Nationwide Marketing Group welcomed VP of Furniture & Bedding Mike Derro into the fold in mid-October — right before Virtual PrimeTime. We caught up with Derro recently to get to know him a little better and to understand where he sees the category heading in 2021.
Rob Stott: All right. We are back on the Independent Thinking Podcast and honored to be joined in his second month on the job by Mike Derro, our VP of Furniture and Bedding here at Nationwide Marketing Group. Mike, first of all, before we dive into it, you literally skipped out of a meeting to come onto the podcast. You must have been excited to do this and I appreciate you finding the time.
Mike Derro: Very happy to be here, Rob. We have a team call every morning and it’s just to set the stage and really make sure that the people on our team are aligned and focused and trying to make a difference and helping our members grow.
Rob Stott: That’s awesome. Like I said, I appreciate you being here. Brand new to the job, but not new to the industry, so excited to catch up with you and kind of see what you’re excited about with this job. Let’s start with your path through this space and what brought you to Nationwide. Just tell us a little bit about your career history and what brought you here.
Mike Derro: Yeah. I’ll go way back. I went to school in business for business management and I was involved with sports and athletics my entire life, Rob. When I was in school I always wanted to do something within the athletic fields, competitive nature and so on and so forth, so I was actually working at a gym right out of college and I was a personal trainer for a while and I was saving up money. I actually went to the bank with a business plan to open up my own gym and this was in the early ’90s, Rob. That was when independent gyms were still, actually today they’re still pretty popular. I went to the bank, they said, okay. We like your business plan, but you need to come back with a certain amount of capital, which I didn’t have. I was working with someone who took a job in sales and I was going to do it for a year and make the cash I needed and open up my gym and when I got into the sales, I just loved it. 28 years later, Rob, I’m still in sales and for the last 20-
Rob Stott: I was going to say, still saving up capital for that gym.
Mike Derro: Still saving up capital. I still may do that. Maybe I’ll open up the gym and let one of my kids run it for me. Real funny story and my very first sales call and this is 100% true and I’m dating myself, Rob, but I was in the telecommunications industry for a sales job and I’ll even date myself even further. What we were selling were pagers. I don’t know if you ever even saw one Rob or carried one, but we were actually a really large organization in the wireless telecommunications industry. Back in the early ’90s, the joke was, there was two kinds of people that carry pagers. There was doctors and then there was drug dealers. I got my first appointments and it was at a residence home and I went to this person’s location and it was a house. I walked in and I was starting to do my first pitch, very first sales pitch. The gentlemen seemed nice. We’re sitting down for 10 minutes. We’re going through the process and then the front door gets blown open and it’s the DEA.
Rob Stott: Oh no.
Mike Derro: On the ground. Rifles pointed at me. They thought there was a transaction going on and there was a transaction. I was just trying to sell the guy a pager.
Rob Stott: When they say that doctors and drug dealers, it’s not incorrect.
Mike Derro: It was not the doctor that I was speaking to you, I guess. Long story short, I ended up selling one of the DEA agents a pager and I thought, hey, this is sales. This is exciting. I’m going to stay in it. I’ve been in sales ever since.
Rob Stott: Any stick ups since?
Mike Derro: No. Thank you. Thank God. Zero. I was in sales in telecommunications for a number of years and started getting into management, but I had a good friend of mine that I’ve just known for years, all the way back to high school days, who was working for a company called Serta at the time. When a sales opportunity opened up at Serta, he just really talked so highly about their go to market strategy. Their mission statement at Serta was, “we grew our business by growing our retailers business”. I just really fell in love with that mission statement.
I interviewed with him. I didn’t know anything about mattresses at the time, other than I bought one from Mattress Giant back in the early ’90s and just really fell in love with that retail independent channel strategy, go to market and joined Serta back in the early 2000s and had a really long career with Serta that became SSB. For about eight years, Rob, I was part of a team that was specifically working with independent retail channels and it was more on the mattress side of the business, opening up mattress stores, but the majority of our independent entrepreneurs owned furniture stores. I was dealing with a lot of individual entrepreneurs in the furniture that were opening up mattress stores and competing against themselves in the marketplace. For a lot of years with the Serta brand, I felt like I was closer to the independent retailer than I even was from the manufacturer because honestly, Rob, I wasn’t even looking at… Our mattresses and the product was important, but for me, I was looking, how can I work with that independent retailer, grow their business, drive it, open up more stores, get more market share and create a life for themselves that they may not have been able to do just on their own.
