In part one with Andrew Gross, we talked to the bedding veteran about the best business book you’ve never read.
It’s called New Lanchester Strategy. Gross introduced us to a framework for how to think about market competition.
In part two, Andrew discusses how to apply the principles of warfare to gain market share. How do you operate if you’re the dominant market player? Well, it’s different than how you approach gaining market if you’re a smaller business. Whether you’re number three or number one, Andrew outlines strategies for taking bigger pieces of the pie. Here’s a hint for smaller players: beat up on everyone who is smaller than you.
About Andrew Gross
Andrew held an EVP position at SSB and was a board member and SVP of marketing for Serta. During his time at Serta, the brand moved from #3 to #1 while doubling EBITDA. He and his team introduced iComfort gel-memory foam, widely considered the most successful new product in category history and ultimately a profitable $500MM+ franchise.
Mark Kinsley: Okay. First and foremost, if you did not catch part one with Andrew Gross, you gotta go back and listen to it because he takes us through this framework for how he’s navigated market competition and the implications for the mattress business. But we, we, we had like a big hard stop, a big cliff hanger in episode one, so that we can bring him back for episode two.
Mark Quinn: Well, yeah, Andrew’s getting ready to tell us the, the keys to the universe and we shut ’em down. So sorry about that. Andrew. Um, r real quick story. Um, uh, I, I, I don’t know if you remember this conversation, Andrew, but. It’ll segue into what we’re about to talk about, but we were talking about something at the time and I was at Leggett and we became friends over time with you at Sarta and we would talk about marketing things and we, we had some really good conversations and at one point you were giving me some advice on something and you could tell on the phone call.
That I was clearly annoyed or irritated in where the conversation had gone. And you know, when, when you’re talking to someone and someone’s getting you, uh, feeding you some truth, that doesn’t sit necessarily well. It has a temp, it a tendency to like fire you up a little bit and it shuts you down or frustrates you or whatever it was.
So you were telling me th some things that were true and I was getting frustrated. And you go, mark, I go, yes, Andrew. He said, just remember feedback is a. Do you remember that? And I’m telling you, I don’t know how many times I have thought about that moment, and I’m like, I’ve even to told my kids about it.
Whenever someone’s giving you truth and you’re like, I don’t know about that. Anyway, it just cracked me up. And I, I still remember that conversation so
Andrew Gross: well, you know what, , I use that, uh, Every, uh, employee reviewer conversation with someone that worked for me. I always reminded ’em the feedback’s a gift.
And then, uh, if they didn’t like something I said, I always reminded something that I was told is that when it comes to managing people, uh, if you’re the boss, your perception is your, uh, is your employee’s reality.
Mark Quinn: Yeah, that’s true. And I said things for the gift. It’s a crappy gift. I’m taking it back. .
Andrew Gross: I said you can take it back, but I’m not gonna change my perception.
Mark Kinsley: right. No. While, while feedback is a gift, just remember guys, unsolicited advice is abuse.
Andrew Gross: Ooh.
Mark Quinn: Yeah. Well, that we could have a whole podcast about that concept. Right? , uh, Andrea, we left off and you are, you’re getting into some really good stuff. So let’s pick up right where we left off, which. Um, we were talking about, um, some things and how you see the industry today and through your lens, you’ve had some time to sit back and kind of look at things.
Uh, so let’s talk about some of that and, um, kind of where things are and, and where you see things kind of going. Sure.
Andrew Gross: So I see a few big trends, and I think the first one is that, um, there’s a big opportunity in home and health. Uh, you know, just, first of all, you gotta make an assumption that Covid is gonna be around for a little.
And, you know, I’m not, this is not meant to, uh, turn this into a political argument, but one way or the other, whether there’s a therapy vaccine, herd, humidity, herd immunity, et cetera, it’s gonna be around for a while, and you’re seeing the impact that that has on depressing industries like travel, hospitality, entertainment.
and those dollars going to the home because people are staying close to the home and they wanna upgrade the home. They want greater experiences in the home, outside the home, et cetera. So that, I think is a huge growth area. And that’s someone what’s fueling the numbers that you’re seeing right now in the, in the betting industry.
