Pillows from a vending machine?

December 23, 2010

If you can get hot-cooked kosher food from a vending machine, why not a pillow? With no end to the creative ways people are using vending machines these days, a custom-made pillow is actually not such a strange concept.

And The Dream Machine does not operate the same way as the vending machines that dispense candy or pop. It’s really a mobile manned kiosk that lets consumers select the shape, density and embroidered message they want in and on their pillow. It takes about 10-15 minutes to make and costs anywhere from $130-150.

“It’s a bit of retail theater,” said Dave Young, the CEO of bedding-materials supplier VyMaC Corp that bought the master licensing rights from the machine’s creator Merrimac Dillon, the owner of The Pillow Bar retail chain. Young’s company rebranded the technology as The Dream Machine. “It’s a lot like the popcorn machine. It takes about the same footprint as those little red machines.”

The consumer is able to select their own pillow based on sleeping preference: side, back or stomach sleeper. Then they can sit back and watch as the machine fills it with its patented duck down. Customers are able to squeeze the product as it’s being stuffed, which Young said makes it more fun and interactive.

The machines are fitted with an embroidery needle that lets people personalize their pillow case with their name, initials, a word or message such as: “I love you.”

But justifying $130 and up for a pillow?

“Quality costs a little money and the retail theater is probably part of that as well,” said Young, noting that a low-end down-filled pillow costs about $100. He added that the average lifespan of any pillow is about three years. “The personalization aspect is certainly worth an extra $10, so you take that and you add it up and you’re pretty much getting to that $129-149 awfully quick.”

FRANCHISE BUSINESS

Young said the Dream Machine operates like a franchise business, where people license the machines for a one-year term for $15,000 that includes enough fill and materials to get them started. They then pay a renewal fee of $5,000 for each additional year. Young said by just selling one pillow a day, the franchisee can make back their initial investment in just four months.

“Everything after that is gravy,” said Young, who claims the Dream Machine provides licensees with a 70-percent gross profit margin, based on the suggested retail price per pillow of a minimum of $129. “That’s if you were an individual kiosk operator. If you were going to put it into a four-store furniture chain the economics are even faster; now you’re not adding overheads (rent) you’re just putting it into existing structures.”

Young debuted the machines at a retail trade show in Las Vegas last summer and is using this holiday season to more widely gauge how consumers respond to the Dream Machine.

“It will be an interesting test to see how well it stands in the gift category,” he said. “In a mall setting we expect it to bring in a much different level of foot traffic than just a static pillow display would.”

While skeptical of Young’s math in regards to the Dream Machine returning such a high profit margin based on selling just a single pillow a day, retail expert Doug Stephens didn’t think spending $150 for a nice pillow was exorbitant.

“It didn’t necessarily scare me too much,” said Stephens, the founder of Toronto, Canada-based Retail Prophet Consulting, who added in some circles consumers are still shelling out $20,000 for “hand-tufted” beds. “But I don’t think a $150 pillow is an impulse buy. I just don’t think you’re on your way from Wal-Mart to The Gap and you say, ‘Oh wow, custom-made pillows – I’ll take one of those.’”

Stephens felt the machines would have more success in mattress stores and bedding centers, where people usually go to buy high-end sleep products.

“It’s all about positioning this thing in the right retailers,” he said, “but I certainly don’t see it as being an in-mall type of thing.”

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