May 31, 2019 1:16:55 PM
Bob Phibbs interviewed Barrie Brown, CEO Sleep Store about his progress up the ranks to running multiple locations and eventually landing in his own single store selling luxury mattresses from $5,000 to $100,000 in Silicon Valley.
Bob:Welcome, Barrie Brown with Sleep Store in San Jose.
Barrie: Hey, Bob.
Bob: So, who are you and what do you have to do with retail and try to keep it under an hour.
Barrie: Under 10 hours. Currently, we own and operate a very high-end luxury mattress store in a very upscale Santana Row shopping center in San Jose. We only deal in handmade luxury mattresses that are chemical-free. And our starting price point is $5,000, and we go up way over $100,000 for a mattress.
Bob: But wait a minute. Everybody's buying beds in boxes, and all they care about is 299 specials. Isn't that all that we want is buy on promotion and convenience? Isn't that all anyone wants to buy anymore, Barrie?
Barrie: Well, if you just relied on the Google search, yes. But the reality is that there are a lot of customers that want natural products. They want something that's customized for them, or they have an application at home that they need something unique and different for.
Bob: Well, I want to backtrack just a little bit because you have had an amazing career to get you to this point. Can you just fill us in a little bit about some of the organizations you've been associated with and maybe your journey to owning just one store in San Jose?
Barrie: Very long story. I've lived a long time, so I've got a lot to say. Got married at a very young age, couldn't find a job, needed a job, and somehow I found a job selling used cars. And not a glamorous job, but it got me through college. Then I upgraded and I sold Datsuns, before Nissan was Datsun or before...yes. However, that works. So, it was that long ago. Swore when I graduated from college that I'd never ever get into retail ever again because the hours are brutal, you meet crazy people, you're not respected. How could I ever do that to myself?
So, I got a job with a Fortune 100 company, worked there for 12 years, kept getting promoted, promoted, promoted. Got promoted to Seattle, this crazy guy with obviously not his first wife came storming in the building and wanted to tell me that they were going to revolutionize the mattress industry and they were going to open these things called sleep shops and sounds crazy now, but even before the internet, everybody bought to their mattress in a department store or a furniture store.
It really truly was one of the first sleep shops in the U.S. Mattress Discounters was the first one. And met this guy and in that position at Ryder, I had met a lot of entrepreneurs with big dreams and small pocketbooks and we negotiated a security deposit. And I leased him some old, Ryder one-way, the household moving trucks, painted them white, painted over the yellow, put their logo on it and that started Sleep Country, Sleep Country USA. I reviewed their financial statements every month. And one day I had received another promotion from Ryder.
And so, I was young and my ego was out of control and I thought the best thing I can do is go in and get a price increase from this guy cause he's a difficult customer. And about an hour and a half later, I walked out of there with a job offer, six-figure signing bonus, and part ownership of the company. And so, that's how I got back into retail. The thing I swore I'd never do. But at Sleep Country USA, we grew from a startup to, we grew to 75 stores. We also started up Sleep Country Canada which is still to this day, the biggest and the best mattress retailer in all of Canada. And they are truly a fantastic organization.
The CEO of Sleep Country Canada is amazing. And he was a store manager at Sleep Country USA. And then when we went and started up Sleep Country Canada in an advisory consulting role for some really sharp owners, Dave made the move to Canada and he's running the whole show now.
Bob: So, the industry, as what we've been hearing, is in total free fall and no one's making money. It's all online. And what you're saying is, "No, there are actually people who started out quite awhile ago and are still considered as experts in the field." Is that correct? I think it's important to stop there for a moment.
Barrie: Yes. Absolutely. The retail mattress industry in North America is approximately an $18 billion industry. Out of the 150 online sellers of mattresses in the U.S., they're doing about a billion and five right now. And expected to grow to two billion. So, there's still $15, $16 billion being sold in mattress retail stores, and department stores, and furniture stores.
Bob: Thanks. So, we can move on now. I think it's very important we get that out because again, so many people listen to us from a variety of backgrounds, from people who work in big boxes, people who work with brands, independents. And I think it's just really important for this podcast to understand that it's a thriving market and in spite of some of the news that's still, the majority of these products are still doing quite well across the U.S. So, you started that with Sleep Country, both USA and Canada. And then what ended up happening?