And then health is the other part of it. So, and I know you guys always talk about, lots of people talk about how you have to elevate this industry from talking about the attributes of a mattress to better sleep. But you need to go another level from better sleep to better. and if you see what’s going on, for instance, with sleep tracking a apps and the research around sleep, a lot of it is now linked to or, or toward, into overall health regimes.
Look at, uh, what the MBA is gonna do when they, when they restart. Start in Orlando, right? They’re giving every player an aura ring. Mm-hmm. , because there’s a data now emerging that if you. , you know, whether it’s your sleep patterns or your resting heart rate, et cetera. Sometimes you can see signals of infection before you actually see that infection manifest itself.
Hmm. And so I think that’s also a big opportunity to think about how this product plays on a, on a, in a broader health arena. And so I see that those, you know, home and health is big opportunities. Um, the next. Is just acceleration of e-commerce. I mean, you know, COVID has thrown gasoline on the fire of e-commerce.
You know, there’s some data out there that says that E-commerce went from 17% of retail in total to 27% at one point. . I know Mark and I were talking before this started that Yeah, that’s gonna come back a little as retail opens, but behaviors are changing and people are becoming more comfortable. And that doesn’t mean that everything is going a hundred percent to pure e-commerce.
It may be that now transactions are starting more online and people may still want to go to a store, but it’s gonna play into your how you play omni channel. , how do you create, for instance, um, you know, the ability to create appointments or to create online appointments or increase your chat ability, create those touch points that exist in an online arena.
Um, third one for me is that there’s, you know, we’re gonna assume that the next on anti-dumping, uh, petition is gonna get approved, and there’s gonna be a window of opportunity for the domestic industry to take advantage. . But at some point, water’s gonna seek its level. Importers are gonna continue to set up US operations or Mexico operations, or another low cost country like Poland for instance.
And there’s gonna be a window there to figure out how do I seize back some of the business and the value segment and reposition it, but that door, but that window will open and it will close. So you need to figure out how you’re gonna take advantage of it. And then the fourth one, which I think is really important to this audience, is that I think local is gonna make a big come.
and it’s driven by the fact again, that people are staying closer to home. Um, in the midst of all this covid stuff and everything going on politic, uh, politically there’s a much more, you see it in surveys about stronger attitudes around buy American and buy local, and I think that’s an opportunity for the local retailer.
It’s an opportunity for the independent local manufacturer to stress their roots, um, and take a, take advantage of. . Um, and then I got one more last one is that, um, you gotta recognize in this business as a salesperson, your competition now is the mi You know, some people call the middle funnel the review sites.
There’s no other business I’ve come across that has such a perfusion of review sites that have earned so much traffic. And if you don’t understand what they’re saying about your products or your even your store, you’re in a, you’re in a point of deficit.
Mark Kinsley: And that trend alone is something we’ve spent a fair amount of time talking about because whether the reality accurately refre reflects what the product is about, how it performs, and what it means to your consumer, it doesn’t really matter because whenever people get into the search phase, Like it or not, the billboards that are flashing right in front of them are what’s on the first page of Google and the second page of Google and review sites have figured out how to own that real estate, how to keep those search results elevated, and they understand the algorithm.
They understand how to pivot very quickly. They understand the nature of content and how to put it out. Like I said, whether you like it or not, the reality is the consumer is coming in to your store. If they do come into your store primed with certain information they’re finding on those review sites, which appear trustworthy, and that’s what this is gonna come down to.
You’re gonna be fighting that fight. I think one of the keys to that’s gonna be education. So not only being educated as a salesperson and as a retailer, but understanding how you can bridge the education gap for the consumer and how you can help them understand. This site may be unsavory and here’s why.
And being able to, being able to keep up with those things so that you can explain it to them. What’s, what’s your take on how the review sites could continue to impact the industry and where that might be going?
Andrew Gross: Um, well listen, they’re, they’re taking a huge amount of traffic. They certainly know how to play the game.
Uh, and in terms of, uh, creating new content that’s relevant to consumers, um, they’ve certainly tried to play the broader sleep game. So look at the deal between, uh, TAKIN and the N S F. Um, and the numbers are just extremely large. I think it puts a lot of pressure that whether you’re a manufacturer or retailer, everybody in the world today is a content.
