The mattress industry has been going through a significant change in the last few years. In part, this change has been driven by the changing demographics of the mattress customer. As baby boomers have been getting older, they are looking at ways to keep themselves feeling younger and more energetic. They are far more willing to try new products than their parents before them, especially with more personal items like mattresses. This trend has been driving other industries as well, notably the weight loss and plastic surgery industries. But over the last few years there has been a significant growth in the sleep industry, and the mattress industry as a whole has shifted significantly to try to give a more comfortable and luxurious sleep experience. What has this meant to you, the consumer? Over the past few years, there has been an internet explosion as people have become more comfortable with ordering larger ticket items on the internet. With the ability to vacuum package and ship a mattress on a FedEx or UPS truck, an entire industry has stormed the web.
There are new companies selling pure latex mattresses such as Habitat Furnishings, Zenhaven, Plushbeds, and others. There are also companies like Casper, OnPurple, Loom &Leaf, FCO Homegoods, and others, offering hybrid mattresses made using a variety of innovative materials. Some of these companies have not been around very long, so I always advise buyers to consider purchasing a mattress from companies that have been around for 10 years of more to make sure they stand the test of time, and can service your warranty and return issue down the line. Some of the big players, like Tempur-Pedic, Select Comfort, Simmons, Sealy, and Serta, continue to innovate, though their products tend to be far more expensive than beds made of equal quality by much smaller, boutique style manufacturers. When you see the advertising that is always chasing us around the internet for these products, you need to be aware that the consumer pays for the cost of these ads. A lot of the smaller companies riding the coattails of these corporate behemoths are merely catching the breadcrumbs left by the big players, and that in and of itself is a huge marketplace.
The trend now is the tightening of prices for a decent mattress. The healthy competition in the industry has led to a much more comfortable price point for many of these mattresses. It is easy to spend $700-800 on a queen size mattress and get something that is really decent that will last. High end bedding is still available for consumption, though. Companies like Hastens, and even American lines, like the Simmons Black series, have price tags of $5,000 and up. Select Comfort sells their higher end digital air bed models for $5,000 and more. Finally, there has been a fair amount of growth lately in the adjustable bedding area. This used to primarily be an institutional market product for the elderly or bed bound. Now manufacturers see a huge area of growth with younger markets, as well as the aging yet physically active baby boomer market. It seems many manufacturers are reinventing the adjustable bed category, with prices starting in the $1000 range and much higher.
These models are sleeker, more family oriented, with high tech connectivity to smart phones, and ergonomic remote controls, and look like anything but the old school �hospital bed� that moved up and down. Also, the American culture has been shifting to a more health conscious ethos, with emphasis placed on getting proper restorative sleep, putting in your eight hours, and having a quality mattress. Eagerness to explore new kinds of mattresses is also on an uptick, with the industry strongly suggesting that the average consumer replace their mattress every eight years or so. Gone are the days when couples would buy a mattress and keep them for the duration of their marriage, or even their lives, thanks to an aggressive, and competitive marketplace with many new and innovative ideas about sleep and bedding in general.In a recent talk at the Hackers on the Runway conference in Paris organized by TheFamily, marketer-extraordinaire Seth Godin asked “Is Digital the End of Luxury Brands?”
Rather, the question should be “Is the Digital Generation, i.e. the Millennials, the End of Luxury Brands?” Unity Marketing supports brands examine the disruptive influence of the demographic shift in the target market for luxury and help brands bridge the gap between the current consumer demographic to the next – the Millennials. Today luxury brands face a generational shift in the demographics of the target market, from maturing Baby Boomers (born 1946-1964) to Millennials (born 1980-2000). Demographic disruption is the biggest challenge that luxury brands will face over the next 10 years. And this disruption is happening in the largest luxury market in the world: the United States. The impact of demographic disruption will be felt by luxury brands both near and far because very simply, the U.S. luxury market ( €64,9 billion in 2014) dwarfs that of any other market in the world. It is larger than the four next largest markets combined – Japan (€18.1), Italy (€16.1), France (€ 15.3) and China (€ 15), according to statistics compiled by Bain/Altagamma.
Today luxury brands face a generational shift in the demographics of the target market, from maturing Baby Boomers (born 1946-1964) to Millennials (born 1980-2000). Both generations are about equal size, give or take 75-80 million people, but not of equal spending power. Affluent Boomers have already made their money, accumulated wealth, as well as acquired the luxury lifestyles to which they aspire. Their appetites for luxury has turned primarily to experiences and they simply don’t have much interest in luxury goods any more. Millennials are still on the road to affluence, as the leading edge of that cohort is only 36 years old, and not yet reached his or her stride in terms of income or wealth. With people reaching their highest income levels between 35 and 54 years of age, the window of affluence, it will take until about the middle of the next decade, around 2026-2029, until the Millennials reach critical mass in the affluence window. Not till then will they have enough spending power to potentially drive the next luxury boom.
So until the middle of the next decade that leaves the significantly smaller Generation X, about half the size of Boomers and Millennials, in the age range that marks people’s lifelong income peak and so their highest potential as customers of luxury brands. But the simple fact is, the relatively few affluent GenXers can’t fill the gap left by affluent Boomers as they age out of their highest-earning and spending years. And it will take another ten or so years before enough Millennials reach their peak of affluence and have the ample money to spend to grow the luxury industry. Between now and then brands will experience a ‘Luxury Drought’ brought on by a change in demographics which will disrupt the forward momentum and growth of the luxury industry. The Luxury Drought will be marked by slowing growth and increased competition that will descend upon the luxury market. The growth years that the U.S. luxury market experienced during the 1990s and first part of the 21st century was due largely to the movement of the gigantic Baby Boom generation into the age ranges that define the window of affluence.