Barrie: Then we, the owners, decided to part company from one another. And so, the next step was to sell the company to private equity and I was the lead on selling a company to private equity. And it was about a year process and lots of great stories that are best told in dark, dingy bars and not on a podcast. But they were some pretty great stories. But we ended up selling to Fenway Partners who at the time was the owner of Simmons mattress. And that's a whole other long story, but it's also interesting conflict in the mattress industry where there's so much private equity. But we sold the company to Fenway Partners.
And then shortly after that, we acquired all of Sleep Train Stores in the northwest and that brought us up to 75 stores and about $85 million in revenue and navigated with lumps. We navigated through the 2000-2001 recession. And as we were coming out of that recession in 2002, I was contacted by a headhunter to interview for the CEO job at Mattress Giant based in Dallas. And after flying to Nashville and meeting with the ownership group, accepted the opportunity at Mattress Giant, started there in 2002. We had 172 stores and about $140 million in revenue when I started there. And then fast forward 10 years, then we were doing about $250 million and I had 386 stores and a couple of acquisitions along the way.
Bob: So you know a thing or two about making money in a brick and mortar store. I think we can all get that from that pedigree. What do you think the most common problems are for an awful lot of larger chains? What are some of the challenges that you run into with that many units?
Barrie: Well, I think if you look at the turnaround of Best Buy, I think that's probably a great example. Everything got centralized. They took all of the decision making away from the local folks. You see it at Macy's, where Macy's in the old days had regional buyers, and they had merchandise that was reflective of the market, and you didn't get the same winter clothes in Minnesota that you did in Los Angeles.
Bob: Well, they're trying to go back to that now. They've kind of swung the other way. They did so much centralized. Now they're kind of realizing, "Hey, maybe that was something we should have looked at."
Barrie: Yes. You look at Best Buy, they quickly made some smart changes, and they empowered the people on the sales floor to match prices, online prices immediately and all of a sudden, Best Buy turned around. And I think in retail you have to have local knowledge. You have to have employees that are enthused, energetic, are committed to the cause, and remembering that retail is detail, and you have every little thing matters.
Bob: Wait. You told me a story about that, before we go too far.
Barrie: One of the best salespeople I've ever known in mattresses over the years, and he was working in the Wellington Florida store and he was killing these numbers and way over last year. I don't remember the numbers right now, but he was always up everywhere he went. He was just amazing salesperson. And he said, "Mr. Brown, how can I improve my sales in the store?" We're up 20% or 30%, but I want to do more."
And I said, "Clean your bathroom." And he said, "Why?" That doesn't matter. It is no different than making your bed every morning. It's a discipline and a commitment to having a store be right. He called me about three weeks later, and he said, "You know, Mr. Brown, I took your advice. I spent a whole day cleaning the bathroom. I got it perfectly clean, and nothing happened for a week, and I thought, "Wow, he's just giving me busy work."
And then a lady pulled up in a BMW, and I was all excited, and she came in and said, "I'm here to buy a new mattress. But before I do, I really want to use your restroom." And she went into the restroom, used the restroom, came out with a big smile on her face and said, "I've been in six mattress stores today. Yours is the only one with a clean bathroom. I want to buy a bed from you," and proceeded to buy a $4,000 bed.
Bob: Wow. But that's true, though. I appreciate that lesson that it's a habit of being detail-oriented, right? That's the key. I think that's the challenge for an awful lot of, certainly, medium and larger brands that you've got to hit or miss people, right? They sort of buy into it. They sort of don't. And then there's others who were just waiting for something else to come along, and ultimately that's your brand being defined there, right? By shoddy service or by a shoddy bathroom.
Barrie: Exactly. And I think in retail it's very easy for...I call it mattress blind, but it would apply to any retail environment where you see the same thing. You see the same piece of paper on the floor day in and day out. On the 10th day you're like, "There's that piece of paper, and you don't even notice it."
Bob: "There it is again."
Barrie: "There it is again. I've seen that thing before." But every customer that walks in your door, they're looking at it through a fresh set of eyes. And so, every little thing that may not mean anything to you, looking at the store day in and day out, it's a big deal to the customer because they're looking it through unfiltered...well, they have their own filters, but they're looking at the store like, literally they're there for the first time. And so, everything will either excite them or disgust them.
Bob: I think that's very true. What's been the biggest challenge for you in the past three years? Was it taking everything that you know and bringing it down to this luxury mattress store? Or what would be the biggest challenge, and how you overcame it?
