The stuff of dreams – The bed maker Japan is resting on

Since World War II, Japan has transformed into a powerhouse when it comes to their manufacturing. They have developed an international reputation for extreme attention to detail, but also for high quality, and this is embodied in the word monozukuri. As a company with four manufacturing bases here in Japan, can you tell us in your own words, what is the essence of monozukuri? What is your take on monozukuri?

I believe the essence of monozukuri is that we should produce something that can satisfy the customer’s needs when they use it. From the maker’s side, it is essential to pursue the better-quality products, but it cannot be unilateral to satisfy the customers. We should produce something that can satisfy and meet the needs of the customers. I think when we can achieve that, we can fulfil the role of a manufacturer.

Japanese manufacturing in the last 25-30 years has been subject to intense regional competition from competitors in Taiwan, Korea, and China, who replicated the Japanese monozukuri, but have done it at a cheaper cost, providing the world with cheaper yet inferior-quality products. As a company that is involved in lifestyle, can you tell us how the regional competition affects a lifestyle brand like Dream Bed? What strategies have you adopted to overcome this stiff price competition?

As you said, there has been very fierce price competition in the Asian region, and there were some companies who ran a business in a way to manufacture cheaper products overseas, then import and distribute them in the Japanese market. However, the Japanese market size is relatively small compared to bigger countries like the US, so we see the limitations with selling such cheap products. Japanese consumers tend to put a lot of importance on quality or the details of the product, as you mentioned earlier. We thought that we need to get ourselves involved to manufacture products to satisfy the Japanese customers. We decided that from the day of starting our business, we should manage the production line on our own, and we should do the manufacturing process in the country. Particularly, for the mattresses, we have integrity in the manufacturing process from selecting the materials to producing the finished product. That is how we are keeping the quality.

Dreambed is involved in something that is vital to everybody’s lives: sleeping is fundamental to being a human. Not only does sleeping help us be healthy, to be more alert, and to be friendlier, but it also helps our productivity in our daily lives. How, as a bed company, are you educating the consumer when it comes to the benefits of your products and teaching them the necessity of having your products? How are you adapting your products to suit the different consumer needs when it comes to sleeping?

In terms of teaching the consumers about the benefit of our products, as the maker of the beds, we did not have a lot of opportunities to be connected directly with customers in the past. As we realized that, for the past ten years, we tried to establish more channels to directly connect with the customers by having showrooms or shops. We are now able to have direct conversation with the consumers, and we are on the way to prepare a lot of environments where we can meet with them now. In those environments, as a maker, we are trying to communicate our thought processes and methods of manufacturing. We are putting in a lot of effort to directly communicate with the consumers now.

Your company started the business in 1950, you celebrated your 70^th anniversary, and since then, you have become a comprehensive manufacturer related to bed products, including frames, mattresses, futons, and duvet covers. You even have interest in furniture, with your Arezzo sofas and your Fusion sofa beds. We also know that you are involved in ODM (Original Design Manufacturing) businesses. You have these relationships with Serta of the US, RUF of Germany, and Roset of France. Between these two lines of business, the OEM business with Dream Bed and the ODM business with these technical tie-ups, can you tell us which is the focus for your business currently? Could you also tell us about the synergies that you have been able to create between these two domains?

We are the manufacturer for the beds, and we will continue to put our focus on in-house manufacturing going forward. We will utilize our accumulated technology and manufacturing know-hows and capabilities. That will remain unchanged. However, we have a partnership with other makers overseas, and we highly appreciate their brand capabilities and product capabilities. What we are trying to do is combine those capabilities with technologies and manufacturing capacity so that their products can be the best fit in the Japanese market, Japanese environment, and for the Japanese consumer’s appetite. I think that is our role in brand partnership. This focus will continue to be the important wheels to drive our business going forward. In the licensing agreements, we are not just manufacturing as we are told to do, but we are trying to incorporate our way of thinking and way of manufacturing into their product. I think that differentiates us from the other competitors.

Dream Bed is your original brand, and you started that and within Dream Bed, you have sub-brands. For example, you have the Ecoral bedframe series, and you have the HugmiL series, which is designed to prevent children from falling out of the bed. But you also have mattresses such as the popup series, which is developed to be both hard and soft for a perfect night’s rest. For Dream Bed, what strategies are you adopting to further roll it out to increase sales and who are you targeting?

Our biggest consumer is the general consumers, so B2C. 70% of our sales come from the shops and distributors for general consumers, and 18% is from commercial users, such as hotels, and the rest is miscellaneous, including housing. The biggest challenge is how to increase the market share for the biggest consumers, which is the general consumers.

