Inflation. It’s now a household word.
Pre-2020, few people knew or understood the ramifications of “supply chains.” Now, it is a default response to every backlog in every industry worldwide. Add in increased gas prices, energy prices, grocery bills and now, formula shortages, and people are understanding just how much quickly rising inflation can impact their day to day lives as well.
In today’s episode we discuss how to tackle inflation, while increasing your overall ticket price. We applaud the Dominos pizza tactic of re-thinking how to reward your customers in an inflationary environment, we talk about the need to over communicate the how and the why of inflation on present day purchases and we drop a foot traffic driver that’s sure to turn some heads (think: the inflation negation sale).
Also, our heartfelt condolences to the family of Harry Cornell on his passing. He was a veteran of our industry and helped to shape and make it what it is today and we’re forever grateful.
FULL TRANSCRIPT
Mark Kinsley
We are a nation facing inflation. It’s here it’s real and it confronts consumers every day when they go out to make a purchase from fuel to food. How can we compete what can you do about it and your Furniture and Mattress Store the DOS Marco show begins in 60 seconds. Driven entrepreneurs
Mark Quinn
Listen up, it’s time to team up with nationwide Marketing Group North America’s most successful network of independent retailers. You’ll gain access to programmes and services that level the playing field between you and the national chains, industry leading digital marketing increased buying power, exclusive networking events, and of course their awesome learning platform. Nationwide marketing group is the business partner that helps you get results and stay ahead of the competition. Take the first step today and visit nationwide group.org
Welcome to the dose Marco show with Mark Kinsley and mark when we’re mattress and furniture leaders gathered to grow, get the inside scoop, tell stories and take tequila shots. The galaxy’s greatest mattress podcast has lived off in
Mark Kinsley
I was probably I’m gonna say 2025 yards away from this minivan. And I had a dose Marco shotglass. And there was a friend of mine in the car. And I launched it and as an industry friend. I was not being mean to him. I launched it from like maybe let’s call it like 50 yards away. And I nailed him like perfectly but I was like I knew he’s not going to be hurt because the does Marcos tequila shot glasses are indestructible. So then I took it down, and I put it under the tire and I said run over it. Let’s see what happens. In destructable. Quinn, how the heck are you today?
Mark Quinn
I’m beautiful. How are you?
Mark Kinsley
I’m good. Some crazy stats coming out in the mattress industry that tie into in crazy 16% down in sorry, units were down 16% and dollars were up 1.1% which shows you how the industry is closing that gap. With higher prices as well everywhere consumers look these days, prices are higher. In fact, for the year end coming in March. We’re here March 2022. For you time travellers, the CPI was up eight and a half percent. And usually, you know the rate of inflation is somewhere between two and 4%. Well, that’s the highest rate of inflation since 1981. So we’re talking 40 years we’re talking Reagan administration. So people are facing it people are in some cases suffering and if you look at the numbers of other categories, just not the total CPI and walk us through it. I mean energy fuel, gasoline electricity, give us that rundown. Do you have it memorised?
Mark Quinn
Are you talking about in the other categories? Yeah. Yeah. So here, here we are. So in consumer prices for energy and increased 32% prices increase for fuel and oil 70% Kinsley, think about that. Gasoline, 40% electricity, 11% natural gas 21%. So all kinds of stuff there. What I was looking at when you were talking, I was trying to find another step. I was trying to look at the consumer confidence index also, because I know that that’s taken a major hit as a result of all the pricings and other pricing increases another data point. Kinsley, the concern in this conversation is the fact that 64% of consumers today are living paycheck to paycheck. So that’s going up. And if you think about all the inflation, then you think about like it said in that little blurb right, the fuel, people out there really struggling to you know, try to figure all that out. So there are definitely some headwinds, but there are also some ways to hit that golf ball into the wind low and right against the turf so you can travel at the fastest rate, there’s always a hack Kinsley, and we’re going to talk about
Mark Kinsley
it’s always a hack. You know, I want to talk about Domino’s first that pizza company, because I think they took something that was potentially a disaster for them. And they turned it into an opportunity. And if you’ve listened to the show for any amount of time, you know that we have a philosophy of trying to say something happen that might be considered bad. And we say Good. What does that give us the opportunity to do? So facing high fuel prices and facing what was probably a driver shortage? What did Domino’s do? In their infinite creativity, they said, Hey, we want to give our customers a tip. We know times have been tough. So if you order your pizza online and come pick it up, we’re gonna give you a $3 tip. So you know, somebody behind the scenes had crunched the numbers, found out how much it costs them to pay drivers how much they can save, and they turned it into an opportunity to reward their customers. That’s the type of creative thinking, I think we need to bring to an inflationary environment where people are going to be counting their their pennies at every turn. And like you said, with so many people living paycheck to paycheck, you’re gonna have to sort of stratify stratify, you know who your customers are, what you’re saying to them, and get in front of the right people that have those consumer dollars to spend, and continue to build value in what you have. But I love what Domino’s did by turning driver shortage and high fuel costs into we’re gonna give our customers that tip. So how, how can you apply that in your furniture mattress store, get those creative juices flowing in that direction?