That was many, many years of doing that and just had a lot of sales divisions within SSB when Serta and the Beautyrest brands combined. Part of my responsibility for a number of years was buying groups. That was my first introduction to, actually Mega and Nationwide before Nationwide and Mega merged. I’ve been in the buying group world for a lot of years and that led me to conversations with Mr. Tom Hickman and joining the Nationwide team this year.
Rob Stott: Sure. Not only did you join this year, but you joined two weeks before our first ever virtual PrimeTime. You talk about a new venture for Nationwide and everyone involved, but you joining the team. How were those first two weeks?
Mike Derro: Both feet in the fire Rob. It was amazing. I was lucky enough to be a part of many Nationwide PrimeTime shows in person and so I think all of us were a little uncertain of how the first virtual PrimeTime was going to go, but really excited of how powerful and positive the messages that I was getting personally from a lot of our vendors and manufacturers and the independent entrepreneurs out there and the retailers. Our members were ecstatic and it was two and a half days of just running around a little crazy, but it was great to be a part of and I was really happy to see the outcome for a two and a half. Of the feedback I got, it was almost 100% positive.
Rob Stott: That’s awesome. Before we dive too much further into Nationwide and kind of where we’re heading and your excitement and what you see there, I know prior to, for the last year, you had been with a company Flow Water. We found out a little bit before we started this podcast, our paths almost crossed or they probably did, we just didn’t know it, at CES while you were out there for Flow Water. It’s a really interesting company because I’ve seen, for those who don’t know, you could describe it better I know, but basically the water fountain stations that you refill bottles and… I’ve seen them pop up everywhere. Malls. I know my old high school right down the road, my wife works there now, they installed a whole bunch of these systems. Tell me what that was like. A very different industry, but what was it like working with Flow Water?
Mike Derro: Very different. It was great. I was hired on as their first chief sales officer. It was a startup. They were six years young when I joined them and my responsibility was to really try to help them grow. They had a couple of sales teams on the west coast and my responsibility was to grow those sales teams across the country. What attracted me to Flow Water was their mission statement. Their main goal as an organization was a green effect and it was about removing the plastic waste that, unfortunately, goes into our lakes, rivers, landfills and oceans. That was the actual mission statement of the company before we even had the hardware to sell. That attracted me. It was another… Similar to furniture and bedding when you’re trying to either have someone sleep better and get a better night’s rest and they feel better in the morning. This was a company that was geared around giving the end consumer a better experience with water.
We take water for granted in a lot of cases, Rob. I mean, to your point and your school. There was water fountains everywhere and you could get water. The reality is, unfortunately, most tap water is not very safe to drink. The micro plastics that unfortunately are heading into our waters from the lakes, rivers, landfills is… I’ll never forget this fact when I was doing some of the due diligence is, if you’re just drinking normal bottled water, plastic water or just water out of the tap, unfortunately there’s micro plastics in there Rob, to the effect that you’re essentially drinking two credit cards worth of plastic ingesting into your body every month. We are trying to provide, we were, when I was with Flow Water, trying to provide a solution for schools, education, colleges, fitness gyms and corporations, where they just had a much safer source of water and it was transformed… It was all about transforming tap water.
We could tie into any potable tap, tap water source, Rob and provide clean, great tasting, good for you because we added minerals and vitamins back into the water and we removed 99.9% of the contaminants that you didn’t want in your water. It was a mission-driven company, which I really fell in love with. Long story short, COVID, we felt the effects just like everyone else, right. We had a trough in say March and April that we saw on the retail side from furniture and bedding as well, but we were able to transition quickly as a smaller organization to create a touchless solution within our hardware and that’s really started to resonate well within those verticals that I spoke about earlier. Flow Water’s doing really well. I felt like throughout this year, we were really making great headway, enough to the point where Tom Hickman started talking to me about Nationwide. I felt comfortable enough that we positioned things the right way in Flow Water and they’re continuing to be successful and I could get back into the furniture and bedding business that I had been in for decades.
