on the larger world will be. My generation asks a lot of ‘why’ questions like ‘Why is that decision being made?’ and ‘How does that impact me and my community?’ ”
Bryant Looper, 34, is senior vice president of sales for Atlanta-based ReST (Responsive Surface Technology LLC), which produces technology-driven “smart” beds. He says: “Millennials can come across as being shortsighted and wanting instant gratification but in many ways that’s because we’re the first generation with so much information and technology at our fingertips.”
Many millennials understand that this combination—the purpose-driven attitude, focus on change and insistence on understanding “why”—can come across to older generations as being too lofty and self-absorbed for the world of business. The Gen Xers BedTimes interviewed think they can play a valuable role in closing the communication gap between the youngest members of the workforce and the oldest.
Kelly Ellis, 38, is senior director of integrated marketing for Serta, part of Atlanta-based Serta Simmons Bedding Co. LLC. “Gen Xers have a foot in both camps,” Ellis says. “What’s interesting about my generation is that we can remember when phone lines were connected to walls and tech wasn’t a total part of life. There’s almost a nostalgia for things being a little slower. The younger generation never had that.”
At 35, Sean Bergman straddles the generational divide. Technically Generation Y, the chief marketing officer for Fairfield, New Jersey-based PureCare, a supplier of sheets, pillows and other sleep accessories, thinks like a Gen Xer.
“We can be the bridge between the two generations and I think the influence we have is just now emerging,” Bergman says. “If, as a leader in an organization, you can focus on the results and not the process then you can guide millennials—anybody—to a good result.”
There may be no place where the generational attitude gulf is wider than in the workplace. As L&P’s Kinsley puts it, “Like most boomers, millennials want to love and be loved, serve their communities and raise children to be productive members of society. How they go about navigating toward their ideal life is unique because the circumstances in which they grew up are so different than previous generations. Many boomers came up at a time when one of the most important factors was finding a stable job so they could provide for their families.”
Millennials are more inclined to see themselves as entrepreneurs or independent contractors, Kinsley says, “and the depth of company loyalty (that boomers have shown) isn’t the same. Growing up in an information-rich society, you have the appearance of infinite options and unlimited job choices.”
Riz Sunderji, 38, is president of Sleeptronic, a Dallas-based mattress manufacturer that his father, Andy Sunderji, founded in 1990. Riz Sunderji grew up in the bedding industry and has noticed a distinct generational difference in attitudes among workers his company employs.
“About 60% of our factory employees are Gen Xers and about 40% are millennials. Retention is tougher with the millennials,” Sunderji says. “Previously, our employees were happy to work overtime because they wanted to make money. Now, they seem comfortable with less. Money is less important to them than their own time.”
Kinsley agrees. “Keeping millennials in place is going to be an ongoing challenge. Employment isn’t transactional anymore: ‘I give you a paycheck; you show up for work.’ Millennials want purpose and employers who give them meaning behind what they do will win. Employers who provide autonomy and a sense of mastery will win. Others may not lose, but they may have to adjust to a revolving door of employees.”
Keeping millennials motivated and in place depends on communicating meaning behind the work, Looper says. “We want to know what’s going on and be involved in the company,” he says. “We don’t want to be a spoke in the wheel. We want to feel as if we’re helping that wheel to turn.”
The career paths of Marino and his Tuft & Needle co-founder, Daehee Park, are illustrative. “We left our last jobs because we didn’t think that they served any purpose in the community or for us,” Marino says. “Our parents thought we were nuts, but we wanted to create a company that solved a problem.”
Upstarts drawn to startups
Retaining talented employees has not been an issue at either Tuft & Needle or Malouf. Both were started to address specific problems and were built by Gen Xers and millennials who had no previous industry experience. In the process, the founders created company cultures and workplace structures that reflect the principles and approaches of their own generations.
Founded in 2003 to bring affordable luxury linens to the market, Malouf has 150 employees whose average age hovers around 25. “The company has been growing by triple digits for the last five years and we project that will continue for several more years,” Sam Malouf says.
Marino and Park started Tuft & Needle in 2012 “to change the way mattresses were designed and sold,” as company marketing materials phrase it. The company, which has 120 employees also with an average age of about 25, “has been profitable month over month since our first month in business,” Marino says. “In 2015, the business made about $40 million in sales and this year we’re on track to doubling in size.”
Both Malouf and Tuft & Needle have created workplace cultures that emphasize collaboration, teamwork and employee empowerment. And both have stripped hierarchy from their operations to make way for creativity and independent problem solving.
As Malouf explains, “We hire people on the basis of their potential and we look at people as having unlimited potential. We have a pure empowerment environment here and believe that if people find greater satisfaction in their jobs, they will contribute more and progress more.”