Look at YouTube, you’re, you’re content creators, right? Um, and if, if, if I’m a retailer, I gotta think about how do I create more content around the products and services that I offer that on a local basis can counter some of those review sites. Again, go back to those principles of warfare. If I’m a local retailer, most of my business is going to come from the areas that are closest to my.
and with things like geotargeting and geofencing and your use of kind of some offline media to drive online media, you gotta put up a, a wall around that and say in those areas, I really am the expert and, and, and I own this category. And that’s not just about the marketing media you use, but it’s also about your ability to create content and content these days.
The ability to create content doesn’t cost a lot of money. It’s not costing us a lot of money to create this podcast. And people are so much more comfortable, like with the production values, that you don’t have to be intimidated by the fact that, you know, production values have to be great. But if you have 40 beds in your department, you should be able to talk about all of them.
from the relative merits and strengths, um, and, and what people read online. So I, I think that’s the big opportunity for retailers.
Mark Quinn: You know, here’s, here’s the thing, you guys, if you, if you think about the, the review sites, It’s also, isn’t it, the, the originating source, right? Mm-hmm. . So the review sites today, we, we go online and we’re looking for a bed.
We don’t know the review sites that we come across, right? We’re in the search phase. So we need to learn our way into buying this mattress that we don’t wanna buy to begin with. So the local retailers have a major advantage if they’ve done the right job of building a connection to the people in their market.
Because if that guy tells me that these beds are good for X, Y, and Z, I’m much more likely to buy into that than I am some random review site. But if the website for that retailer is absent of any content helping. to make a good buying decision with a educational piece to that, then, then you’re gonna, the, the local retailer is gonna give that ground up to these fake review sites that are all about just driving clicks and links and affiliate fees.
Andrew Gross: Right. Uh, and, and think about it, a lot of these sites got started by, you know, one or two people in their apartment creating. Right. So it, it, you know, it, it’s not about, um, the amount of resource you have, it’s a lot of, it’s about effort and saying, I’m, I’m going to be, you know, in the business of creating an upset yourself targets, I’m gonna create, you know, listen, if I have 35, 40, 40 models, I’m gonna create something new every day.
If I know that these are the questions or issues that people are asking me about bedding, I’m gonna create content. , like, um, you know, one of the areas I always found frustrating in this category is, you know, it’s, it’s hard to explain to people what’s the difference between kind of, uh, you know, a firm medium and soft bed.
And I still don’t find a lot of content online that really explains that and demonstrates that goes back to what I talked earlier about that tactile thing. You can even show it visually, right? So I, I still think that there’s a lot of opportunities out there. And then if you localize. , you can be the relevant expert in your area.
It goes back, I said, back to those principles. You gotta figure out how to fight the battle on a battlefield where you have a greater chance of winning. If you just put up your hands and say, well, I can’t compete with all these big online people that have 800 million visitors a month on that. That’s the wrong way to think about it if you’re a local retailer, because what you’re concerned is about, well, how much traffic is in your back?
Mark Kinsley: Let’s, let’s actually pause there. So yeah, we’re talking with Andrew Gross, former e v P of Serta. Uh, he’s , he runs Oh, okay. Before I do my major reset, tell us the name of your consultancy and how you got that name.
Andrew Gross: Yeah, so I set up a small consulting operation. It’s called 12 Squared. and it was pretty simple.
Uh, 12 times 12 equals 1 44 equals one gross .
Mark Kinsley: Andrew Gross. Perfect. Andrew Gross. Well, I, we, we love, uh, picking your brain and we’ve, you know, been friends over the years and we’ve seen your career progress and the impact that you’ve had on the industry unfold. And, and I think it’s a really, Good kind of dovetail to talk about these online reviews, these online review sites in relation to the principles that you laid out in the last episode.
So again, if you haven’t listened to that last, last episode, go back. And give it a listen and really absorb it. Grab a pen and paper because then think you’ll find some really good notes. But Andrew takes you through these three principles from thelan. Strategy model number one is your goal is to be number one in whatever you do.
Concentration is key, and then battles are fought to be won. So take it from an independent retailer’s perspective, and you feel like you’re fighting this multi-front battle called the internet, and then you’re gonna apply these principles to your business. How would you be thinking about. .
