This article is based on a video originally recorded on Visa Franchise Youtube Channel
Patrick: Hey, Patrick Findaro here, Co-founder at Vetted Biz. Very excited to have Dirk Stallman, President at Verlo Mattresses. He’s been in the furnishing industry for the past two decades. Verlo was founded in 1958. So very excited to have on Dirk and talk about the mattress industry, larger furnishing industry, exactly what Verlo Mattress does, and keep it open and better understand if the furnishing industry could be good to start a business or potentially open up a Verlo Mattress. Thanks, Dirk, for joining today.
Dirk: Hi, thanks for having me, Patrick.
In the home furnishings’ industry, experiences make a master
Patrick: Tell me, Dirk… How did you get into the furnishing business and then Verlo?
Dirk: Part of my background in retail. I started in ad agencies many monts ago, and I had a chance to go to Kohl’s department stores. This is back in the mid to late 90s. They were growing. It’s a great story. When I started at Kohl’s, we were as it was probably less than 100 stores. Then, when I left, Kohl’s was close to 500. It was a really fun time to be there. But I took a job with another department store chain here which also was based in Milwaukee, and that was at the time Carson Pirie Scott, which was a division of Saks Department Store Group. I worked there for four years. And I got to know the home furnishings business because we had furniture galleries much like, the old department stores did back. That got me over to another retailer here in town called Steinhafels, which is a very large regional market leader. I was there for 12 years and built a marketing department where it had a lot of fun. There I had an awesome boss, Gary Steinhafel. It was really a great experience. Now I’m here at Verlo.
Patrick: I’ve heard great things. I mean, some people joke about the weather. But, besides that, I’ve only heard good days, especially the people.
Dirk: Yeah. I’m from the Midwest. I grew up in Rockford, Illinois. And this is only 90 miles away from here. I feel most comfortable in the Midwest. It’s a good place for me.
How to succeed in the home furniture industry
Patrick: Dirk, we met at the Franchise Brokers Association. We talked a bit about the mattress industry and the kind of the players in it. It’s always just kind of piqued my interest because you do spend eight hours, or at least you should be spending eight hours, on this piece of furniture. For me, it is an important part of my house, probably the most important part because I spent a third of my life on it. And there’s still not great information. Consumers don’t have all that much information on when to choose, what to choose in a mattress, or maintaining a mattress. I really enjoyed our conversation on all that as well as even sleep hygiene.
Dirk: Yeah, we kind of geeked out on sleep hygiene a little bit
Patrick: I’m into it. But tell me again a little about the mattress industry, where it sets, the growth, and…
Dirk: I think about the ISPA forecast. ISPA is the International Sleep Products Association. This is sort of the governing trade body that sits over all mattress and sleep products.
“ISPA projected earnings of $ 11.9 billion for 2021. You see … the mattress industry is a sizable market”
As we always say,”Who do you know that doesn’t sleep on a mattress?” It’s usually interesting when you start driving around a neighborhood, and it’s not just a master bedroom, it’s a kid’s room, it’s a guestroom. There are a lot of mattresses all over the place. And it’s a big, big category. I think mattresses are also very much tied to housing growth. And how large the millennial group is coming into what we would call really key buying years. Let’s call it at age 35 to 54-sell. Maybe when you’re ready to buy your own furniture, when you’re ready to get rid of the hand-me-downs, and some furniture you might have built yourself.
Patrick: Well, I don’t mind about a hand-me-down couch, but a hand-me-down mattress…
Dirk: That’s just gross.
Patrick: It doesn’t have the same…
Families grow, the mattress market rises
Dirk: That’s probably better to not go there. But, it’s big. And we’ve seen some forecasts that literally for the next 10 years, as this group comes of age and gets into their key buying years, there’s going to be pretty robust growth, not to mention housing. So the two are sort of intrinsically linked together, housing, and mattresses, and furniture.
Patrick: I imagine what COVID did, you know, some businesses have really struggled, but other ones have done well, especially in the home services.
Dirk: Yeah. It was a little scary.
Patrick: Home products, I mean.
Dirk: Yeah, it was a little scary in the beginning, when nobody knew kind of what was going on. The first couple of months were tenuous. And we sailed through that and realized that we had a lot of things going for us.
“A thing that makes Verlo kind of interesting is we build our own products and we sell those products”.
