Okay, maybe I am crazy, but the other day as I drove by the third Mattress Firm store within about 500 feet of each other I thought, “Why do we need so many mattress stores?” The next day I was visiting one of our client work sites in a Macy’s department store and learned that successful Macy’s mattress sales people can make $100,000 per year. I thought, “Excuse me, say that again, I think I misunderstood what you just said.” (But I heard correctly.) All this mattress business stimulated my sleepy business brain. I had to learn more about why America needs so many mattress stores, how they could afford to pay these kind of wages, and whether internet upstarts like Casper Mattresses were going to disrupt this clearly over-priced industry. Here are five things I learned.According to Statistic Brain, an interesting website maintained by statisticians, the mattress industry is a $7 billion industry that ships 36 million mattresses per year. Of these mattresses 90 percent are innerspring mattresses.
Eighty-one percent (81%) of mattresses find their way to us via mattress stores and furniture retailers (43% via mattress stores and 38% via furniture retailers.) Another sixteen percent (16%) get to us through department stores (5%), warehouse clubs (5%), and via internet sales (6%). There are about 9,000 mattress outlets or stores in the United States and about 3,500 belong to Mattress Firm, which has made seven acquisitions of competitors in recent years including names like Sleepy’s, Mattress Pro, and Sleep Train.According to Utpal Dholakia, a professor of marketing at Rice University in Houston, Texas, the reason there are so many mattress stores is because mattresses are profitable and gross margins are large. A $1,000 mattress set only costs about $250-$400 to make, so the retail store has a gross profit of between $600 and $750. And most mattress salespeople are paid on commission, which keeps those expenses truly variable and tied to volume.The largest five brands by market share account for 68 percent of industry sales and are Sealy (19%), Serta (17%), Simmons (15%), Tempur Pedic (12%), and Select Comfort (5%).
One brand strategy, that seems top secret and certainly confuses consumers, is how these companies put different product identification names on the same mattresses that appear in different retail outlets. According to Jerry Epperson, an experienced industry analyst speaking in a Freakonomics podcast, “Most of your larger, name-brand mattresses try to put an identity on a mattress that it sells on this corner, that has a different identity to the mattress that they sell on the opposite corner, to a competitor. So this one might be the Westchester, and the one across the street might be the Winchester.” But they are the same mattress. Epperson goes on to advise consumers to “Look at the spring count, look at the foam density, look at the material on the outside. And finally, just look into the features of that mattress. Compare the features — don’t look for the same identifying name. And when you talk about a Serta, a Sealy, a Simmons, almost all of the big guys, they sell a broad mix of mattresses from very inexpensive up to extremely expensive mattresses.”
The on-line segment of mattress sales is very new and growing. As noted above only about six (6) percent of mattresses are sold on-line, but this segment is growing and changing demographics should keep it so. One of the fastest growing on-line mattress retailers is Casper, which was founded in 2014 and now has annual sales of around $100 million. To appreciate what investors think of Casper’s future just note that venture-capital firm, IVP, paid $55 million for just 10 percent of Casper, which is still privately held. That means it is currently valued at $555 million. Mattress Firm, which has sales 25 times larger than Casper is valued at $1.3 billion or only three times that of Casper. It shows us that investors are betting that we do not need the volume of brick and mortar mattress stores we have now. But who really knows, I guess we’ll just have to sleep on it. ) is the nation’s premier specialty bedding retailer, offering a broad selection of both traditional and specialty mattresses from leading manufacturers including Simmons, Sealy, Tempur-Pedic and other great bands.
Founded in 1986, Mattress Firm’s purpose is to improve lives one relationship at a time. With more than 3500+ stores, Mattress Firm offers consumers the benefit of highly-trained, knowledgeable sales professionals, a broad product offering and competitive prices in an attractive and comfortable store environment.Not Ready To Apply? Careers at Mattress Firm As an integral part of the Mattress Firm experience, the individuals who make up the Mattress Firm Team are incredibly important to our company. A career at Mattress Firm offers the opportunity to join a dynamic organization with a commitment to distinction. We’re committed to being a great place for great people to work. Retail- As a member of our sales team, you’ll have an opportunity to experience the finest sales education curriculum and management development training in the industry. By joining our sales management team you’ll enter an environment that will focus on your professional development. Mattress Firm is committed to providing an opportunity for you to develop your professional selling skills, gain management experience and broaden your business acumen.
Other Opportunities- A career at Mattress Firm offers an opportunity to join one of the fastest growing, most successful sales organizations in the entire bedding industry. Associates who embrace the Mattress Firm Experience should expect to have a career that is rich with challenge, reward and opportunity. Mattress Firm opportunities are currently available in most markets for full-time sales management, part-time sales, and warehouse/operations positions. Who is Mattress Firm The Mattress Firm story began when a single location in Houston, Texas first opened its doors in 1986. From the very beginning, the company set out to be a different kind of mattress retailer, focused on creating a unique shopping experience for the customer with a large selection of quality, brand name products, competitive pricing, and knowledgeable, well-trained associates. It was a concept that quickly caught on, and as its reputation grew, so did the company; and by 1994 Mattress Firm had added several new locations throughout the state of Texas.
Over the next several years, Mattress Firm grew to new heights, with the addition of corporate owned and franchise owned stores. By 2002, the company owned and operated approximately 250 locations across the United States and was considered the second-largest independent retailer in the country.One thing that never changed, however, was the company’s approach to providing a uniquely positive experience for its customers; enabling the company to thrive and continue its expansion across the country. As new research emerged showing the link between proper sleep and good health, Mattress Firm responded to the growing demand for specialty mattresses by expanding its product selection to include pressure relieving mattresses from top manufacturer Tempur-Pedic®. Fast forward to 2014 when Mattress Firm entered into agreement to purchase West Coast sleep retailer, Sleep Train and Chicago based Bedding Experts to propel into the number one slot as America’s largest specialty bedding retailer.