Rob Stott: No, that’s awesome. The innovation over there, it’s cool to see and I know micro plastics is something. That’s a topic that’s almost to the point where it’s become a buzz word at this point, but a very serious one. I’ve seen it crop up in other industries from washers and dryers. A lot of those micro plastics come off of clothes that fall into those waterways and stuff. Manufacturers doing their due diligence there to create products that filter those out and what not, but cool to see. It’s just an awesome company and like you said, an awesome mission statement and it ties into everything I think that goes on here at Nationwide and how we’re working to help independents like you mentioned.
This past year, the F&B team I know has been hard at work making sure that our dealers have opportunities. Coming in, take a minute to reflect on… I know you were working with Flow Water at the time, but this F&B space has been through the ringer in 2020. You’re coming into Nationwide, how are you reviewing things as they were this past year for the space that you’re now in charge of here at Nationwide?
Mike Derro: Yeah. First off, I think the organization has done a tremendous job with the support of the membership, even all the way down to the PPE and all the things that started to come out in March and April when COVID really started to expand in the United States. I think the organization as a whole just did a tremendous job supporting that independent retailer. It’s no different than the furniture and bedding industry. Jeff Rose, Johnny Lamp and Chad Fischer just did a tremendous job this year, just putting in the work to support the membership. We in the division understand that as long as the members are healthy and well and they’re driving sales and growing their businesses, then we’re going to be fine. We saw a really significant shift, post Q2. Q2 was a struggle in most furniture and bedding, but when we looked at the categories in general, Rob and you started to see that disposable cash of where the consumer was spending, outside of maybe not going to travel and flying and going to different places, staying in hotels or going out to dinner, they reflected and looked at their own homes and they wanted to make improvements in their homes.
The furniture and bedding business in general has seen a tremendous pickup for the last, Q3 and that’s continuing in Q4. I see this industry as a whole continuing to be strong. I am really optimistic about 2021 for a few different reasons. I just wrote an article that I think will go out into the newsletter that’s coming out, probably in the next few weeks, but I see some positive things for 2021. One, there’s been tremendous movement on the vaccinations where already Pfizer has been out there and been rolling out this week and then yesterday, the second vaccine was approved. I think from just from a worldwide perspective and COVID specifically, to have two vaccinations that are 90% effective, is unheard of. To put it in perspective, a real good flu vaccine protects about half the people. To have two that are over 90% is unbelievable and that’s led to a lot of consumer optimism and you’ve seen that reflected in the New York stock exchange and consumer confidence. That would be one.
The second thing that I’m really confident in is just the stability in the country. Regardless, Rob, of who you supported in the presidential campaign, there was just a real polarizing effect with both parties that now that we’ve gotten past the election, you’re already starting to see that unified response to COVID and we’re on the verge of having a second government economic recovery plan be launched. I think from that stability factor, we’re going to go into ‘21 with a little bit more consistency than probably March and April and the rest of the year, where it was this year. The last piece for us, in furniture and bedding, the majority of the transactions historically has been around life-changing moments, Rob. Getting married, you’re buying a house, you’re selling a house, you’re having children, getting divorced, whatever that is and that’s not going to change. What we’ve seen in the last few months is that those real estate transactions continue to increase. The new starts or new home construction has been double digit increases for the last few months and then the mortgage rates, interest rates have been at historic lows. I think there’s a lot of tailwinds that we head into 2021 with as an industry and as an independent retailer ship in furniture and bedding, that we have a lot of things working for us.
Rob Stott: Well, you’ve mentioned the opportunities around the major life events. This year feels like just a major life event for everyone and you kind of hit on it, but just the idea that people have been sitting at home on a couch, in a bed, working on a daily basis and in an office too. People that hadn’t had home offices that are now finding that they are working from home. Some jobs are switching to full-time work from home. They realized remote work is possible. This global pandemic has been a major life event for everyone and feels like it was, not what you thought of, maybe at the outset, but it really has presented itself as a major opportunity for this space to sell new furniture, sell new couches, sell new kitchen tables that are now eating/working spaces or office furniture that wasn’t top of mind for a lot of people before. Those first two months of the pandemic, I know had a big impact on this space, but it’s making up for itself and then some, it feels like. As you mentioned, the back half of this year and then as we look ahead to 21.
