The presidential nominees have discussed the state of the national economy – that is when they take a break from calling for a jail sentence for one candidate while the other is accused of not being fit for office.
According to the National Federation of Independent Business, expected conditions over the next six months should improve. However, that as offset by significantly weaker inventories and hard-to-fill job openings.
Conditions in Illinois typically reflect national trends, said Kim Clarke-Maisch, state director of NFIB. She said there is room for improvement.
One way of looking at it is that “we improved from awful to bad,” said Juanita Duggan, NFIB president and CEO. “The bottom line is that small business owners are deeply uncertain about the future, and that is affecting their decisions.”
The NFIB Index of Small Business Optimism dipped 0.03 points in September for the second consecutive month. Increased inventories fell seven points while hard-to-fill job openings plunged six points, landing at 24 percent. Six of the 10 indexes dropped, washing away the rise in expected business conditions.
Small businesses won’t be hiring or building inventories, according to Bill Dunkelberg, the NFIB chief economist. The top issues for small business owners will not be addressed this year, he said. And he points to that heated presidential election as one reason way.
“The presidential election is so divisive that it offers little promise of a bipartisan effort to deal with any of these important issues,” said Dunkelberg.
We have come a long way from the Great Recession, but I agree with the NFIB officials. The legislators in Washington, D.C. are so polarized, Illinois included, that little gets done. Compromise has become a dirty word. The finger-pointing in this presidential campaign has dampened the mood of small business.
But I wonder if there are some businesses that are prospering despite the political climate. And one look at some local suburbs indicates to me that there is one item that is registering high sales. All you have to consider is what most of us want – a good night’s sleep.
All you have to do is drive along some main arteries and strip malls and you see them. Mattress stores seem to be everywhere. I was driving along 95th Street in Oak Lawn and saw about four or five in just over a mile. Ken Murphy, the CEO of Mattress Firm, agrees that Chicago has probably too many stores. But the reason you see so many mattress stores is because of a series of acquisitions by Mattress Firm. In the best markets, Houston-based Mattress Firm aims to have a store for about every 50,000 people. Right now, that company exceeds that limit.
But my main question is why? Some duplicate or unprofitable stores will be closing but not right away. I actually confirmed that belief with an employee at a Mattress Firm. This person has been told that stores will be closing within the next year. Most closures will come as store leases end.
It just seems odd that an item that used to be purchased let’s say every decade or so has become so plentiful, and in many cases, profitable. Roughly 9,000 specialty bed and mattress stores in the U.S. generated about $11.5 billion in revenue in 2015, according to a report last year from market research firm IbisWorld.
But again, why is there so many?
A new mattress was an easy purchase to delay during the recession. That resulted in more demand as the economy slightly improved. Industry analysts also said an increase in bedbug infestations may have been the reason for a hike in sales. Mattresses are a high-margin product because stores do not need that many employees. Each location does not have to sell a huge number of mattresses to break even, according to industry analysts.
These mattress stores are profitable for the owners. I don’t know how well the employees do. One facility I went to had a young woman working evenings. I noticed there was not a rush of people coming in. After talking to her, I learned she was the store manager. Of course, she was the only employee. She explained that if a couple of people come in and purchase a mattress, it was a good day for her.
I guess the bottom line is that these mattress stores will continue to be profitable for the employers. I’m not so sure about the employees over time. But I’m all for a new mattress. The economy may be uncertain but we might as well get a good night’s sleep.