Mark Quinn
Yeah, I like that. You know, it’s interesting. Also, when you think about things like that, you kind of wonder, like, do you get this sense, Mark, that consumers are kind of like, okay, like, I guess you get some cover from the national media. But at some point, right, you can like, okay, stop piling on, right? Every now and then you get, you know, reports of companies with record profits. And that kind of stuff comes out. Like, for instance, during COVID, the companies that actually had, you know, had the vaccines, right, so they’re out with record profits? Well, sure, because they’re producing the vaccine. But, you know, I think there’s some consumer doubt that all of the inflation that’s being handed down is actually necessary. So they’re kind of wondering, okay, what’s necessary and what’s not? And what’s profit growth versus keeping up with the reality of inflation? Do you get the sense of that as well,
Mark Kinsley
100%. And really, I think one of the easiest ways, in my mind to break this out, was to look at people earning households earning $60,000, or above, versus households earning $60,000 or less. So the the additional expenses due to higher prices for people earning under $60,000, outpaced their growth in annual household income. But people household earning above $60,000, their wage growth, beat the additional expenses. So that just shows you for people households under 60,000 bucks a year, it’s getting worse for them. And for people earning 60,000 plus a year, it actually got a little bit better for them, because their wages were able to outpace the rate of inflation. So it shows you kind of that, that divide and it really speaks to the number that we quoted in the very beginning of the show, which was units were down 16% Matrice units down 16% dollars up 1.1% clearly making up for some of that in terms of dollars, you know, across the board, we know that prices on on all materials have gone up due to supply chain issues and beyond. But it’s it’s a really tough climate. And I think, go back to last week’s show, what did we talk about? We talked about how, you know, people are going after those bigger tickets, and they’re doing it by you know, with people coming into the store, Hey, I just need a mattress. I’m a budget conscious consumer. Great, the middle was dying. And then we were making more than money at the high end. So we’re seeing that play out now. And it just we have to be reminded people are confronted with this inflationary environment every time they go get a gallon of milk every time they fill up at the pump. So we have to look at this and say, not unlike Domino’s did good. What can we do to bring people in? I know there’s a lot of creative brains out there. You’re one of them.
Mark Quinn
Well, thank you Mr. Kinsley so are you so let’s have a little fun with that, shall we? And say, Okay, if we want to look at as an opportunity let’s think through some things that people out there can do that maybe we’ll be able to no around this whole problem, which is inflation. I think one kind of goes back to what we were talking about a second ago. Explain the inflation to your customers, right so maybe it’s on a website maybe it’s when they come in maybe there’s a easel maybe it’s whatever but you know, some explanation in terms of Hey look, it’s you know, raw materials so things have gone out gone up however, we’re still really aggressive and this is how so yes, inflation is happening but this is how we’re handling it. So effective communication back to the consumer. We’ve you know, we’ve we saw the opportunity might be work with your suppliers getting new beds, SPECT and place on the floor that are more aggressive than they’ve been in the past or, you know, re merchandising or anything like but make sure you’re communicating with the consumer as to why it’s happening and how it’s
Mark Kinsley
one thing that yo Adrian said. I thought I had my Yo, Adrian button. Where’s that? I don’t know, we’ll just cheer for Adrian, how about that? One thing that Adrienne said, Who’s producer for the show, and the voice of the fam, in our audio story, she was saying, look, if I need to buy something right now, from my home, you know, they’re going into a home construction project, I don’t know what the prices are going to be in a year. So I’m more likely to secure that purchase now. So I don’t have to deal with hybrid prices even later on. So I don’t know that it kind of goes to what you just said about explaining inflation and explaining that, it’s probably never going to be cheaper than it is right now. Because even if the rate of inflation declines, you know, back to a normal cadence of two to 4%, prices are just gonna go up, that’s just the way the world has worked. So maybe, you know, letting people know that now is always going to be the best time to buy. And maybe if you want to treat it around a sale, people are gonna hit your waggon to that which is relevant. And what’s relevant. It used to be the word supply chain that’s still there. But inflation is now becoming that household word that people are mentioning. So maybe you could have an inflation negation sale, you know, where you dropped your prices, eight and a half percent, because all the other prices have gone up that much. So just tapping into that which is relevant, had a great article up on fam dot news. So you head over to fan FM dot news. And you can see this article by Alex Milstein where the title is three mattress industry insiders weigh in on importance of Memorial Day. So Memorial Day coming up, use that time when people have a little more freedom, they’re out and about, they’ve gotten an extra day, and they’re familiar with sales happening during these this time period, to grab grab some volume, out of days like that, you gotta be conscious of those holidays.
