Executive: Jeff Stroud
Location: La Canada Flintridge, California
This month, SSN interviewed new company Somnvie founder and CEO Jeff Stroud, who has spent the past 40 years engaged in the home textiles business. His family founded the specialty home textiles chain Stroud’s in 1979, which culminated in a successful IPO for the brand in 1994. The family ultimately exited the business. Jeff Stroud’s newest venture focuses on what he calls the “sleep economy” by providing high-end bedding through direct selling company Somnvie.
SSN: How did your family’s background in the retail world prepare you for this adventure?
Our family’s store was focused on all aspects of home textiles, including bath, tabletop linens and a lot of fashion bedding. During the years we operated the stores, we sold over $2.8 billion in bed linens throughout the U.S. This provided a deep understanding of home textiles and bed linens, how they are made and the main factors that create value for the products. Another part of our success is utilizing the relationships we previously built with suppliers and mills, and in establishing the supply chain for our products. With our 40-year history, we knew exactly who we wanted to go to in order to make Somnvie happen.
For example, we wanted our products to reflect what we found in our research interviewing customers about the way they want their sheets to feel. Some people want a buttery soft feel, others want a cool and crisp feel, and still others want a warm and cozy feel. We went to the mills and said, “make us a buttery soft sheet, a cool crisp sheet and a warm cozy sheet.” We knew they could find the materials and processes to make that happen, and they did.
When we operated the retail stores, we always focused on the customer’s experience and helping them make a purchase that suited their personal preference. These same fundamentals apply now.
SSN: Why do you refer to Somnvie as a “wellness” company?
There’s some incredible research that shows sleeping well and living well are interrelated. Here’s the interesting thing about that: If you sleep well, you’re likely to live well. But on the other side of the coin, it’s also true that if you live well, you’re likely to sleep well. The research is unclear about which comes first. Our tagline for Somnvie is sleep well, live well. Casper mattress company filed a brief with the Securities and Exchange Commission (SEC) on Jan. 10 that makes a case for something called the “sleep economy.” They argue that sleep, along with nutrition and fitness, is what now makes up wellness. The global sleep economy is currently valued at $432 billion, and the U.S. market makes up $79 billion of that.
SSN: How is Somnvie different from your previous direct selling company Private Quarters?
Private Quarters was really designed to be a party plan company, and that’s why we had so many low priced items—sheets, towels, scarves, slippers. We were sort of like a Bed, Bath and Beyond for direct selling, and we merchandised the product like a retailer would—good, better, best. We didn’t really understand direct selling. This time around, we’re focusing entirely on the bed and the sleep experience. We do not have a good-better-best retail strategy. Everything is best. We are merchandising by experience and preferences. Our brand associates help the customer understand the specific experience they want, and sometimes they’re not sure until they touch it and feel it and say, “yes, that’s what I want.” When someone is buying $2,000 to $3,000 worth of bedding, they are making an investment in their future.
SSN: What led you to decide the direct selling model was a better fit than retail e-commerce?
We found online shopping can be terribly inefficient for meeting the customer’s needs because they can’t experience the product before they buy it. It works well if a photograph of the product conveys all the information a customer needs, but that’s not the case with bedding. It’s impossible to touch a sheet over the internet. There’s no substitute for having a personal shopper and fabric swatches, so customers can feel the differences in the fabrics and make a decision that’s based on their own personal preferences. Online shopping simply cannot provide the personal service and relationship building that direct selling allows.
SSN: What additional products do you see the company developing?
Well, what I see us focusing on are products that are part of the sleep economy. Of course that means pillows, bedding and mattress toppers, but it can also mean lighting, sound and scent devices, sleep tracking devices, medical devices, bedside clocks, digital apps, and even meditation and counseling. Somnvie is all about living well.
SSN: What are your thoughts on the future viability of the party plan model?
I think there is a cultural shift around the traditional host rewards. The idea of having people over for a party where they buy something and I get stuff for free doesn’t really resonate with millennials. We see this moving away from a model of “what’s in it for me” to a model of “what can I give back.”
As a result, we tested something in the fall that is like a Toms Shoes concept, called Pillows for a Purpose. For every pillow that we sell, we’re going to donate one to a women’s shelter. It works economically because the pillows that we donate to the women’s shelter are less expensive but still a well-made and good, good pillow, and because we are working with a supplier, we’re saying we need something at a great price. We think that’s going to be much more effective in motivating people than the old-school party-plan referral. It’s just part of the way business is changing.
SSN: Who are the “power sellers” in your compensation plan?
One of the things we learned really quickly in our stores was that a customer would come in and they’d be looking for one item, say sheets or a pillow, and the salesperson had the ability to build on the sale to say, “you know, you really should check out our mattress pads, or we’ve got these great blankets over here that just came in or whatever.” What we are doing here is taking that same principle and applying it to this new model. It is a very tried-and-true and basic concept of personal service and allowing people to interact with the product so that they make the right choice. We’ve always believed in it. We know how to do it for this product line. We were able to create it in the stores, and we’re going to create it here again.
So we have incentives in our compensation plan for our brand associates to build these sales and not just do transactions. It’s just a very fundamental idea that is front and center in our compensation plan for the power sellers.
SSN: What are the game changers for companies that want to thrive in the future?
In today’s world, there is a need for an easier, simpler, lighter, cheaper, and more fun business opportunity. This is very much in keeping with all this discussion about the gig economy.
The old days of carrying around a huge sales kit and doing parties seem to be over. What people want to do today is to meet their friend at Starbucks, show them some items, and then put the order in on their phone. More gig economy-ish.
I think the channel has to understand that and what that means. How do we respond to that? So one of the things that we’re thinking about is creating that type of a gateway opportunity. We still think that the personal shopping experience to redo the entire bed is where we want to be. But we’re thinking through ways to get people started, or a gateway to sort of get them in the fold and graduate to that next level.
SSN: What advice would you now give to your younger self?
I would take advice from Ralph Waldo Emerson: “Our greatest glory is not in never failing, but in rising up each time we fail.” When we are young, we tend to define people by their successes. I would tell my younger self that the virtue of resiliency, or the capacity to recover quickly from difficulties, is our greatest glory.
SSN: Who has influenced your career the most and why?
My father taught me that “good guys” and gentlemen can win in business. We often encounter accomplished people who achieved their success by the manipulation and abuse of others, and then tend to believe that those are the only people who really get ahead. My dad showed me that it doesn’t have to be that way, and that people who build genuine and healthy business relationships can be winners, too.
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