Mike Derro: I completely agree, Rob. I think the momentum that the channel has built and the independent retailers have taken advantage of, will continue into ‘21, for sure. Even when the vaccinations and the herd immunization happens, I think it’s changed people’s lives forever and they still want to have improvement in their home. You hit the nail on the head. Two sectors in the furniture business, dining and office, really wasn’t that strong for a lot of years. It’s two of the largest categories now in the furniture industry because of people working from home, because of people working out of their dining room and the mattresses they want, they realized now that they have to sleep better and they want a better life in their home. I think that will continue. I think you’re going to see that consumer, even when we’re able to travel and get outside without a fear of contracting any type of a virus, I think you’ll still see consumers wanting to spend more at the home than they ever have before.
Rob Stott: Yeah. Unintentional plug, but Night & Day. Murphy converted our guest room into an office here, working from home. That was just because working for Nationwide I’m able to work from home. They allowed me to stay up here in Philly, but Night & Day Murphy bed, there’s a vendor right there and I’m working on a desk that’s from a vendor as well and got a monitor this from a… It worked out.
Mike Derro: Absolutely.
Rob Stott: We’re all making changes and adjustments. You get the opportunity to sit around and upgrade and look at your house and do these things. It is what it is. We talked a little bit about the product side and what retailers have been able to capitalize on in this space. How about the business side of things? I know mattress retailing and furniture retailing for what it’s worth, have both had to adjust and retailers are changing business strategies on the fly. We’re getting back to the point where here in the next couple of months where everything fully open and not that social distancing will be completely relaxed. I’m sure consumers will still have a little bit of wariness about going out and all that sort of thing. What opportunities do you think they’ve taken advantage of or how long lasting do you think these changes in how retailers have had to do business? Is this the new normal for them? I hate that term, but it is what it is. Is this the new normal for them or do you see things going back to an old normal, if you will?
Mike Derro: I think some segments of the old normal, Rob, are gone forever. I think some of the things that the retailers have adopted and made a part of their business will continue, moving forward, even when we get back to whatever the new normal is going to be. Right, Rob? I think from a digital platform and perspective and then outreach to that consumer and finding her where she is looking for that new dining room table or the new mattress, she is starting online. The digital platform, including social media platforms and the Google searches, are something that are going to be with us forever and will probably even just accelerate. Those retailers that have worked with our organization, whether it’s Site On Time or Retail Web Services, to develop those programs and adopted into their businesses, will continue to be successful. That won’t change even when we’re able to go back outside and spend more time and not social distance as much as we currently are. That’s something that will always be part of business moving forward.
I think what we’ll see in the first part of next year too that’ll be an improvement in what we’re seeing right now, is the supply chain challenges that many of the manufacturers are seeing. We’re already seeing huge improvements on the bedding side of it now. We all feel that based probably over Q1 and into Q2, those supply chain challenges will be back to whatever normal is, but a quick turnaround. On the furniture side, it will probably be a little bit of a slower comeback. We still see huge improvement, but that lead time is still unfortunately, pretty far out, but we see that being lessened in Q2 and then for sure, going into Q3. I think we’ll have a ton of tailwinds in the first half of next year and then Q3 and Q4, a lot of the supply chain challenges that have really restricted, even though we’ve seen huge growth Rob, over the last few months, it could have been larger for independent retailers if supply chain wasn’t as big of a challenge as it is. That’ll subside going into the back half of next year. We really feel strongly that ‘21 is going to be a powerful year for independent retailers.
Rob Stott: Yeah. I know the supply chain issues were something we wanted to dive into a little bit. An awesome overview and good to hear that things are improving. For the retailer that’s sitting there right now, they’ve got so much demand or they’re sitting on some back orders. What’s the message to them or what can they do to, not necessarily improve business because the product just is there right now? What’s the message to them to get through this while they wait for things to catch up?