Mark Quinn
Yeah, I like that. And you know, since the holidays are coming up, Kinsley What about like really thinking about how you use financing differently? Right? And so maybe you’re doing 36 months, or same as whatever your hook is, but what if you message it a little bit differently? What if you tweak your offer a little bit differently, so that the upfront payment is lower, just to make it easier to get in, or, you know, tag that promotion, with some kind of language around beating inflation, which is what everyone’s kind of hearing about these days. So really get a little more creative in terms of what kind of financial offer you’re making to the consumer, there’s
Mark Kinsley
so many great options, you know, for for helping people, you know, break it down into a more budget friendly manner. Now, I know there’s a lot of debate out there about, you know, should we be marketing and selling financing, and that can go a couple of different ways. But in this inflationary environment, when people are trying to figure out their finances, you know, it’s a good way to serve people that still still need those goods. I mean, on a past show, we were talking about being relevant. And there gonna be two and a half million weddings that happen this year. And we want you to be sure to get in front of those couples who are registering heard from Sweet Dreams mattress and furniture in North Carolina, heard from Greg and Matt man and Katie law that they actually were setting up a registry after hearing that podcast episode. And it wasn’t something that was terribly hard to do. So tapping into things that are going to happen, the weddings, episode is up on fam dot news, you can check, check out that entire thing. But we’re talking two and a half million weddings at a measly $400 price point, if every one of those couples got a mattress, that’s a billion dollars in revenue, and there are 136 people on the average guest list. So get in front of them, and get that happy couple set up with something that’s going to be nice and handy, that they can ride out this inflationary environment on that sounds terrible.
Mark Quinn
So drive it into new into new markets. So be more creative and we’re looking I like that go fishing in a different pond, as they say, yeah. What do you think to mark about, like, you know, as it relates to, you know, beating inflation, I like what you’re talking about earlier, like beat the price increase. Right. And so we were talking about the, you know, the offers that you can do differently as well. How about in terms of making it important, right? So if you’re a consumer, Kinsley and you have a bed and it’s not great, right, it’s not all that comfortable. And so on your list of things to do, it’s okay. Get some flowers, the weather’s changing, get some get a new broom for the kitchen. Go out and maybe get your tires rotated and you know new mattress is somewhere on the list, right? And then when you look at purchase you have to make so you’re thinking family vacation, you’re thinking mattress, some of these other things we talked about on the list. then if you’re not at the top of the list, it’s easy to defer that, right. So you’re gonna be like, Oh, the hell with that I can sleep on my mattress and get crappy sleep for another, you know, six months, and then I’ll buy it later. But if you’re almost like messaging that even in social media, and you’re saying, Hey, guys, I know you might be thinking that you want to, you know, postpone your matches purchases because of inflation. But don’t forget, like, that’s the one place that really makes a big difference in your life, right, or maybe not taken on exactly that way. But just friendly reminders along the way that that part of their life, that purchase is not a need, it is an absolute thing that they have to have in order to live in
Mark Kinsley
and talk to people that may have a hard time getting sleep, and who I’m referencing here 10,000 people every single day turns 65 in the US 10,000 people a day. So that’s going to, you know, the number of adults over 65 is going to double over the next several decades is going to top out about 88 million people. And that’s going to be 20% of the population by 2050. What’s happening right now 10,000 People turn 65 every day. And as you age, what do you have a hard time doing? getting good sleep. As you age, the bedroom becomes an environment of wellness, as you age, the bedroom needs to be safe and comfortable. Especially if you’re getting up in the middle of the night, you’re sleeping less you may be wandering around, you want to know that mom and dad are okay. There are a variety of different different circumstances. So look at the demographic data and understand you can specifically message to people who need this environment be comfortable and safe. And you know, we got an article coming out. I hadn’t banged out an article in a while for the fam mainly doing podcasting here, but I wrote it because it’s all about the culture code for health in America. And we had you got to subscribe at fam dot news because I’m really excited about this one. Because the culture code for health, I’m gonna give you give, I’m gonna give it away, but I’m gonna give it away. Culture code for health and America’s movement. Because you’re stuck in your static, you’re not healthy, you’re not free. So if you’re moving, you’re free. If you’re moving, you’re able to go and complete your mission, or see the countryside or be with your grandkids or just be with your family members. And so when people describe being sick, they describe being contained and confined. So think about how you can position our products in relation to movement, the adjustable base, wellness being giving you the sleep and the foundation of health to help you move more into your mission. These are some aspirational things, but there’s a lot of there’s a lot of really healthy psychology there to tap into to make sure you’re relevant with our audience. Instead of you know, slamming the 249 Queen button.