Andrew Gross: Well, it’s a great, it’s a great question.
So the first thing I think you have to do is you have to define the, the, uh, the battleground, which is first, think about your market. Where do you sit in your market? Are you number one in your market? Because it’s a different answer if you’re number one. But if you’re not number one, and you want to get to be number one in, in your market, which includes, you have to think in your mind how much online sales from people outside the market are being done, you know, national retailers are being done in your market.
think about where you stand because that’s really going to drive then your strategies from there. So for instance, if you’re number two or number three, your first question in mind is not, you know, what most people think about is, what am I gonna do to be better than number one? You know, big, bad. Um, so I’m, I’m, you know, I’m Quinn’s, uh, furniture and appliance and Big Bad Kinsley’s is the number one player in the market.
Here’s the. I eventually wanna beat big bad Kinsley, but in order for me to beat Big Kinsley first, what I’m gonna do with Mark Quinn as, as, uh, Quinn’s Furniture and Appliance is I’m gonna do the thing that my mother said I shouldn’t do, which is I’m gonna beat up on the little kids on the playground
Mark Kinsley: You’re not gonna focus on number one, you’re not focusing on big bag Kinsley. You’re focused on somebody else. Right? The first thing is here, define that
Andrew Gross: market area. Can I just
Mark Quinn: draw a point out here real quickly? So in the first episode, if you go back and listen. Yeah. There were two wars that were fought.
Kinsley won both wars in the example you just gave. Yeah. And now he’s the big bad friend. I have a won anything now he’s the big furniture store and I’m number. Like, when do I get to win a war or one of these market share battles? Do you have an example coming up where I get to be on top of that?
Andrew Gross: Uh, hopefully.
We’ll, we’ll see how good you are. Um, Quinn . Okay, I digress.
Mark Quinn: So, Michael, go ahead, please. Number one. I get it. Okay. Okay.
Andrew Gross: You’re, so, say you’re, you’re Quinn, you’re number three. And yes, you’re saying, listen, I’m, I’m freaked out about the big ad that Kinsey’s running or what’s going on in Amazon or way. , but you know what?
I looked at my market and there are six other guys that are selling, um, in my category and they’re smaller than me. So your first question is to say, how do I get share from them? Because I have the advantage over them. And so say whether it’s I have to offer something in terms of my product, my selection, my service, or I can do something with my marketing and geofence my marketing around one of their op operations.
Let me get share from them because when I get share from them, I get bigger. When I get bigger, I have more money to spend, more salespeople, more resources, et cetera. So that’s one of the things that, in that strategy about, um, basically figuring out where you can be number one, right? Where you can create a battle, where you can be number one.
that concentration and focus is very, is very important. And what we often get distracted is, is we’re all focused on, I want to go after the big guy. I wanna go after Kinsley’s or I’m, I’m feeling threatened by the business that’s being taken away by an Amazon or a Wayfair or someone else. When the reality is the first thing, you have to look in your market and say, again, going against your mother’s advice, are there other people that I should beat up on first that I can take?
because if I can take share for them, I can get bigger and stronger. And so to, to go back to the example I used in terms of, you know, how the team built Serta, you know, they took over licensees in each of those markets. They went in those markets and said, we’re the retailers that we can partner with.
They may not be the number one retailer, but rather than focusing my efforts with maybe 40 or 50 retailers, I’m gonna concentrate that. And with, in partnership with that person, get bigger and bigger than I ultimately can be number one. Right? So that’s, that’s the, um, you know, the example I would use for, uh, Quinn’s Furniture and Appliance versus Big Bad Kinsley’s World or whatever we’re gonna call, uh, the name of his retailer is, Figure out where you can concentrate an effort.
If that means beating up on little guys, take share from them. Do that because then you’ll start to grow your, your, um, your business and your size and your, and your, uh, resources over time. But then you can challenge that big leader.
Mark Kinsley: So let’s say you get to the point now, Andrew, where, uh, Quinn’s Nu tier three operation, which I heard he went down from number two to three in that conversation, which I like, right?
