Select Comfort dialing up the plushness

It's not often customers walk into a national store and get helped by the CEO.

But Select Comfort Corp. Chief Executive Shelly Ibach was among the sales staff last week in Edina, where she shook shoppers' hands and gladly guided them through the company's new stand-alone luxury bedding store.

Select Comfort recently relocated from inside Southdale Mall to its new $300,000 location several blocks away. It serves as a template for a $33 million national remodeling plan that includes larger stores, more products and hip, touchy-feely testing stations that invite customers to squeeze, poke and lie down before they buy a mattress.

Ibach expects the new digs and redesigns will keep Select Comfort ahead of its rivals. Analysts say it also is likely to satisfy shareholders who are pleased with the firm's comeback from death's door just four years ago.

The Plymouth-based company, which manufactures adjustable air-beds in Utah and South Carolina, saw its stock drop to 19 cents a share in December 2008. To save Select Comfort, former CEO William McLaughlin dumped third-party retailers, closed dozens of stores and swept all the branding under a single name. The stock now trades near $32 a share and second-quarter sales and earnings easily trounced analysts' expectations. Third-quarter results are to be released Oct. 17, and analysts' expectations are high.

Ibach, a former Marshall Field's and Target exec, took over the CEO role from McLaughlin in May. She's determined to satisfy investors by focusing on customers and strategically placing new stores with proprietary products. The energetic Ibach insists that investments in new bed models, fresh marketing and remodeled stores will continue the company's trajectory forward.

Edina's relocated store, just off bustling France Avenue, is sleek, modern and 1,000 square feet larger than its former Southdale location, Ibach said.

It's one more secret weapon that is expected to help ratchet up product sales, company officials say. Customers are buying 13 percent more products than a year ago, CFO Wendy Schoppert recently told analysts.

So perhaps it's no surprise that in addition to Edina, Select Comfort moved seven stores from malls to off-mall locations during the second quarter. Ibach relocated two more during the third quarter. The idea is that specialty beds and bedding can be a destination unto themselves.

The new plan has helped the company "capitalize on the drive-by traffic of the new stores. They can make the stores almost like a billboard," said Eric Hollowaty, research analyst at Stephens Inc.,

But not all stores are relocating into stand-alone or strip mall settings. In some cases, Select Comfort is keeping the mall, but renting more space and redoing their stores. It recently rented and remodeled larger space inside the Mall of America, the Burnsville Mall and three other stores.

During the third quarter it also opened 13 new stores and relocated stores in Edina, Roseville and St. Cloud.

By year's end, 43 percent of Select Comfort's 381 stores will either be remodeled or relocated, said Ibach while pausing between customer tours in Edina. Sales at new locations are higher than traditional stores, she said.

Ibach's plan calls for increasing the number of Sleep Number stores by 5 to 8 percent each year. But it also calls for redesigned older stores and a marketing plan that brands stores and products under the better known Sleep Number name instead of the Select Comfort moniker. If successful, the spruce-ups will help double 2011 sales to $1.5 billion by 2015.

Analysts like the plan. Swapping indoor malls for stand-alone stores or strip malls often allows for cheaper rents and larger square footage to showcase more products.

"So far it appears to be paying dividends," Hollowaty said. He recently visited one relocated store near O'Hare Airport in Chicago. "I was very impressed with the job they did on the store. It's very attractively merchandised and very well laid out."

Aside from beds that range from about $699 to $4,100, the new retail spaces feature new interactive product kiosks and glossy shelves lined with cooling bedsheets, fluffy comforters, inflatable pillows, and hypo-allergenic bedding made with silver threading.

The stores also showcase touch-and-feel stations that let customers squeeze gel-filled "memory foam," caress "temperature balanced" sheets or stretch out on one of the Plymouth-based company's trademark adjustable air beds.

Sales reps adjust dials to find customers' perfect "sleep number," setting, where pressure points are lessened and support is enhanced.

Last spring, Hollowaty looked on as one customer stretched out on a display bed and watched a live ceiling video of his back responding to the bed's changing air pressure. As the salesperson altered number settings, colorful pressure ring images of the man's back and hips changed from bright red to soft yellow, signifying comfort.

"They can capture that screen and e-mail you the image before you even leave the store. They are very good at engaging the customer. They are very interactive," Hollowaty said.

That's intentional, Ibach said.

Despite her leadership role, Ibach said she is still in love with the customer. "I focus on what the customer wants and being interested in what her needs are," said Ibachm who joined the company in 2007. "I'm most passionate about the customer experience."

Ibach insists "we are not just selling mattresses," but an entire experience that addresses the needs of sore athletes, pregnant women, people with night sweats or sore backs, and everyone else who ever tossed and turned at night because they couldn't get customized neck or back support.

Dee DePass • 612-673-7725