Mark Quinn
Yeah, and yes, I love that. And by the way, I hope everyone goes and reads that article. You know, Alex sent me that piece that you wrote and he’s like, Hey, jump in on this. You did too. And you Okay, make some recommendations or edits and I’m like, I can’t like it was I thought you you wrote that so incredibly well the way you told that story. So great job with that. I hope you guys go go go check that article
Mark Kinsley
out to your real I was just a real story about my grandpa Ray, my grandma many
Mark Quinn
grandpa. I love it. I love it. It was her name was really Mini. That seems like a great a great grandma’s name. It’s
Mark Kinsley
perfect. Yeah, she could she could whip up on mini also.
Mark Quinn
Do you know what the average American is going to pay this year in inflation cost $5,200. Mr. Kinsley so if you look at food growth, food costs, growth fuel all that the average American is going to spend an extra $5,200 a year. And so when you think about that stat at the beginning of this show, 64% of people are living paycheck to paycheck. So you know, maybe even tire savings back to that I don’t even know I’m brainstorming here, but like, you know, coming here to save $1,000 will get you ahead. It’s gonna cost you $5,200 spend with us, we’re gonna give you 1000 back. So now you’re you’re way ahead of your neighbours. Right? I mean, something.
Mark Kinsley
There are lots of creative ways to do this. I think if you look at some of the promotions that mattress Mac has put together with with the gambling and recently the Derby and you know, those those things do a good job because people have an opportunity to get it for free. Now you kind of have to have a bankroll there to hedge like Mack does, but but ultimately get with your team and think about the realities of the environment we’re in, say to yourself, good. What do we do with this information? How can we use this as an opportunity to serve people or connect with them just like Domino’s did when they said driver shortage gas shortage. We’re going to give you a tip we’re going to help you get ahead. Even though it was probably just a way for them to save money.
Mark Quinn
You know what, if that’s what it was, though, that’s what you do you pivot, you acknowledge where the market is, you show empathy towards your consumer, I think that’s a big one, right to, in your social media and in your advertising, share some empathy. You know, just for the consumers. We know it sucks. It’s hard. We understand that the current state of life is not easy because of inflation, we get that and we want to help write that kind of language, connect to the consumer, meet them where they are, acknowledge that things might be tougher for them, and say, Look, we’re here, we’re aware of it. And we’re going to do everything we can to help mitigate the extra cost of inflation. Come on in and shop with us and we’ll get you out of here as cheaply as we possibly can.
Mark Kinsley
That’s what we’re here to do to we’re here to help you come up with ideas, feed you with information to keep you relevant, and hopefully help you serve your consumers better. This is the DOS Marco show. I don’t even know how many episodes we’ve done at this point. It’s like 300 And so it’s like a really big number.
Mark Quinn
I do it’s 300 and
Mark Kinsley
I was totally gonna say that I didn’t have it memorised.
Mark Quinn
You’re always the one that knows. So someone asked me the other day I got on at 330 Something like that. But you know, Hey, before we go, I just want to make a acknowledge that a veteran legend inside of our industry has passed away. Harry Cornell who was the great grandson of the grandson of JP leggett, who took leggett and Platt from a $10 million business to a five and a half billion dollar publicly held equity in the United States consolidated all of the innersprings suppliers in this industry built it into a multinational company that had multiple different businesses inside multiple different verticals. Harry who knew so many people and he’s one of the best guys I ever knew in terms of building relationships and understanding the importance of that he has passed away and has left behind you know, legendary status the guy I mean, he was just one of those guys that helped the industry become what it is today. So Harry, thank you for what you gave to this industry. Thank you for your personal friendship to me and my wife. And for the time that we had and for having great family behind left behind Sharon and Lance Be sure Brent Be sure and Blake and a lot of a lot a lot of folks sad and mourning that but a lot of people in this industry knew Harry so Harry, rest and peace, my friend.