Mike Derro: Yeah, for sure. Don’t stop communicating. Continue to market, continue to advertise digitally and reach out to that consumer because our independent retailers and our members, they’re the brand. We have hundreds of vendors that are going to support their brand, but when the consumer is looking for that new mattress or consumer’s looking for that new sofa, they want to go to that independent retailer and support that local business. Continue to communicate. There is inventory on both furniture and bedding. You may want to potentially limit the SKUs that you’re actually promoting and we used to have an old saying in retail, sell what you got. Right, Rob? If you have SKUs that you’re deep in, promote those, sell those. Continue to work with us at Nationwide and the vendors will continue to improve the supply chain and that’s one nice thing about a member being a part of Nationwide, is you have a really powerful engine working for you with the manufacturers to make sure that the Nationwide member is as high on the totem pole as possible to get products into their stores. Sell what you have, continue to market and advertise, especially digitally to that consumer, as they do want to support local.
Rob Stott: To your point about working with a group like Nationwide, yes, you as a retailer have your inventory. You got what is your bread and butter, but if there’s ever a time to potentially explore what else is out there from a merchandising perspective, now would be the time. Check what’s out there and check what’s available. If demand’s high, consumers, not to say, they’re so set in their ways, they know what they want. Some are. That’s just a fact, but if they need something, if it’s something where they need to make a replacement or need to upgrade something, find what’s out there for them. Work with them and maybe it’s with a vendor partner you’re not thinking about right now.
Mike Derro: Yep. For sure. Like I said earlier, we have hundreds of vendors that we’re working with in the furniture bedding side. MemberNet. We try to keep that as updated as possible and in there there’s some inventory opportunities as well too, that we try to push out. If any member has any questions on any vendors or just asking us, what’s moving, what’s high in inventory, reach out to us. We’re happy to help.
Rob Stott: That’s awesome. Last question, we’ll close on this. You alluded to what excites you about ‘21 coming up and the opportunities available. I always asked this jokingly to Jeff because he knew I came from the CE space and innovation was my thing and I always like to joke with him about floating beds and things like that. What, on the product side, excites you about what’s coming in in the next year or over the next couple of years, as far as whatever innovation looks like in furniture and bedding?
Mike Derro: Yeah. I can speak more specifically probably on the bedding. We have two or actually three really huge launches on the bedding side, going into 2021, Rob, that we’re really excited about. Some of our top vendors are introducing product that has elements of virus protection, health and wellness and that’s also on the furniture side as well, too, Rob. I think where probably the number one factor that most consumers are thinking about now more than they ever have before, is their health and wellness. The vendors and manufacturers have taken that to heart and they’re implementing those into some of their new product launches that I couldn’t be more excited about. I think the independent retailer that looks at those products, that’s speaking to their consumer, that health and wellness are top of mind right now, they’re going to have great products that they can provide to those consumers when they walk into their stores in 2021.
Rob Stott: What does that mean exactly? When you talk about the health and wellness and virus technologies in a mattress. Do you understand and can you explain a little bit about that-
Mike Derro: Yeah. There’s manufacturers now that are coming out with surface protection capabilities that kill 99.9% of viruses on their mattresses. For me, as a person, which I haven’t been traveling as much, but as a traveler, that’s the one thing I always worry about and think about, even previous to COVID, is what hotel I’m staying at, what’s on the mattress and so these manufacturers are coming out with products that are specifically going to tackle that problem and solution and make not only themselves feel more comfortable with it, but if they have children they can feel comfortable that the children are sleeping on a healthy mattress.
Rob Stott: Oh, that’s awesome. That’s really cool. That’s innovation. That’s a group of manufacturers working to solve a real world problem that you wouldn’t think possible, but hey, here we are. Innovation in 2020 and moving forward.
Mike Derro: I will tie out one last thing on a product innovation perspective, just because it was top of mind for me in Flow Water. We have a manufacturer that’s actually making product from recycled plastics. Taking plastic out of our rivers, oceans and making the water sources a little bit healthier.
Rob Stott: That’s awesome. Those things always excite me and clearly for you as well. It’s cool to see a company’s mission show through with product or how they’re working to improve the lives of consumers. Mr. Mike Derro, I appreciate the time and I know we’re coming up on the end of the year here, so I know we’re all busy. I appreciate you sparing a few moments and chatting with us and look forward to seeing what comes out of the F&B team in ‘21.
Mike Derro: Thanks Rob. I appreciate the time too and happy holidays.
Rob Stott: Thank you, you too.