The Covid situation has created a unique opportunity for many businesses, even though it has affected many negatively. We see less consumers going out to showrooms and shopping commercially on the street, but more are doing online shopping. Companies that can adapt their business model to be online, to internet-related business, have been able to succeed in this environment. Can you tell us more about what efforts you are doing to adapt your business so that you can reach consumers online?

Due to the Covid-19 situation, a lot of people have rethought and pursued the improvement of their living environment. Under such a situation, we are beginning to provide products, for example, that are suitable for the teleworking market. Those tendencies should remain in the market at a constant rate, even after Covid-19 is over. Assuming that, in the future, we should keep developing new products that will fit into the future style of life. However, we will not say that Covid-19 will last forever, so it is important to value our baseline products and to consistently maintain our fundamental philosophy of providing products that are truly high quality and affordable for the customers.

Can you tell us more about your R&D strategy? What products are you currently working on, and is there a particular product that you would like to share with our international audience?

Looking back at our 70-year history, we have developed as a company that is supported by R&D technologies. In that history, a lot of changes happened in the appetite of the consumers and the market itself. To meet the changing demands, we always felt the need to develop new materials and products. To develop something new, we cannot just stay in the domestic market, so we tried to procure the quality materials from overseas. Before Covid-19, we dispatched some of our people to visit exhibitions around the world to procure new materials for the development of new products. We kept working on research and development in such a way, and we not only manufactured products according to the licenser’s instruction, but also acquired the technical capability enough to be granted a license to make our own delicate adjustments for the Japanese market. We especially put a lot of effort into the development of mattresses, and we worked on product development, using anti-insect materials from an early stage, while reading trends of the times. We are now also working on antivirus technology, and we are about to launch new products sometime soon. Some of them have been publicly announced already. Our history is really attached to R&D.

Since 1975, you have had a connection with RUF, and you have other links with the American company, Serta, too. Can you tell us how you are leveraging this overseas know-how that you have developed since 1975, and this customer-oriented approach to expand your sales internationally?

As a manufacturer, I think we have a responsibility for the products that we supply to the market. We should not always be thinking about our manufacturing or products from the company side, management perspective, or economic environment perspective. We should be side-by-side with the customers so that we can satisfy the needs of the customers. For example, for waterbeds at their peak, a lot of companies, a lot of competitors, entered the market. However, at this moment, we are the only one that remains in this market now. As the only company to supply waterbeds, we have a lot of responsibilities not just to the products but to the service and to provide new products in this area. I think that is representative of the attitude of our company. As the customers see the corporate attitude, they will feel confidence in the products.

One region that really appreciates the quality of customer service with Japanese products is the ASEAN (Association of Southeast Asian Nations) region, which is the most populous region in the world, and in 10 years’ time, is expected to be the fourth largest economy after China, India, and the US. As a company that is focusing currently on Japan, how will you leverage this new, growing demand that we are seeing taking place in ASEAN? How would you take advantage of this regional growth? What strategies would you adopt to adapt to it?

At this moment, we do not have a specific plan to expand in the overseas market, but we still think there is room to grow our market share in the domestic market. Although the population is shrinking and the market size will decline going forward, we still think there is a role that we can play in the Japanese market, and we will continue to explore the way to expand the Japanese market share. However, in the long-term, we cannot say that we can ignore the ASEAN market going forward. It is very important to explore the opportunity to enter the ASEAN market going forward.

On a regular basis, we are exchanging information with our counterparts in the ASEAN region, and if we are going to do something in the overseas market, we will not do it alone, but we will have partnerships with local makers so that we can bring the good Japanese products to the ASEAN market, or we can import the good products from ASEAN market to Japan. That is something we would like to establish in the future. At this moment, we have good relationships with counterparts in Indonesia and China.

Your company heavily focuses on co-creation and since 1975, you have had these licensing agreements. You are going to focus in the short term on the Japanese domestic market, but are you currently looking for more partners in Europe or in the US, and is it for material development, or would you like to also have another licensing agreement like you have already established with these three companies?

As for overseas partners, in the case of Asia, we would like to find a partner who can work with us to do material development, and we can bring in our strengths into the development of the new product so we can produce something good for the local market. But in the case of the US or Europe, the market environment is slightly different than ASEAN’s. For those markets, I think we will continue to find good partners for licensing agreements so that we can make the best use of each of our brands in that licensing agreement. I think that is going to be a good option.

Imagine we were to come back in two or three years to interview you all over again. What would you like to tell us? What are your dreams for the company, and what would you like to have accomplished by then?

With the listing, we are no longer a family company but have become a public company. We would like to become a company that can grow up step by step. Three years from now, or maybe five years from now, my hope is that all our customers are going to recognize this company as having grown so much as a listed company.

Which one is your favourite bed?

The new model of Serta. It is in the Serta brand, but we have incorporated our accumulated technology in developing the new model. It is a completely unprecedented type of bed, and you will have very good dreams if you sleep on it.