We literally say we build them in the back, and we sell them in the front, which means those products are built locally, which there was a lot of demand for local businesses, I think, as people realized they could, they needed support. That some of these local businesses needed support. And the other thing is they’re service locally, which people go, “Wait, you service a mattress?” And I’m like, “Yeah, we actually do.”
Patrick: That was news to me…
Dirk: Yeah, yeah. Yeah, so.
Patrick: …when you told me two weeks back. But when you explain it, I’m like, “Oh, shoot. That makes a lot of sense.”
Dirk: Yeah. So when you build the product, you know, the ability to manipulate the product. So we can open it up, and we can change comfort layers, and we do it all the time. It’s part of the service that we offer. And that’s kind of what you and I were talking about is, I think Verlo is sort of this intersection of service and a product. We kind of combine those two together. And then, of course, we collapsed the profit pools of a manufacturer and a retailer. And it’s a good business.
Patrick: And I mean, in terms of if you could break down the numbers, like, is a good amount of the revenue the after-sales servicing or is that more…
Verlo Mattress Franchises: A broad and versatile business
Dirk: The majority of the revenue is coming through the mattress sale itself. We have a bunch of different prices to fit all sorts of budgets and needs. Where I think Verlo really wins is what we call the master bedroom category. So when you’re ready for that first, quote-unquote, “real bed”, or you’re ready to replace that bed…
A lot of mattresses are partner-driven decisions. There are two people sharing a surface. And just like you and I were talking, your definition of soft and my definition of soft could be very different, vastly different. Because comfort is so subjective, it becomes difficult to manage. We like to say, “Hey, if two people are sharing a bed together, somebody is compromising, chances are you’re both compromising in some form or fashion.”
Patrick: Definitely. My wife and I are definitely uncompromising. She grew up in Europe. And as you might know, Dirk, there, it’s a really, very hard and firm mattress.
Dirk: A little more firm. Yeah, a little more firm. Right.
Patrick: And I never thought I had a soft preference, but it was in polar opposites, so.
Dirk: Yeah. Right, exactly. So, you know, I think that’s…part of it is, you know, we have the ability to even make a mattress two different comforts, right, left and right side, if you can visualize that, so.
Patrick: And you have some competitors that do that, but I think they’re in like the 5000 plus range, paying around.
Dirk: Yeah, yeah. It’s…
Patrick: They have remote control and…
Dirk: Yeah, I mean, there’s air. I think that’s probably the most available mass-market solution for adjusting different comforts. But the air is very polarizing. You have people that love it, and you have people that don’t love it. And it’s hard to find that in-between. It’s a small part of the industry, a big part of the industry. I mean, select comfort is a very large retailer. But there really only corners air. That’s what they do.
Verlo: Technology and innovation for greater comfort
Patrick: Okay. What’s the Verlo product?
Dirk: The Verlo product is primarily sprung with foam. It’s a traditional construction. But the bread and butter is really a coil spring with foam layers on top. That’s predominantly what America buys. I guess the really big buzz now is sort of hybrid. You’re going to hear people say, “Well, I have a hybrid mattress.” That is basically a coiled spring unit with some of the more, what we’ll call modern foams, EG memory foam, gel foam, those types of things put on top. I like to say it’s the evolution of coil construction. Some technology has changed, but the basic principles of how it’s put together are pretty much the same and have been for many years.
Patrick: In terms of like the industry players, I know from my own experience, we bought a…that master mattress…
Dirk: Master bedroom.
Patrick: …very pretty big purchase for us. And went to a couple of stores. One was like a big box. Well, one was a major retailer, 300 plus locations. There’s another one independent owner-operated. Very different feel. We went with the owner-operated one as he made us feel very welcome, you know, give a little discount, or he threw in a pillow, and just the buying experience is a lot different. So that’s my limited experience with the mattress market, at least in the last few years. But I’d be curious to hear it from you, like… How is Verlo’s position, and what’s like, kind of the market for the mattress space?
Dirk: Well, our formula is a little different in that. We have, in all of our locations, there’s a factory involved. That the factory is locally owned, it’s locally operated. The product is made in that town. And because of that, our team inherently has a lot of information about everything from how the bed is constructed and how that bed is going to feel to you. They’ve gotten pretty good at dialing in what we’ll call a comfort. But at the same time, they really can geek out about foam density, tensile strength in springs, different types of spring units, the benefits, the drawbacks, etc., of all of the above.