At Tuft & Needle, “middle management doesn’t exist,” Marino says. “Being a manager is not something that millennials find rewarding. One of the things I love about removing hierarchy is that you don’t have people guarding their knowledge. It creates a culture of education and empowerment.”
Both Malouf and Marino credit dedicated teams for their companies’ success and emphasize that commitment is a two-way street. “The loyalty and commitment of our employees is only as good as our commitment to them,” Malouf says.
Commitment and empowerment pay off. “I hear on a regular basis, ‘I’m never going to leave this job!’” Malouf says. “We recently had the first person quit in the history of our company (for a reason other than the relocation of a spouse) and we didn’t know what to do with that. It just doesn’t happen here.”
Rethinking business models
If the tide of younger, ever-connected, uber-informed employees and consumers carries with it an expectation of transparency, purpose, collaboration and convenience, then what should bedding industry leaders consider as they examine their approaches to the products they manufacture, market and sell?
BedMart’s Stone suggests that brick-and-mortar retailers begin by taking a hard look at the way their businesses operate. “Your competition is not just across the street anymore. I’m competing with product provided globally in an environment where Amazon Prime, Zappos and Nordstrom set the experience bar.”
Stone believes that retailers must embrace technology by integrating it into their stores and by creating a robust online presence that includes an e-commerce option. “Brick-and-mortar stores who bridge both arenas will win,” she says.
Ellis cautions that reaching millennials “whether they are doing research at the beginning of a purchase or are ready to buy” involves more than just having a website. “They want to know more than where your store is, how to get there and what brands you carry. They want way more information than that,” she says. “Stay ahead of the digital curve by keeping an eye on the keywords consumers are looking for, optimize your digital rankings and use social media. Take a step back and look. It’s not as overwhelming as it might seem.”
Make sure, Ellis says, that the message consumers receive online is seamlessly integrated into the experience they have in the store. And when they walk in the door, keep them there by adding value to the buying process. “Retail sales associates must understand and be able to speak to everything a consumer sees online,” she says.
Stone adds, “Train your RSAs to be guides and teachers. Millennials don’t want to deal with hard-sell RSAs and will run away from them.”
Some encourage traditional brick-and-mortar mattress shops to look at how other retailers have countered e-commerce sales with rich in-store experiences. Shoppers at Houston-based Gallery Furniture, for example, are greeted with free ice cream and cookies at the door. Stores feature exotic animals and an indoor playground for children. Meanwhile, Taunton, Massachusetts-based Jordan’s Furniture creates elaborate Christmas displays and offers ropes courses and indoor skating rinks at various locations.
On the other hand, millennials will run from what Looper describes as “false sales and discounts.”
“It’s an archaic sales philosophy,” he says. “Millennials want to be in control of their own decision-making process. We hate to be lectured and threatened, but we love to be inspired. ‘This price is only good for today’ is a threat.”
Choosing innovation
Sleep products manufacturers can gain traction for their brands with Gen Xers and millennials by folding the things members of those generations seek and care about into their products and into their corporate missions.
“Millennials are looking for new products that they can relate to and that offer solutions for individual needs,” Johnson says. “They also appreciate brands that are part of a greater cause.”
And new means new. “Millennials are always looking for improvement,” Looper says. “We relate to the idea ‘get ahead of it, or get run over by it.’ ”
Marino agrees. “I think the time is coming when you can’t just do the same stuff,” he says. “The industry thinks it’s innovating and coming out with new products, but I don’t see it. When I put new mattresses in the lab and test them against 10-year-old product, I don’t see a difference.”
Bergman thinks that connectivity may be the key to future innovation. “Now that the internet of things has come to the bedroom—in the form of adjustable bases—all manufacturers should be looking at ways to harness that capability,” he says. “Younger consumers want to see what a product will do for them, and technology is the way they measure effectiveness and interact with that product.” (The internet of things refers to the interconnectivity of everyday objects that enables them to send and receive information.)
Communicating the purpose and value behind a product also is key to attracting younger consumers to it. Manufacturers should position their products as life enhancing and avoid commoditizing them, many of the Gen Xers and millennials BedTimes interviewed insisted.
For instance, most millennials don’t have back pain. “The message needs to be that mattresses help you make the most of your life,” Stone says.
“Millennials look for uniqueness and innovation—not the deepest discounts—and will pay more money for a product they associate with having a higher value,” Malouf says.
Companies that demonstrate through their philanthropic efforts that they value more than simply selling products also attract the attention of younger consumers. “It’s meaningful because it builds trust—and trust trumps marketing buzz every time,” Malouf adds.
Pace of change isn’t going to slow
When these young industry leaders look to the future of the sleep products industry and their place in it, they are largely enthusiastic and optimistic. But they do sound some cautionary notes about the pace of change and the need for current leaders to respond to it in meaningful ways.
“We’re in a very dynamic, fast-paced world and I don’t think we’ve seen the full force of it yet,” Malouf says. “Companies that don’t adapt, change and move forward will lose out.”
