Ashley Furnitures line of mattresses Sierra Sleep by Ashley will hit their goal of $250 million in sales in 2018 compared to their sales of $170 million in 2017. That is in the mattress industry is showing flat to negative growth through 2019. Aside from the marketing and advertising they’re doing, what sets them apart is the sales force. The bedding specialist that they have dedicated only to selling the bedding line is taking away floor slots from their competitors. The wholesale bedding market is $8.5 Billion. Ashley’s goal for mattress sales in 2019 is $350 million and they also want to have mattresses be 20% of their case goods business. Technically their case goods business is actually categorized as bedroom and dining room.
There is a lot of debate on whether you should only sell the product the you floor, whether you should stock the furniture that you have on the floor or if you should just special order for customers when they like a floor sample. When you sell from vendors that you can pick up from the same day, then of course you shouldn’t stock the product because you’ll lose out on GMROI. GMROI is gross margin return on investment. Basically, it is the calculation of how much gross margin return you get on the investment when you buy furniture. You calculate that by cost of inventory. So if you don’t stock the product in your warehouse, then you will have less cost of inventory. The issue arises when you have vendors that take weeks or months to deliver. Then you may lose out on the customers that want fast delivery or even same day delivery.
At Ashley they consider a product discontinued when there is less than an estimated 30 days of stock left in all of the warehouses put together and they do not plan to continue manufacturing the product. So if something was discontinued, then there still can be stock in some of the warehouses or then it goes into the “hot buys” section. The hot buys are items that are discontinued but there is still stock left in some of the warehouses and they over from 25% to 75% discounts. The order has to be put in by an Ashley employee or independent contractor “sales representative” or “marketing specialist”.