August 9, 2018 at 10:42 AM
Bricks-and-mortar mattress stores aren’t resting so easy.
That’s because online retailers are laying claim to what may have seemed like sacred territory for their physical competitors: mattresses. The plush surfaces where humans spend a third of their lives may have seemed immune to e-commerce just one decade ago. But not so anymore, given a boom in online mattress start-ups, detailed online user reviews, free shipping and no-hassle returns.
Physical retailers were told a cautionary tale this week when Reuters reported that Mattress Firm, the country’s largest mattress retailer, is considering filing for bankruptcy. The company is saddled by expensive store leases and might be pressed to shutter some of its 3,000 locations, sources familiar with the situation told Reuters. As of Monday, the company hadn’t made any final decisions, and the company did not return a request for comment by The Washington Post.
Mattress Firm was already on shaky ground after losing Tempur Sealy International, the maker of Tempur-Pedic mattresses, as a supplier last year. It has also been dogged by the financial troubles of its parent company, Steinhoff International Holdings, in the wake of an accounting scandal.
But analysts agree that for Mattress Firm and other bricks-and-mortar retailers, there are broader complications at play. Their most serious competitors are online retailers who have found quick success with bed-in-a-box models — often mattresses that come compressed and vacuum-sealed to your door and then expand to their full sizes once unwrapped.
No need to come to a store, no need to lie down and feel for yourself.
Just like everything else.
“If you told [shoppers] 10 years ago, ‘You’re going to buy a bed-in-a-box and you’re going to love that,’ they’d say ‘What?’ ” said Brian Yarbrough, a consumer research analyst at Edward Jones. He compared the shift to early skepticism that Amazon.com couldn’t break into selling apparel “because people want to touch and feel it.” (Amazon chief executive Jeffrey P. Bezos owns The Post.)
But here we are. Online mattress start-ups — including Nectar, Tuft & Needle and Leesa — have won customers over with offers to buy mattresses online and try them out for a few months. Companies will offer full refunds for returned mattresses and, in many cases, donate the used mattresses to charities.
Casper, for example, raked in over $100 million in sales in 2015, its first full year. The mattresses are sold at Target stores, and this year it opened its first permanent location in New York. The store was outfitted to feel like a bedroom where customers are encouraged to relax and even snooze. More than a dozen other pop-ups have opened nationwide in the past few years.
Meanwhile, stores such as Mattress Firm have to contend with cavernous showrooms and expensive store leases. Mattress Firm closed about 70 stores in 2017, according to a report from the financial services and investment firm Wedbush. Analysts there estimate that the company could close 600 to 1,000 stores this year.
Charles Lindsey, an associate professor of marketing at the University at Buffalo School of Management, said bricks-and-mortar stores — whether Toys R Us or J.C. Penney — have clearly suffered as shoppers venture online. Staying competitive would require those companies to ramp up their online platforms and “have this 360-degree presence so that they’re available to consumers in a seamless manner."
People “like to shop online, but they also like to do some experiential shopping from time to time,” Lindsey said.
Mattress Firm isn’t out of the fight. The company claimed a third of the industry market share as of a December 2017 report by IBISWorld. The company generated an estimated $3.8 billion in sales in 2016.
“There are still going to be consumers who want to test-drive these things,” said Meghan Guattery, a retail industry analyst at IBISWorld. “People spend so much of their lives on their mattresses and in bed that they’re willing to take the time to go to a store to really test it out and make sure the thing they’re buying is what they want.”
But that may not always be the case. Seth Basham, equity research analyst at Wedbush, said 12 to 15 percent of mattress industry sales are moving online. That figure, he said, is increasing by three percentage points per year.
Lindsey said companies such as Mattress Firm should focus on boosting their online presence to reach customers on their phones and social media. Millennials in particular seek out “experiential appeal” that will draw them toward a company on all platforms, he said.
“Whether they can do that or not,” he continued, “that’s certainly a different animal.”