It may seem comical, but one topic we hear about consistently from you is WHY SO MANY MATTRESS STORES?!?
And why in the world are they so close together?
In Lakeway, there’s a Mattress Firm 1.6 miles away from another Mattress Firm. In the Lake Travis area, you can count nine mattress stores within a 3-mile radius. That’s a lot of shut-eye.
Perhaps it all makes sense. Yes, there are new homes and new residents and a growing community that needs its rest. We all sleep. In fact, the average person spends 25 years of their lifespan asleep! We obviously need mattresses.
On the other hand, most people only replace their mattresses once every 8-10 years. It’s definitely a necessary purchase, but not an impulse purchase or one that you make often. You don’t routinely exclaim, “Ya know what? I haven’t bought a mattress in a few weeks. Let’s go get one!”
The situation could almost be captured in a Pinterest e-card. “I wish we had more mattress stores nearby…” said no one ever.
Well, we hear you, Lake Travis. Here’s the skinny on mattress stores:
Showrooms Are Affordable
In the retail world, overhead is pretty low for most mattress stores, because salespeople are paid on commission. Plus, they carry little inventory.
In large chain retailers, all new mattresses are shipped directly from the manufacturer. This means the mattress stores you drive by in Lake Travis might only have to sell 20-30 mattresses per month to cover their rent. The rest is profit.
“A” is for Agglomeration
Major retail chains like Mattress Firm intentionally cluster their stores together. This is why you see them every few miles and why new ones keep opening nearby. It’s called “agglomeration.”
When they purposely put a bunch of stores in prominent areas in close proximity to each other, they actually attract more attention (hence more sales) than a single store can achieve alone.
We Don’t Buy ‘Em Online
Oddly enough, in a world where you shop deals online for practically everything, this trend doesn’t apply to mattresses. You want to lay on them, jump on them, roll around and test them out.
It’s also hard to comparison shop in the virtual world, because each mattress has a brand-specific name in different stores, so you don’t know if you’re comparing apples to apples.
That’s why mattress showrooms, although they may seem kinda old school, are not going away anytime soon.
Meet the Margins
Did you know the national average for a markup on mattresses is 44%?
According to an article by Consumer Reports, 40-50% markups on mattresses are standard in the industry. The manufacturer’s suggested retail price (MSRP) is usually 100% or higher.
Plus, the more expensive mattresses (over $1,000) rake in serious cash. Have you seen the luxurious $3,000 mattresses? They could realistically only cost about $300 to make. A 900% markup? Ouch.
It’s a Profitable Business
Let’s take a closer look at Mattress Firm, the country’s biggest mattress retailer.
According to the company’s second fiscal quarter results for 2015, net sales have increased more than 61.2% over the prior year to $661.1 million. In terms of their growth for the full fiscal year to date, Mattress Firm opened 149 new stores nationwide.
Over the years they’ve acquired companies like Mattress Giant, Sleep Train and BedMart, to name a few. They paid $425 million for Sleep Train. Two weeks ago, Mattress Firm projected their fiscal net sales for 2018 at $3.4 to $3.5 billion.
Sleep On It
You have options. For instance, tucked away in the Hill Country Galleria is Austin Natural Mattress, a locally owned store that has been serving Austin residents with a new philosophy about the mattress industry since 1998.
They make natural and organic mattresses and they don’t think a high quality mattress should include such a steep markup. Based on their reviews, they’re living up to their motto. And their stores are 26 miles away from each other. You might like that.
One of our roles here at Lake Travis Lifestyle is to discuss happenings and issues that we hear about in our community. We always welcome your feedback and insight — just remember — it must be expressed in a professional and respectful way.
Post image via Creative Commons, William Allen on Flickr.
We were just on this bandwagon and went to many of the stores in our area. We almost bought a clearance mattress that we were told was a great deal. It is not for two reasons: Clearance mattresses are returned mattresses are void of their warranties and they are still marked way above what they should be and if you search around you can probably find one just as good that is brand new and cheaper.
We decided to go with the newest trend: memory foam mattresses and buying through Amazon. This has worked out perfectly for us at a fraction of the cost.
Jearise Havenga
You are right, According to their financial reports, their gross margins are 40%. This means that every time someone buys a mattress for $2,000 (after discounts and promotions) they still make $800 in pure profits. The average store makes $250,000 in profits per year. At this rate they will continue to open stores until they saturate a market and drown any competitors.
This is a market ready to be disrupted. Like Jearise, we bought our latest mattress form https://www.tuftandneedle.com . We paid $750 for a high-end king mattress with a 3 month no questions asked return policy.