Barrie: Well, I think the biggest challenge is going from working in a corporate environment to an entrepreneurial environment. You know, there isn't a staff for me to say, "Do this ad, fix this computer, rearrange the linens on the display cabinet." So, you really have to get into every little detail, and you have to live it, and breathe it, and realize that it's all about you. I'm fortunate that our son has worked for me for 16 years in the mattress industry.
He's very talented. And so, I'm fortunate that he's able to work in the store with me. So, we're a good team, and we do well together. Whether it's family ties or experience, we talk, and act, and think the same way around customers. So, we have a very consistent message that's never conflicted, and you can't go one against the other in our family because we're on the same page.
Bob: Well, that's really important because you can get those renegade sales guys where it's kind of like the wild, wild west, "And if you buy it from me today, I'll give you an extra 10% off, but only ask for me," right? And all that kind of stuff that you don't know what's happening.
Barrie: Or in the mattress industry, "If you come in and talk to me and pay cash, I'll give you a 20% discount." For some reason, that cash never finds its way into the drawer.
Bob: Funny about that. "Our inventory numbers seem to be off."
Barrie: The inventory guy doesn't know how to count.
Bob: That's exact because they're so hard. There's just so many to count at one time, that's always it. So, how much is the most expensive bed? Yours is what? $50,000 from [inaudible 00:14:49]?
Barrie: No. Our most expensive bed from Hästens in Sweden is $179,000. Our bestselling bed is $43,000. So, maybe that's the one you have in your head from our discussion.
Bob: That must be it. So, how is the sales process different between these three? You have three bed companies, one from Sweden, one from England, one from the USA. And is that different than when you were selling something that was at a much lesser price point?
Barrie: Absolutely. In a regular mattress store or somebody that buys online, the discussion is...every customer comes in and says they want a firm bed. And there's an old wives' tale that a firm bed will last longer, or it's better for your back. There's probably an article somewhere on the Internet that says it's better for your back. And it is just not true. And so, we spend a lot of time educating the customer on the right bed for them, not the right bed for their mother. And then we also have the ability to customize, which really helps. But we spent a lot of time trying to find the right product for the customer and educating them along the way on all the benefits. We're in a regular mattress store it's...
Bob: It's all about price, isn't it? [inaudible 00:16:19].
Barrie: Yes. It's about price, and you try to move them up, but if they balk, you just go, "That's okay. I'm going to churn and burn and get up the next one." I was with Simmons mattress in Atlanta a couple of years ago. I was with one of the vice presidents, and he said, "Hey, you want to go meet the best salesperson of Simmons mattresses in all of Rooms To Go?" And I said, "Heck yes. I am all about meeting the best in our industry." So, we got in the car, left their headquarters, and we went to Buckhead, walked in and I met the number one mattress salesman of Simmons for all of Rooms To Go, which they're a huge organization. Then I said, "So..."
Bob: "What's your secret?" Right?
Barrie: So, we were talking, and he's telling me all about how many Simmons he sells and what a great salesman he is. And I was like, "That's great." I said, "But what's your secret to success? Why do you sell more Simmons than anybody else in Rooms To Go?" And he goes, "Oh, that's really simple." He says, "I can type up an invoice faster than anybody else in the building. I get done with the sale, and I'm back in line for the next stop before everybody else." And then I asked his boss how many comfort exchanges he has, how many exchanges for the wrong [inaudible 00:17:42], and not surprisingly, he was also the leader in the clubhouse on all the bad behaviors. So that's part of...
Bob: Because he values one thing over the other. It's not customer satisfaction. It's like you said, churn and burn. "How quick can I get them out the door?"
Barrie: Well, that's our whole philosophy and approach in our store is we take the time, we find the right bed, and we make it, and we do it right for every customer.
Bob: Well, I think that's the challenge, you know? I think people walk into most mattress stores, there's what? Twenty? And then they just start laying down on them. Well, anything's going to feel better than a bed you've had for 20 years, right? Realistically, your body's not going to immediately tell you, but if you get educated and suddenly you realize like, wow, there's a lot more to this, I think you can also shut down, right? The customer can feel overwhelmed and like, " Well, I don't want to think about this too much." So, how do you balance that between what they need to know and what they come in knowing? Because you're in a very upscale neighborhood. For God's sake, you're diagonally across from Gucci. So, you're dealing with a very different customer than most of the people in the world, I would say.