Patrick: And probably feel the passion from the owner itself…
Dirk: And you really do become this expert, right? Because you’re so in tune with how the mattress is constructed and what makes it that mattress. What makes it that bad. And it’s fascinating when you get together with our owners because these guys are really passionate about foam densities, and tensile strength of spring, and different types of spring units that we might use, and what we would call good spec versus bad spec. And…
Patrick: Well, they’re so like craftsmen were two years back…
Dirk: It is, yeah.
The perfect mattress, made to order
Patrick: …there were a lot of craftsmen, but now there’s not so many. You’re producing the goods that you’re then selling.
Dirk: Right. And because we make every bad order. We don’t have a warehouse full of finished products. It’s just not how we do it. Every bed that you come in, I mean, we have back rooms full of raw materials to put beds together but at the end of the day, we build it for the customer, so.
Patrick: So you don’t have to have that crazy clearance where it’s the 2020 model you’re selling and making no money on.
Dirk: We do actually transition models. Technology keeps evolving, and there are new and exciting products out there. That’s been a little dampened down because of the pandemic.
“We see that opening back up in 2022, where we’re going to see trade shows, and different types of technology.”
And even though things have been somewhat quiet over the past couple of years for innovations, I have a feeling that it doesn’t mean people haven’t been working on it. We’re gonna probably see some pretty interesting things to consider in 2022. In the last 20 years, memory foam has become a sort of mainstay. Tempur-Pedic made that, they sort of made it their hook for their construction. Gel foam became really, sleeping hot, and temperature regulation became a big, big thing. And it is admittedly an issue for people.
Patrick: It goes into sleep hygiene and less like, you invested like 50-hours plus of your time. You’re not going to pick up on that.
Dirk: Yeah. Yeah, it is.
Patrick: So it extends that, you know, from someone from the Verlo Mattress enterprise, whether from the president or all the way down to the bottom, you can just like to share those two cents. It’s a big impact.
Dirk: There are a lot of things you can do, as you pointed out about sleep hygiene, to get yourself in a place where you can go to sleep. There are a lot of fascinating tactics that you can do physically, not only for yourself but your environment, like blue light. So there are all sorts of tactics that you can implement to help you put yourself in a position to get better sleep. And it’s funny because we talk about all these tactics and that was your bed comfortable? That’s one of those that you should at least consider like, “Hey, you know, for whatever reason, I just can’t get comfortable on this bed.”
Patrick: That is kind of the base.
Dirk: Yeah. I mean, that is where you are sitting or lying. And as you say, I hope we’d all get eight hours, but the reality is, most of us don’t. Most of us don’t get eight hours overnight, so. But yeah, there’s a lot to it. And that sort of formula for better sleep is part of that three-legged stool for better health. We talked about diet…
Patrick: Yeah. And people don’t talk about, you know, food too just like, you have to have, I guess there is another way, like, fasting is healthy for you from time to time, diet, fast.
Dirk: Yeah, I know you mentioned that.
Patrick: Who’s making money, you know, selling and fasting courses or…there’s not an incentive for someone to really push that. But from Verlo selling a mattress, and then you can share a lot of free information to help that person along.
Dirk: Right. That comes in that expertise. When you’re working with somebody who really knows their stuff. It goes a long way because…
Patrick: I mean, to that advice alone, like could be worth the price of the mattress if like…
Dirk: It could be. Right, yeah. And…
Verlo mattresses: an overpowering sleep experience
Patrick: Yeah. Getting that exact comfort level. Then going from sleeping six and half hours to seven and a half.
Dirk: Right. And sort of all these things sort of combine to overall delivering a better experience and having, technically, a better result. So you want to sell a product that solves a problem. And sleep is a problem for a lot of people for a lot of different reasons. Being able to find a good sort of comfortable position is important. That’s kind of where you start, and then there are other things that we can sort of factor in.
Patrick: Then you can worry about not mouth breathing and all that.
Dirk: Yeah
Patrick: Make sure you’re comfortable…
Dirk: You’re kind of extreme in that realm. I think you’ve kind of taken it to another level, which is good for you because it tells me how much you value sleep.
Patrick: Definitely.
Dirk: If you’re willing to go to, what do you, say you tape your mouth shut sometimes?
Patrick: I did, yeah. For a while, I was taping my mouth shut.
Dirk: Just so you can train yourself. Good.
Patrick: I was in a yoga class and I realize, yeah, I have a deviated septum and I look into it. You don’t really have to get surgery most of the time, so taped it shut for like 30 days, and sure enough, then both…
