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| | Strategy: The Select Comfort “Game Plan”
(how we realize the opportunity) 
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| | Select Comfort has made significant progress toward becoming the world leader in better sleep since it was founded in 1987. Consistent focus on the core strategies put in place in 2000 has solidified Select Comfort as the leading bed retailer in the U.S. Consequently, the Sleep Number®bed has emerged as one of the fastest growing brands in the industry. |
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| | Going forward, we will continue to focus on these proven strategies, with additional emphasis on expansion opportunities. Our mission and vision have not changed, but in 2006 the company will be even more bold in developing, improving, and executing our strategies to ensure we maintain our long-term position as an industry leader and to deliver on our mission. |
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| | Select Comfort’s strategic imperatives and priorities for the next five years will include: |
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| | Build Awareness:The first step to fulfill our mission is to make people aware of their choices; aware of personal comfort and the benefits of sleep only attainable on a Sleep Number®bed. Understanding consumers, their concerns and interests, and then creatively and efficiently reaching them in a convincing and motivating way, is what will differentiate Select Comfort. |
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| | Expand Distribution:With increasing awareness and interest in our brand, we are able to build same store growth and profitability, expand distribution with new stores, and selectively expand with other retailers of quality beds. In the U.S., Select Comfort is targeting between 600 and 650 company stores (approximately 1 per 250,000 population) and up to 1,000 to 2,000 partner doors. We will also extend distribution to other places where consumers need to sleep—guest rooms, hotels and resorts, RVs, assisted living centers, etc. |
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| | Accelerate Innovation:With growing awareness and more points of distribution, we can get a good return on our investment in R&D and innovation. Our company was founded on innovation: we’ve grown by thinking differently and we’ll continue to value creativity and well-prepared risk taking. As we grow, we’ll improve our processes and disciplines, requiring fact-based advancements in comfort and better sleep. |
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| | Leverage Scale:We will leverage growth, innovation and continuous improvement to be the low cost, high quality product and service provider in our industry. Our success is sure to attract competitors, so it is imperative to have the lowest cost structure to compete with advantaged value and quality, while fully investing in our growth initiatives. |
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| | People and Culture:Our sales, delivery and service reps are our trusted ambassadors with our customers. Our customers develop trust in them and our company. The rest of us support both our customers and our front-line team. It is a privilege to be part of the Select Comfort team. We are selective and demanding, and we reward performance through compensation and career growth opportunities. New Business Expansion:Though our product offering is narrow—beds and accessories—our opportunities to reach people wherever they sleep are huge. We seek to expand to new channels of distribution where we can develop leadership scale and competitive advantage for long-term profitable growth. |
