A good night's sleep is about one third of your day. So a third of a day is a third of your life which makes having a good mattress that fits your needs. So, if buying a new mattress is on your "to do" list, you have many more options today to explore the industry than before. If purchasing a mattress from the traditional mattress store, be prepared for a migraine inducing experience. The multitude of choices is staggering, but built in to take advantage of the customer confusion. Many of the same mattresses have different names, but the experience is barely discernible except for the price, which often reaches several thousand dollars. Regarding design, the difference between models, clouds the industry even further. Does "Tempur-Cloud" offer better cushioning than the "Memory Foam?" What about the "OptiCool Gel?" Does it support the back better? Beginning about 2009, a major manufacturing company, Sealy and Simmons, two of the largest mattress manufacturers worldwide, was bought by a private equity (PE) firm.
Following the purchase, the firms bought and sold between themselves. They stopped competing with each other, and to cut costs raised the prices of mattresses. For many years there was no competition in the market and the price of a mattress skyrocketed. With the top brands controlling the price, the entire mattress market jumped on the same train. The price of a new mattress was marked up over 40 to 80 percent. The cost of making the mattress is about $300 but the selling price may be as much as $3000. In addition to markups, manufactures changed the design from a double sided mattress that could be flipped over and used for another 8 years, to a one-sided mattress, thereby reducing the cost of manufacturing and lessening the number of years of usage. Is there really that much difference between one mattress and another? According to Consumer Reports, a good mattress should not cost more than $1,000 depending of the materials, firmness and support. There are three basic designs:
Memory Foam: Memory foam was developed by NASA in the mid-1960s. It was created for a better fit of airplane seats. It is made from a substance called viscoelastic. The foam molds to the body while sitting, then springs back to the original shape. Air Cool Memory Foam-A common complaint about the traditional memory foam is that it holds heat and make that good night's sleep uncomfortable. The "cool" version claims to have "open cell technology" that distributes heat more evenly. Gel Memory Foam: The gel technology claims to reduce motion transfer and stabilizes pressure points. Innerspring or coil-Steel coils are the traditional mattress design that is offered in several different configurations. As well, they are much less expensive than foam and the most popular. Various compositions include several layers of cushioning with a top layer of pillow softness and gel. Adjustable Air- The bed is inflated using an electric pump. This type of bed allows the customer to inflate it to the desired firmness using an electric pump attached to the bed.
Competition between many manufactures is fierce and any way they can reduce cost is significant. The most well-known mattress companies are Tempur Pedic which acquired Sealy in 2012. It is now known as Tempur-Sealy which also owns the brand name Stearns & Foster and Posture Pedic. Manufacturers Serta and Simmons were acquired by the investment firm Advent International. Despite the fact that these companies are owned by the same parent company, they conduct their business as separate entities and compete with each other in the marketplace. Following up on a complaint, the U.S. International Trade Commission in 2014 conducted an investigation on the manufacturing of innersprings for mattresses. The study Uncovered Innerspring Units from China, South Africa, and Vietnam, which revealed that innersprings manufactured overseas were hurting the domestic manufacturing market. Companies that were using the "innersprings" had reduced cost, but not necessarily selling the mattress for less.
To the buyers rescue comes the online mattress store that greatly reduces the excruciating buying experience with a few clicks of the mouse. Several clever entrepreneurs opened shop to compete with the traditional brick-and-mortar stores and take the mattress business online. The online mattress purchase is gaining traction by offering an ease-of-use buying experience with a customizable mattress that sells for less. Stefan Papas, founder and director of Oz Mattress, says he saw an opportunity to enter the market with a unique business model revolving around a purely online experience. "At some point the major manufacturers, along with the major retailers, decided to take the public for a ride, it's a racket. This enabled my company, Oz Mattress, to offer all the luxury mattress tech at half the price. We were also able to introduce free delivery, a 100-day comfort guarantee and pioneered an old mattress collection programme," Papas said. To help in the decision process, many online stores have fewer options to choose from but still give the customer the option to customize their mattress to meet individual needs.
Buyers can find several the online mattress stores listed on Amazon and offer free shipping. By cutting out the cost of a showroom, online stores can charge a lot less. The mattress will show up vacuum packed in a box. Most will allow a full refund if the mattress don't suit the buyer. To compare like-to-like, a Sealy Ferron Medium Mattress at the David Jones showroom is advertised for $1,605.00 - $3,215.00 Australian. However, a high-end online mattress, the MOD, can be purchased from OzMattress for $799, delivery included. With the growth of social media, the word is out that buying a mattress online is not as odd as some would have thought several years ago. Bypassing the traditional experience, online mattress shopping will change the face of the mattress industry for the better.Steinhoff International Holdings is set to acquire America’s biggest bedding retailer, Mattress Firm Holdings Corp (MFRM) for $2.4 billion. The deal makes way for the South African furniture retailer, Steinhoff, to enter the U.S. market with the country’s leading bedding brand.
The merger marks the formation of the world’s largest multi-brand mattress retail distribution network. According to the companies’ statements released on Sunday, Steinhoff has agreed to pay $64 per share in cash, implying a premium of 115% more than the target firm’s stock price of $29.74 on Friday. This pegs the company’s equity value at around $2.4 billion. After including the net debt of $1.4 billion, the enterprise value comes in at $3.8 billion. Steve Stagner, executive chairman and chairman of the board of Mattress Firm, said, “The Mattress Firm Board believes that the transaction provides significant value to our stockholders through the premium to our share price and the immediate liquidity at closing, while giving Mattress Firm an ideal partner with a proven track record in the complete mattress supply chain including the retail and manufacture of mattresses”. (See also: Mattress Firm Logs Not So Sleepy Q3 Earnings.) The deal is aimed at providing Steinhoff, which operates over 40 brands of furniture, household goods and clothing in 30 countries, to expand globally and diversify its sales channels out of South Africa, its key market, where the volatile currency is a matter of serious concern.
Markus Jooste, CEO of Steinhoff, said, “The boards of Steinhoff and its management team are enthusiastic about the opportunities this transaction creates.” He added, “This transaction will allow Steinhoff to not only enter the U.S. market with an industry leading partner and a national supply chain, but it will also expand Steinhoff’s global market reach in the core product category of mattresses. The Mattress Firm brand and specialty retail concept are a strong complement to the Steinhoff group retail brand portfolio in the many geographies where the group operates.” The shares of Mattress Firm, which has more than 3,500 stores in 48 states with 2015 pro forma sales of $3.5 billion, plunged by 52% in 2015 and further by around 33% this year. Ken Murphy, president and CEO of Mattress Firm, said, “Today’s announcement marks an exciting new chapter for Mattress Firm that will open up future opportunities for our employees, our customers, and our business partners.”