Why are there so many mattress stores?
How do mattress stores manage to stay in business? They’re all over the place, but the average adult buys a mattress once every five to ten years. With high overhead and infrequent purchases, how are they around? —Not Bethany
I SEE your query, NB, and raise you. To my mind, it’s not just about how these stores manage to stay in business: the question is, moreover, how are there so goddamn many of them—particularly right now? Where I live, in Chicago, entire blocks are all but overrun with the places, which frankly don't do much for a street's aesthetics.
In June a Texas Monthly article described the worrisome proliferation of mattress stores in Houston, where the venerably groovy Montrose neighborhood has become known as “the Mattrose” on account of all the new sleep shops. An April headline in the Northwest Indiana Times asked, apropos the town of Schererville, “Why the heck are so many mattress stores opening?” So: you and I aren’t the only ones wondering. What gives?
One thing that jars about this state of affairs is that, in the age of Amazon, there’s something very old-economy about mattress stores, beyond their relentlessly cheesy look. No one goes to bookstores to buy books anymore, right? Well, not exactly. A 2014 report by the consulting firm A.T. Kearney found that despite the digital hype, overall a full 90 percent of retail transactions still take place in physical stores.
And according to an investor presentation by industry giant Mattress Firm, dedicated mattress stores account for 46 percent of total mattress sales, handily beating out furniture stores (35 percent) and department stores (5 percent) for the largest share of the market.
So mattress delivery by drone is still a ways off. But again, these stores aren’t just surviving, they’re flourishing—that market share has more than doubled in the last 20 years. Why open a mattress store when there’s another just down the street? Turns out the economics make perfect sense:
Running a mattress store doesn’t cost much. Since each store is essentially a showroom, with the product delivered to your home from a warehouse, sellers don’t keep a lot of inventory around. And the salespeople generally work on commission. So contrary to your assumption, overhead is actually pretty low. Plus, the uninhibited signage at these places provides constant free advertising.
The industry is benefiting from postrecession catch-up. According to the trade journal Sleep Retailer, the global mattress market saw a decrease in sales in 2008 and 2009; in the years since, the rebounding economy—including increasing home ownership—has occasioned “remarkable” growth in the industry, says SR, expected to reach $25 billion globally by 2017. The U.S. is the largest retail mattress market worldwide.
The markup is stupendous. This is the big one. Mattress markups are notably higher than for other furniture items: Consumer Reports puts gross profit margins on mattresses at 30 to 40 percent, both for wholesalers and for retailers, and up to 50 percent for makers of super-luxe products. One estimate (from a boutique mattress upstart, so take this with a grain of salt) claimed that mainstream retailers can charge $3,000 for a mattress (after wholesale and retail markups, marketing costs, and commissions) that actually cost only $300 to produce. What accounts for this? It’s your classic oligopoly, where the market is dominated by just a few makers—think familiar names like Serta, Sealy, et al. More on this below.
Certain ancillary factors are working in the mattress-pushers’ favor too. Newspapers and lifestyle magazines provide great propaganda in the form of endless encomiums to getting a good night’s sleep, and the well-publicized resurgence of bedbugs certainly plays nicely with the industry’s attempts to get you to replace your mattress more often.
On the principle of Chekhov’s gun, if I use a loaded term like “old economy” in the first act, we’ll be talking about “disruption” here in the third. And lo: some not-exactly-disinterested observers say it’s high time to disrupt the mattress industry, which has been described variously as a “scam,” a “racket,” and, as suggested above, an “oligopoly.”
Critics are galled by a system wherein retailers charge exorbitant, and wildly variable, prices for products whose differences from one another are often (a) slight, and (b) described in nonsensical language—e.g., “ComforPedic iQ” with “Ultra Cool Memory Foam” and optional “AirCool Memory Foam with Micro GelTouch.” (Lots of product labeling is similarly nuts, of course; on the other hand, you’re not dropping $2,000 on a razor blade.) They point to the eyewear business, which has similarly been called oligopolistic, where the entrepreneurial upstart Warby Parker found success selling cheap glasses to hipsters.
Whence the white knight of mattress sales? I found an article profiling one contender whose cofounders show the right credentials—both have Silicon Valley backgrounds, one’s got a great beard—but if I were a mattress seller, I wouldn’t be losing any sleep just yet.