Future progress and success will require leveraging the talents and perspectives of a wide range of employees.
“Other industries, like technology for example, are more global than the bedding industry is right now. Diversity will continue to ensure that we have quality, qualified leaders across the industry as we too become more global,” Johnson says.
Increased diversity also will have a positive impact on an aspect of the industry that is driving consumers to buy mattresses online. “Having more women in executive positions will go a long way toward changing the culture of an industry that, at times, still has something of the used car salesman stigma about it—although retailers have made tremendous strides in consumer experience in the last 15 years to overcome this generalization,” Bergman says.
“From what I’m seeing, we’re really on the right track,” Kinsley says. “There’s already been a shift, led by boomers, to bring more integrity and transparency to the industry, and I think that millennials will continue that.”
Looper hopes that increased diversity will bring renewed energy to the bedding industry. “The industry could use a healthy dose of passion,” he says. “Whenever you bump into passion, it’s magnetic. It draws people in. Tenure in position needs to be replaced with a passion to help.”
Acquiring and keeping young, enthused talent will require older industry leaders “to start thinking about how to create the workplace of the future,”
Ellis says. “It’s about meeting the expectations of your workers, and technology will make it easier to not only attract talent, but make them want to stay.”
Bergman adds: “If you talk to Google, they’ll tell you that one of the reasons they’re successful is because of the benefits they offer. The tech companies have it right. If it takes game rooms, dedicated chefs and basketball courts to get the best results from your employees, then go for it.”
And, e-commerce, the young leaders all agree, is going to continue to grow. “I’m excited about that growth,” Looper says, “because I think it’s going to start a bit of a forest fire.” The image is apt. Fierce as they can be, when forest fires run their course, they make way for vigorous new growth.
“This industry is being disrupted and shaken up, but only by a couple of companies with the rest just following suit,” Marino says. “It’s challenging the old companies into figuring out how to change their businesses if they can.”
And the industry must change or consumer dollars will go elsewhere, all nine say. “We’re on a rocket ship heading up,” Berman says. “You better be looking every day at how you can reinvent your product, your brand, your company. It’s going to happen faster than you can imagine.”
Changing hands: Planning for the next generation of leadership
Starting a business, growing it and passing it on to a new generation is the dream of many entrepreneurs. It also can be fraught with peril. To help bedding industry executives pass the baton successfully, BedTimes asked two consultants to offer tips for structuring transitions that benefit both the business and the people leading it.
- Give yourself the gift of time. Don’t wait until you already are considering retirement or reducing your role in the business to plan for the transition. The point may seem obvious, but too many business leaders leave the transition process on the back burner. “You need to be thinking about all of the components of this well in advance,” says Eric Flamholtz, president and co-founder of Los Angeles-based Management Systems Consulting Corp. Flamholtz has worked with family businesses for more than 40 years. He is professor emeritus at the Anderson Graduate School of Management at the University of California, Los Angeles and has served on the faculties of Columbia University and the University of Michigan.
- Commit to having a multidimensional plan. The unfortunate truth is that less than 20% of family businesses have a succession plan and when a plan does exist, “it is generally done very poorly,” says Robert Lefton, co-founder, chair and chief executive officer of Psychological Associates, a consulting firm based in St. Louis. Lefton has worked with senior executives in a wide range of businesses and served on the faculty of Washington University in St. Louis.
- Evaluate the strength of the family. “If you have a healthy, functional family, you’ll just have the technical issues surrounding the transition to resolve,” Flamholtz says. “If you don’t have a healthy family, then you have to clean up the family issues before you move onto creating a plan. I’ve seen too many families and businesses implode when this step is neglected.”
- Insist on experience. “Send the kids off to work in the real world for several years to learn the dynamics of how to work with other people in other contexts,” Lefton says.
- Evaluate the strength of the business. Lefton believes that all family businesses function best when they include a board of outside advisers, a compensation committee drawn from that board and outside legal counsel. “If you have this three-legged stool in place, it will strengthen your business and strengthen the transition,” he says.
- Consider all your options. Identify all potential successors within the family with an eye toward who is truly capable of moving the business forward. If the field seems thin, consider nonfamily members. “It’s risky to grant the position to a family member simply because he or she is a member of the lucky sperm club,” Lefton says.
- Make a data-driven decision. Gather as much information as you can about the heir apparent from as many sources as you can. Don’t be afraid of using formal assessment tools. A 360-degree survey will allow you to assess how others view the heir’s competence and management ability.
- Create a framework for the transition. Make sure that the next generation of leadership has a solid understanding of all aspects of the business and is respected as a leader. Consider assigning a coach from outside the company to help guide the process and make sure there are regular performance reviews. “It’s more than having them sit in on meetings,” Flamholtz says.
BY DOROTHY WHITCOMB