Yeah, yeah. I I I
Mark Quinn: noticed that, by the way, not only did No, I battle, but I, I went from number two to number three, Andrew. So I don’t know what’s happening. No,
Andrew Gross: I, I, I just figured it was, it would be more interesting if we made you seem a little bit more like the underdog. , you know? Well, clearly
Mark Quinn: I am the underdog.
So, Kenley, go ahead, make, make your points.
Andrew Gross: So
Mark Kinsley: Quinn is, uh, that’s a gift. Quinn Quinn is a distant third to my number one top tier slot. Yeah. Okay.
Mark Quinn: Now, now you both my,
Mark Kinsley: my head is, my head is hanging to the side because the crown is so heavy. Stop it. Stop it. And so Quinn’s Quinn, number three. Let’s say that Quinn against the advice of his mother did decide to go out and beat up on the little guys, and he feels like he’s sufficiently trounced his lower tier competition.
Now he’s in a position maybe to take on number two, which I also own, by the way. I, I expanded my business while he was focused on the little guys . So I own two businesses that wanted to, but let’s just say he is gonna ship his focus over. How
Andrew Gross: would he then think, right. Thing that you should have done. Yes.
Mark Kinsley: Right. How would he then think about approaching, going after that top slot or that
Andrew Gross: stronger competitor? All right, so, so, so while you were like buying number two and expanding your scope so that you could fight at this wide area battle, which is what, when you’re the leader, what you wanna do is you wanna expand the battlefield so the little guys have much, uh, much more difficulty challenging us.
You did the right thing over kins. . But meanwhile, Quinn was cleaning up on all the, on the, on the other guys in the market. Here we go. Strength what
Mark Quinn: I said. Here we go. Here we
Andrew Gross: go. Here we go. So now if you follow, again, the, the principles and the strategy, which you need to figure out is, okay, what can I do?
Either that’s gonna differentiate myself or create a situation where I can compete more one-on-one with, uh, Kinsley, or could throw them off, off his game. where I can start to get an inroad. So for instance, since now Kinsley has made me, has over expanded. Maybe he’s created vulnerability. Maybe Kinsley’s decided, you know what, I’m gonna add a second brand by going into sleep shops.
But I’m not very good in those sleep shops cuz I’m not enough of a specialist yet there might be an opportunity to, uh, to pick off business there or I’m not. He’s not very good in a certain price segment or with certain, uh, aspects of. Or you know what? He’s very, now that he’s become like big and bad, he gets very predictable with his promotion plan.
You know, already you’ve mapped it out exactly what he is gonna do for every holiday. So you have an opportunity, for instance, be it maybe a direct mail campaign to launch a pre-holiday event with an offer that you know is gonna be different and more attractive than what Kinsley’s gonna do. So what you have to start thinking about is what are those weak points?
Of your competitor that you can start to pick.
Mark Kinsley: So I’ve broadened the battlefield and he’s having to fight a multi-front war. So he’s gonna find a point of penetration that he can attack. He knows it’s a seam, it’s a weakness in my front. Go after that and then strategically repeat that process based on the wi, the weaknesses that I display.
Andrew Gross: Yeah. So, um, going back to, uh, Manchester, and there’s two theories, right? There was the ancient hand hand combat. and there was the modern warfare with machine guns. So one of the, so now did he study battles in World War ii, but he also studied ancient battles. And so a couple of them they studied was won the Battle of Thero Monopoly, which, uh, people might famously remember for the movie.
Mark Kinsley: Yeah. In the book, uh, gates of Fire by Stephen Pressfield. Phenomenal book. Right.
Andrew Gross: So, um, so what, what happened there? Well, the, okay, so the Spartans, what they did is basically they said, I’m, I’m going up against this much bigger Persian army, but if I can squeeze them into this one pass, , they can’t fight their whole army against me.
They can only fight a limited number of people. Now, of course, in the movie of 300, the Spartans, you know, obviously they have better access to health clubs and things like, uh, steroids and creatine than the Persians do. So they’re also stronger fighters than, um, uh, than the Spartans. But that was a way, I mean, then the Persians.
But that was a way to say, I’m gonna concentrate my effort in one other place. The other one he looked at is the Battle Tra Trafalgar, which was a, uh, a naval battle. Where an undermanned, uh, British fleet deeded, I think a combined Spanish, uh, French armada. And what they did there is they divided up their, the opposing fleet.