Barrie: And not only different from people that can afford a five to over a hundred-thousand-dollar mattress. But we also have, the San Jose/San Francisco market is incredibly diverse. And so, we have a lot of engineers at Google, and Facebook, and Apple. We get Europeans, we get people from India, people from China, Japan, Taiwan, South Africa. We've had probably somebody from every country's been in the store. And so, you also have to know how to sell and have a conversation with different cultures. Their buying process and their thought process is very unique and different. And so, you have to address each customer individually and be aware of what they're used to, what they know and be able to compare and contrast to what they know and what this new mattress will help them to experience which [inaudible 00:20:03].
Bob: I think that's been lost a long time ago with most retailers. The idea of the compare and contrast to me is the secret to it all, and then being able to say it in the right way. Your engineer's probably want to know tensile strength, etc., etc.
But for most of us in the world, being able to translate that all into a way that we can say, "Oh yes. This is for me," or, "Oh yes. I get that," or, "Oh yes. That's important to me," when they've never walked in the door saying that. And I think, to your point also, you and your son probably start off the exchange by understanding, "We're going to sell a mattress to this person. There's no question about it. We just have to go through and stay focused on our process and how we work," right?
Barrie: If you don't have a sales process, you're dead in today's world. You have to have a process, and you have to have people that know how to adjust to different clients when they come in. But the principles of the process, you've always got to stay true to those.
Bob: Absolutely. I would totally agree with you. Well, you've been a generous man here on an afternoon. I was just curious, when you get overwhelmed or unfocused, and I know you went on vacation here recently, but if you just lose your focus temporarily, what do you do? Or what questions would you ask yourself if you had kind of lost your focus? And that could be anything you've learned along the way to your store right now. What do you do to get back on track?
Barrie: Well, usually, you have that hard discussion in the mirror where there's nobody to fool, there's nobody to convince other than yourself. And I find that when I'm shaving or brushing my teeth, I just look in the mirror and say, "Are you going to be successful today or are you going to be the problem today?" And if I know I go into the day, and I don't want to be the problem, but I want to be a success, 95% of the time I get out of my own way, and I get things done, and get things done in the right way, and make progress.
Bob: Well, that's the key. And I think choosing that is the key that we...I was talking to Patricia Fripp [SP], she's up there in San Francisco, and somebody said, "What do you wear when you're about to go on..." She's a public speaker. "What do you wear when you're speaking. Is it something to make you feel great?" And she goes, "I don't dress for the event. I dress for the way I see myself. That's very different." And it's that same idea of choosing to do this because of what it does for me first. And then I think what that does for your audience or your customers. So, I always kind of finish my podcast, thus it's called "Tell Me Something Good About Retail" with asking all my guests this one question, can you tell me something good about retail?
Barrie: Yes, I can. There's a lot of good things. It's far from dead. The reports of the imminent death, those articles are written by the people selling products online. And I think the more you can specialize and actually talk to customers in a conversational way, and not get stuck in a sales pitch, and treat every human, customers...even though retail is typically a thankless job, there are customers that will value everything you know, and do, and offer. And they'll reward you with pulling out their checkbook and...
Bob: Absolutely. And loyalty, right? Because they'll tell their friends.
Barrie: And loyalty. Thirty-second story, sold a bed to a couple through the sales process. It was really bizarre. They were both trying out the mattress, and then she would say to him, "Get out of the bed like you're angry." And so, he jumped out of the bed, and I thought, "Wow, this is really bizarre." And they ended up buying the bed, we delivered it. And about three weeks later the whole family came into the store on a Friday night. Usually, that means there's a problem with the bed.
Bob: I would think so.
Barrie: Nine out of 10 times, the customer's coming in, "You sold us this bill of goods. It's not good." Instead, the customer came in with a beautiful bottle of wine, handed it to me, and said, "Thank you. We are sleeping so much better now. Really appreciate it." Fast forward a couple of years, they got divorced. He kept the bed. She bought another bed from us. They both have been remarried, and we've sold more beds to them. So, the good news is, as the divorce rate keeps increasing in the U.S., the mattress sales will also increase.
Bob: That's an excellent story, Barrie. And how can they find out more about your store?
Barrie: You can look us up at sleepluxurybeds.com. We sell almost everything online as well as in the store. We've got a lot of video content on of me describing the mattresses and good experience. We've got a lot of sleep information and product information.
Bob: Excellent. Well, you've been a great guest and continued success for you, my friend. Thank you so much.