Something to sleep on

Nation's Business, Feb, 1998 by Lana J. Chandler

When Kimberly Brown Knopf played highschool basketball, she was never the star athlete. "Usually I was on the bench, trying to get everyone else excited and motivated," she says.

Two decades later, Knopf is still motivating her team to succeed. But her team members now are her 85 employees at Mattress Warehouse, a Winfield, W.Va., retail chain with 11 stores in Kentucky, Ohio, and West Virginia.

In 1983, Knopf was single and living in Lexington, Ky., when she responded to a newspaper ad for a salesperson in a bedding shop. The interviewer's enthusiasm for the prospects of the business sparked her determination to run a shop of her own rather than someone else's.

She set her sights on West Virginia because it was "an untapped market," she says. "Entrepreneurship was already in my blood. I had seen my father and grandfather run their own businesses. The bedding business offered a product that had a higher average ticket price [over $400] than most retail firms with a fast inventory turn rate. Typically, the inventory is sold before the invoices are due."

Knopf began by "doing a lot of research in libraries," she says, and attending seminars offered by the U.S. Small Business Administration. Next, she prepared a business plan, estimating that it would take $25,000 to start her company, and showed it to the parents of her boyfriend, Ken Knopf (now her husband). Ken's parents let her use a certificate of deposit of theirs as collateral for borrowing half of the start-up money, and she secured the remaining $12,500 by selling 50 percent of the company's stock to Ken and his parents.

Initially, she purchased a franchise for $20,000. "I paid $10,000 down and leveraged the remainder out over time," says Knopf. "I used the rest of the money for advertising, signage, inventory, a phone system, rent, and other basic equipment." But she saw no long-term benefits in being a franchisee, and in 1988 she became an independent bedding retailer.

Although Mattress Warehouse was the first bedding shop in its market area, competitors have cropped up over the years. Several have tried but failed to mimic her chain, Knopf says.

In 1990, the supplier for more than half of Mattress Warehouse's stock opened a factory-direct store in the same market. "With only one week's notice, we were told our relationship was terminated," Knopf says. "The salesman on our account was an officer in [the competing] retail operation. He knew our markups, marketing plans, warehouse, distribution, and so on."

Although the supplier's store eventually went out of business, the competition it offered provided a turning point for Knopf's company. She diversified sufficiently to prevent the loss of one supplier from jeopardizing her business. Today, Mattress Warehouse buys from a variety of brand-name vendors and stocks several full lines of bedding products, such as mattress sets, daybeds, headboards, complete beds, adjustable beds, and children's beds.

Knopf's company guarantees customers the lowest prices in its market area. For 60 days after a purchase, a customer who finds the same product priced lower at another store can receive double the price difference. It's rare that a customer claims such a refund, Knopf says, because Mattress Warehouse keeps its retail prices low by using its purchasing volume to bargain for deep discounts from suppliers.

Such discounts, Knopf says, and other tactics, such as minimizing overhead, also enable the chain to offer value-added services usually associated with high-priced establishments. Such services include same-day or next-day delivery, financing options, setup of new bedding, and removal of old bedding.

Mattress Warehouse has received several retailing awards, including recognition from Serta in 1995 for outstanding growth in annual sales volume. And while Knopf, 38, won't release sales figures, she says the future looks bright for opening additional stores and enlarging existing ones.

Knopf credits her success to "a staff of highly competent, talented, and dedicated employees." Sales associates average six years on the job, and several employees have been with the company longer than 10 years, going back to the time she was still a franchisee. "People like to work here because they feel a sense of accomplishment," she says. "They have a certain amount of latitude to be creative and participate in the success of the company."

The company provides continuous training in leadership, management, communication, customer service, product knowledge, and computer technology. Every new employee visits a major mattress factory to see how the product is manufactured.

Five years ago, Mattress Warehouse introduced a profit-sharing program. Employees also receive year-end bonuses based on personal performance and company performance. Knopf is also big on promoting within the organization -- some employees who started as delivery drivers now work as department or store managers. "Mattress Warehouse's employees are its greatest asset," Knopf says. "They are the differentiating and unique factor that will ensure the company's long-term success."