TCB | Is the worst of the ERP implementation behind you?
Shelly Ibach: Yes, we completed the ERP implementation in the first quarter, and throughout the second quarter, we improved our customer metrics. We have learned how to utilize the system and it is the right system. We now have one technology to operate our vertical business. Customers demand a seamless and relevant communications process, and our system was 20 years old.
TCB | How has investing in technology helped you stay relevant to today’s changing consumer?
Ibach: This is an area that is absolutely top of mind and front and center for us—setting the pace and staying relevant to the evolving consumer in the world’s digital transformation. We started this process in 2012. With our two new technology platforms—ERP and Sleep IQ—we have transformed the company. We are sitting here with digital at our core.
Today’s consumer expects individualized communication and individualized experiences. They want to buy from companies that know them. Their first interaction is usually through sleepnumber.com, then they visit a store, where our sleep associate gets to know them and provides them with their individual sleep number. They buy the product, and we set up delivery and email them their individual sleep profile. If a customer has a question, they can call customer service, and customer service can see what that customer has experienced. In the past, to see that information, customer service had to view five different screens. Today, with our new ERP system, they have one screen.
According to a recent Accenture briefing, 73 percent of companies have yet to make concrete investments in the Internet of Things. In 2012, when we began investing in ERP and Sleep IQ technology, I said, “We must never lose sight of the pace that the consumer is changing [at]. It will never be this slow again.” The balance between short-term performance and positioning your company to stay relevant for long-term success is the tightrope we need to walk as CEOs. It is all about adaptability. How do you build adaptability into the model? Our ERP and Sleep IQ technology has given us the ability to adapt.
TCB | You are a distant second in the luxury mattress market, behind Mattress Firm. Does this pose challenges?
Ibach: We really like where we are. We have more than 500 stores in 49 states. We cover the country with a footprint that is adaptable. We are comfortable with our customers shopping in our stores or online. We think we are well positioned. We are adding 50 stores in 2016, and we are opening new stores in underserved markets. But we like that we are not over-stored. Many retailers are over-stored, which means they cannot be as adaptable. Being adaptable and ready to serve the changing consumer gives your company the profit level you need to move forward. We want to make sure we are in front of the consumer—setting the pace and staying relevant. If you react or respond, you will never catch up. You will always come from behind.
TCB | You now offer all of your mattresses online, including the “it Bed,” which is targeted at younger consumers. Interestingly you only offer the it Bed in select stores. Do millennials really want to buy mattresses online?
Ibach: Our research has shown that 60 percent of customers in this demographic want to purchase in a store environment. Because the firmness of our mattresses is adjustable, you can buy our mattresses online and not make a mistake—and that has not been lost on us.