So they took all their forces and only put it against part of the, uh, opposing fleet at one time. Knocked them off and then knocked off the rest of it. So what you have to think about is look at your competition and think about what are their weak points. Everybody has a weak. It goes back to, yeah,
Mark Quinn: go ahead.
Yeah. No, no, no. I, I think you’re right. And then if you’re looking at this kind of experience, yeah, like if you have a, a big number one, if they expand that way, making an assumption, maybe they can’t control the in-store experience as much because they’ve got so many stores. It’s very difficult to do that.
So you can win. Doing it that way. So I wanna, I wanna shift gears, Andrew, because we had talked about it too, um, in terms of like, one of the important things for people today is the Bilocal thing. Yes. I think you’re completely right about that. Um, mark and I do a lot of work inside of Nationwide and we’re huge fans of the independent retailer and.
We think that there is a, a big opportunity for independent retailers to flex in their local market. But again, if, if a independent retailer isn’t talking about it, just like the review sites, if you’re not educating your people that hey, a lot of these review sites are full of it and it’s they’re just, you know, trying to get you to go buy and there’s a link and they make money off of the content.
if they’re not educating people or they’re not owning the message of, Hey listen, we are local. We are supporting your kid’s little league. Mm-hmm. We’re doing a lot of things in this community, buy here, and this is why, if they’re not saying that stuff, then they’re giving up that ground to the big box in the e-commerce guys.
Right? Yes. So, um, talk to us a little bit about buying local and the opportunity may be there for the, the retailers out there today. Yeah.
Andrew Gross: You know, I’ll use an example. So, um, totally outside the industry, so there’s. Close to us is kind of a, a, you know, a garden and nursery center that’s a family owned business, been in the business for 70 something years.
They have their own like farm where they grow a lot of their stuff up in Wisconsin, whatever. And they got shut down in Covid. But, uh, unlike the, uh, you know, some of their big box competition like Home Depot and Lowe’s that were able to stay open because they were deemed e. But what they did is, is they maintained, uh, you know, incredible, uh, communications with people via email.
They were able to, before they could reopen, they were able to kind of create kind of an, um, kind of an appointment, uh, Kind of consulting basis that they could help you set up what your garden plan was gonna be. So when they were open, you know, they would be able to sell you and supply you stuff. They reaffirm, firmed and talked about stories about how they had been part of the community and all the great things that they were doing, not only for their employees, for the community.
So it was all about that connection. So then when they were able to reopen and they reopened with a very clear message about how they were going to keep both their employee. , um, and, um, uh, you know, and customers safe, they had just, uh, you know, incredible traffic and response. So it goes back to that thing about people are open to buying local, but it’s on you as a retailer to really show why you should do that.
And part of that is you have to have, you know, you need to be a bigger part of the community with messaging that connects people on a different emotional level than just the product or the.
Mark Kinsley: You know, and it’s also, there’s a little lesson in there I think, also about building it before you need it. Yeah. You know, if they did not have a list of people and were, and they weren’t creating meaningful content, they wouldn’t have that connection with people where they could then, for com therefore communicate.
What was happening in their business and why they mattered. And so they had the, those, those points of connection with their community and yeah, it’s, it’s, it’s this principle of building value in everything you do. And I, you know, I talked a lot to independent retailers and I remember for years I would talk to people and they said it we’re different because we’re a family business.
and I said just about everybody has a family , so what makes it different? And, and they talked about the connection they create with people. And so I, you know, I would tell people then, then put your family out there. You have to prove what you’re saying. You can’t just say it. People don’t believe it, so prove it in everything you do visually.
Put your family on the radio, put your family on social media up on your website, and build value in what that means and how you, having a family that’s connected to people is gonna be the best place to do business and why that matters.
Andrew Gross: Right. We dealt with at Sort, you know, we had the America’s Mattress Division and we dealt with a lot of independent, uh, family operators.
And one of the key messages that we’d have for them is you have to make that, that’s part of your point of difference, but you can’t just, it’s not just words on the, on the, you know, on the sign on your store. or, um, an a point on your website, you actually have to act behind it. Um, and the other part to this Garden center example is about building relationships.
