Major Appliances. Carpet. Mattresses. For the home furnishings business, this was where the line was drawn in the sand—or rather in the middle of the Pacific Ocean.
While the vast majority of products for the home—from sheets and towels to pots and pans to virtually anything with a plug—comes from overseas, these were the three merchandise classifications that were never expected to succumb to global sourcing.
Over the past five years, America has been importing more and more major appliances from Asia, specifically China, and now it’s starting to happen with greater frequency in mattresses too.
Last year U.S. imports of Chinese-made mattresses totaled roughly 4.4 million units, accounting for a little more than 10 percent of the overall American market. While that’s a relatively small market share compared to other home products, it represented a 165 percent increase in units over the year before. Not many consumer product categories are showing those kinds of dramatic year-over-year gains.
China became the largest source of imported mattresses, beating out Mexico, Canada and the U.K., according to these government numbers.
Mattresses had traditionally been one of the “Holy Three” of never-say-never products due to a very basic reason. They are large and take up an enormous amount of space in shipping containers…containers that are priced by the cubic size of their contents rather than the dollar value or other considerations. In the container space taken up by one king-sized mattress and box spring, you could fit literally thousands of toys, iPhones or T-shirts. The math just didn’t work.
It’s also been the reason why major appliance products like refrigerators and dishwashers, as well as giant rolls of wall-to-wall carpet didn’t make much sense to ship based on transportation costs.
For major appliances, the equation is changing for different reasons. The big Chinese supplier Haier was slowly but surely gaining market share in the U.S. under its own name but last year it did a game-changer deal, buying General Electric’s major appliance business. While much of that continues to be made at what was GE’s massive Appliance Park facility in Louisville, KY, one can assume production will, to some degree, transition to China. All the while Haier and other Chinese producers are penetrating the American market on their own.
For mattresses, the reasons for China’s gains are somewhat different. None of the big American brands are Chinese owned and it appears that most of the product coming in from the country is private label or Original Equipment Manufacturer (OEM) branded.
Rather it is the nature of the product itself that’s opening up overseas sourcing opportunities. With the continued gains made by memory foam and similar mattresses, at the expense of traditional innerspring product, suddenly the shipping costs are no longer prohibitive. Memory foam mattresses can be rolled up like burritos, taking up relatively little container cube space.
And there appears to be no let-up in memory foam’s gains in the marketplace.
Following what China has done in other product categories—besides Haier in major appliances, Lenovo bought IBM’s PC business and Volvo is now owned by a Chinese car manufacturer—it stands to reason that China will eventually look to take an ownership position in one of the bigger American mattress brands.
And in carpeting? The U.S. market for carpets is dominated by two big suppliers, Mohawk and Shaw, the latter part of Berkshire Hathaway. Each operates huge, highly efficient manufacturing facilities in the U.S. and so far the foreign inroads have been minimal.
But as we’ve seen in mattresses and majors, never is a very long time.