Having recently purchased a new mattress, I began to notice that my neighborhood in Houston, TX seems to be inundated with mattress stores, particularly by the Mattress Firm. According to its website, Mattress Firm has 102 locations in the Houston area alone. In one of comedian Lewis Black’s famous rants, he was particularly perplexed by the existence of two different Starbuck’s coffee locations directly across the street from each other in Houston, TX of all places. Black was quite sure that the existence of these two locations signaled the end of the universe. Like a recent Texas Monthly article on this subject, it also had me wondering, are Mattress Firm locations directly across the street from each other another sign of the end of the universe, or is there something more to it (Lomax, 2015) ?
I’ve now learned that my area of Houston isn’t the only place where you can’t go out for a short Sunday drive without seeing multiple mattress stores, and it has a lot to do with marketing strategy. It turns out that those stores are half billboard, half storefront. Mattress stores are eating up prime commercial real estate locations more for the marketing benefits than to attract a lot of customers, because they don’t have to attract a lot of customers. The margin on a mattress is about 50%. The employees are paid almost completely on commission and they don’t keep any inventory in store. When you buy, its delivered to you from a warehouse. Also, the mattress company doesn’t actually purchase any inventory, they just buy from the manufacturer when you order from them (Bloomberg, 2015). What this all means is that it is that the cost of opening and operating a storefront in most cases is about the same as paying for a billboard on the highway every month and its as effective to market to potential customers.
While some are betting that there is a market for online mattress sales, Mattress Firm, Sleepy’s, and others are betting that there is really no substitute for being able to try before you buy a new mattress. In some retail segments, there may never be strictly online sales.
Bloomberg Business (2015, February 17). Why are there so many Sleepy’s mattress stores? Bloomberg.com. Retrieved on June 21, 2015 from http://www.bloomberg.com/news/videos/2015-02-17/why-are-there-so-many-sleepy-s-mattress-stores-
Lomax, J.N. (2015, June 18). As we’re invaded by mattress stores, a UT MBA plots to move the business online. TexasMonthly.com. Retrieved on June 21, 2015 from http://www.texasmonthly.com/daily-post/were-invaded-mattress-stores-ut-mba-plots-move-business-online