And that’s one of the toughest things in this business. Um, and I think it’s, it’s actually one of the reasons why I have concerns about the bedding specialist model over time is the ability to build a relationship with your customer when you have such a longer purchase. I think if you’re in the furniture and appliance business, you have a real opportunity because you can supply more things for the home that you need, need to be investing in, in building, uh, an ongoing relationship with your customer cuz they have many reasons to come back.
I think where the specialty sleep model is somewhat, uh, suffered in this growth of e-commerce is what’s, what’s the basis upon which I’m building a long, longer term relationship with my. . Um, and I think that’s something that you have to really think about hard because in the end of the day, especially these days, consumers are only going to trust or give their time and effort to retailers for which they think that there’s some sort of exchange of value in relationship and that, and there’s value in that relationship.
Mark Kinsley: Yeah, it, it’s pretty one dimensional. When you think about the purchase cycle, you think about lifetime value of a customer, how you can maintain a relationship with them. You know, there might be only so much that somebody wants to hear about sleep health. Whereas if you have a store with a variety of merchandise that has a lot of different potential meaningful connections and emotional connections you create, then you have content, then you have a conversation, then you have an ongoing relat.
Mark Quinn: But, so we’re talking about two things though. We’re talking about frequency, right? Andrews, so to your point, the sleep shop has, is at a disadvantage because you’re selling a mattress and the replacement cycle is like, you know, takes time, right? But the other part of it is connection. Kinsley, you saided earlier, and I think that’s really the more important part of this.
It’s, it is what is your ability to serve the, the consumer in a way. That takes you away from being a place to conduct a transaction, to being a place that’s adding value to their life, that’s serving them, that understands, and the selling process is legit. Um, you walk in, you really feel like they’re trying to help you sleep better because of the difference it’s gonna make in your quality of life.
Instead of just going into a place to buy something, which is what a lot of people are doing. They’re just selling things. So if the connection. to the consumer is good because the experience is authentic and real and helpful. Then you build that bridge and, and, and create an opportunity for a long-term relationship with them.
But a lot of people are just transactionally these days, don’t you think Andrew?
Andrew Gross: Yeah. I, I think, and that, that’s unfortunately what a lot of people kind of built their retail model on this industry was a transactional model that was based on convenience that was based. being accessible within a few miles of your home.
And the internet changed that because basically the Internet’s uh, accessible, you know, um, you know, a few inches from my fingertips at all times. And so you have to evolve to something beyond that. And I think the challenge there is gonna be, and it’s not just in this category and a lot of categories they see.
do these category killer specialists that were really built around kind of convenience and value. How do they sustain them films in a world where people are gonna want more and more relationships. And so the difference is if I have a broader portfolio, I have more reasons to interact with people and be part of their lives.
I have a platform than I can build on. Um, now the holy grail there is to get into some sort of recurring revenue subscription service, but I haven’t seen anybody figure that out yet in this. because that’s what, when you look kind of more broadly, for instance, in tech, that’s, you know, where people are building real value.
Um, and who knows, you know, it’s the extent that, uh, you know, on, on the low end mattress prices go down, might open the opportunity for some sort of subscription service. I mean, people have tried to figure that out. It hasn’t worked yet. Um, but e either. You know, the opportunity is to build, build a relationship, and you’ve gotta, you know, add value and emotion into that in order for people to, to, um, to wanna engage.
Mark Kinsley: kind of have what appears to be a subscription model whenever you have five year 0% financing offers. So it’s kind
Andrew Gross: of Yes.
Mark Quinn: Now if, if you’re okay buying your friends, then
Andrew Gross: yes. Yeah. Um, but, uh, I, I think that’s, you know, it’s, it is one of the, you know, for an industry that I think is in a bit of a, a state of flu, it is a challenge.
How, how will retail evolve? What will happen on the manufacturer landscape between the large established players, um, all the low cost entrants and everybody in between. But at the end of the day, I think a lot of it’s gonna be about, you know, elevating the benefits in the category and finding a way to have a stronger relationship with, with your.
And I do think retailers in many cases are in a better place to do that than sometimes brands are, because you have more ways that you can, um, interact and, and serve, serve your customer.
Mark Kinsley: I think that’s a, it’s a great kind of pause point for people to really absorb. Mm-hmm. as a retailer, are you in a better position than a brand, which is pretty singular and focused for the most part?
and I, you know, I tell you just from a, in a very small way, I saw this happen. I, I’ve had this apparel company for about five years that I started. It’s direct to consumer e-commerce. Our whole thing is working out with your phone is an awful experience, so you can get rid of your armbands, and we have pockets built into the shorts.
It’s a very niche audience. We have thousands of customers, but you get to the point where you’re in this cycle of people want more of what you have. So you go from having to be a product brand. To a product brand that’s constantly innovating and introducing new products, or you become a curator and a merchandiser because the relationship doesn’t have much of an extension around that one core product.
Andrew Gross: Right, right. It’s very hard. And that’s one of the things that the, um, you know, uh, going back to the Manchester strategy, they talk about a little bit about kind of what’s your path to growth and all that, and ultimately, , you won’t see a lot of discussion about product there because you have to assume over time that whatever you come up with in product with some exceptions, is gonna be matched in some way.
Mark Kinsley: It’s actually one of the core tenets of a person in a position of strength or a company in a position of strength, you say is copy immediately. Yes. What your weaker competitor
Andrew Gross: did. Yes. And that was, and that’s something that people sometimes they get, um, um, their ego gets in the way. Yeah. But one of the principles when you’re a leader, any good idea that comes out in the market, you should copy it, make it a feature like Apple’s Great about that.
People come up, for instance, with a, a great camera app on their phone. The next evolution of iOS has got those features built in, or even look more broadly, look what the phone did to the whole photography industry, right? Um, well, and we’re really
Mark Quinn: good at copying product in this industry, that’s for sure.
And so there’s, there’s very little in terms of intellectual property or the anything that’s been discernibly different. So enter as we kind of close it up. Yeah, you’ve been really great and, um, We are very, very glad that you gave us the time today, and we’ll have to do this again because the three of us could probably talk for the rest of the day about this crazy industry we’re in and enjoy every minute of that.
But, um, just one last question I have for you, um, and then I’ll let Kinsley kind of close this out, but you know, what is your, what is your hope for this industry? I mean, I know that you love the business. Uh, you were in it for a long time. You had a lot of great connections to retailers and the people at sorta.
what, what do you, what is your hope for the mattress industry over the next 12 months or couple years? Uh, what, what, what would you like to see happen?
Andrew Gross: Uh, it’s a great question. I think, uh, one, um, well, I, I, I’ll just capture this way. I think this is a tremendous moment as opportunity, as I said, between the impact of Covid on the.
Anti-dumping coming in, the focus on wellness, et cetera. And I would, what I would like to see is that the industry seizes the moment because it’s very easy to see how it could continue to kind of progress along the way of more movement towards low cost, uh, quick replacement cycle products versus the real opportunity to capture more of the value that really should be in a sleep, uh, in, in the sleep category related to health and.
And so that’s to me the hope, hope for the industry is you know that you’re in the midst of a unique opportunity, a gift that’s been given. Now, the opportunity is how do you seize on it to create value for you, uh, for your customers, and ultimately
Mark Kinsley: for your owners. I’ll tell you what we’ll do as you think about how you can create those opportunities for the industry and for your business.
We’ll put some of the notes that Andrew made for us on the website associated with the podcast. This podcast. So if you just go to mattress podcast.com, go to the search and just search for Andrew Gross. This podcast or the two-parter will pop up and some of the notes from the Manchester strategy model are gonna be in there.
Everything from the two laws to the three principles that Andrew distilled down. So you can start applying that framework in your business and hopefully, like you said, use this as an opportunity. And, and beyond that, Andrew, how can people get in touch with you and we’ll put some links up as well.
Andrew Gross: Uh, sure.
You can find me on LinkedIn. You can find me on Twitter at ASG 20. You can, uh, you know, we’ll put my, uh, my email contact in there. But, uh, happy to talk to people as they reach out. Uh, you know, as he said, as Mark said, feedback’s a gift and always happy to be a sounding board. Well, we
Mark Kinsley: appreciate you Andrew.
Thanks for being on the show and best of luck and we’ll talk with you soon.
Andrew Gross: Yes. Thanks guys.
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