Mattress Firm’s Private Equity Owner Steinhoff International Holdings Is Going Through Litigation
Steinhoff International Holdings acquired Mattress Firm in 2016 for $3.8 billion. The private equity company became the subject of a number of international legal proceedings in late 2017 and agreed to a settlement of around 1.4 billion euros in September 2021. Steinhoff received approval to pay out that settlement to around 90,000 investors last week.
An independent report found that Steinhoff was involved in a $7.4 billion accounting fraud where it overstated profits, according to multiple reports.
The company has been selling off a number of assets in order to raise funds, according to Bloomberg.
Why Are There So Many Online Mattress Companies New Tech
The key reason these online mattress companies entered the market is a technological marvel. Prichard told me The reason youre seeing so many mattress startups appear is because of the development of the roll pack machine, which has enabled internet companies to ship mattresses across the country with minimal freight costs.
Levine agrees, as a trend expert he says most of these trends have a technology component to them that was the real game-changer.
Roll pack machines like the Teknomac Automatic Roll Pack System from Global Systems Group or other companies like Dolphin Pack Srl, with headquarters in Italy, are responsible for these online mattress companies. These unsung heroes of online sleep shopping ease were successful at cutting out the barriers to entry for new mattress competitors.
This was the final component to disrupt what Levine says is a 28 billion dollar industry.
New York-based Casper was one of the first, if not the first known company to use this technology as a method of selling mattresses on the internet. Levin says they earned 200 million in revenue in their first 2 years on the market. Because they didnt own the technology, however, other companies caught up fast. So, if you catch your zs from a mattress you bought online, now you know how it got to your door.
Is It Okay To Buy A Floor Model Mattress
Its not uncommon for a mattress store to sell their floor models at a discounted price as they clear out old stock. A floor model mattress can be a good way to obtain a high-quality mattress at a bargain price. Theyre often no more than gently used, as customers tend to only lie on them for a few minutes at a time.
Still, its smart to exercise caution and examine a floor model mattress thoroughly before you purchase it. You should also double-check if your mattress will include a return policy or a full warranty. If the bed lacks either of these, it might not be as great a deal as it seems.
If you choose a floor model mattress, its a smart idea to encase the mattress in a bedbug-proof mattress protector before you bring it home. Leave the mattress protector on for a full year before you take it off, to ensure anything that might have traveled home in your mattress has died off.
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Mattress Stores Have Low Overhead
The average mattress costs between $900 and $2,000. Mattress prices are commonly marked up by 50% or more. That gives mattress sellers big profits on just one sale. In fact, mattress stores need to sell fewer than 20 mattresses per month to cover operational costs.
Mattress stores dont have a lot of overhead, either. Many dont carry a large inventory in store. Instead, they keep mattresses at a nearby warehouse and ship them to the customer.
Some stores even ship directly from the manufacturer. This lets them sell mattresses without ever having to manage their products.
Mattress stores dont typically have a lot of staff working at one time. Most employees work on commission. So if they dont make a sale, they dont get paid.
How much do mattress stores mark up their prices?
What Are Sales Commissions Like At Mattress Firm
109English reviews out of 109
Pros
The ability to run your store how you like it Depending on your managers , there’s a relatively good culture. They’re decently good about shift swaps and scheduling your days that you want. For the most part, you write your paycheck or it’s $10.25/hr.
Cons
There’s been a lot of leadership shake up recently, some people I’ve seen a carrot dangled in front of them regarding promotions. Recently, actions and words haven’t been matching up, breaking trust between sales associates on the floor and upper management. Not to mention, if something goes wrong and you start to lose commission $, it’s hit or miss if the warehouse or management will help to correct the situation Finally, you’ll work 50 hours a week on average, 10ish hours a day, and holiday weekends are more often than not extended hours which adds more strain to work life balance, especially if it doesn’t turn out to be a big selling weekend.
Advice to Management
Start being more open with your associates instead of leaving them constantly in the dark. Take a moment to appreciate some of the integral individuals. Stop gaslighting.
Reviewed by: Manager On Duty
No commission cap and Great benefits
Cons
Company lacks stability and direction.
No commission cap and Great benefits
Reviewed by: Store Manager in Galveston, TX
There’s not much pro besides training pay.
Cons
Advice to Management
May 21, 2021
Can get paid either hourly or commission and good start for a sales career
Cons
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Is Mattress Firm Going Out Of Business
Mattress Firm plans to close up to 700 stores as part of its Chapter 11 bankruptcy, including more than 200 within days. The nations largest mattress retailer said in a court filing that it will not conduct typical liquidation sales, where customers might otherwise score a going-out-of-business deal.
Does Mattress Firm Negotiate
Does Mattress Firm negotiate?
Why is Mattress Firm so expensive? Mattresses are expensive when bought from a store because the retailers typically mark up their mattresses by 50% or more to cover costs and make a profit whilst the addition of high quality materials like organic latex or cooling foams can push the price up even further.
What is the best month to buy a mattress? Mattress manufacturers generally release their latest models in June each year. The period between June and September is incredibly popular for purchasing mattresses, and this is when prices tend to be highest. The best time to shop is actually in the months immediately preceding this peak period.
Can you haggle on furniture prices? The majority of furniture stores are willing to negotiate on price to some extent , so you can and should haggle to get a better deal.
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The Company Has Its Eyes On Expansion Online And In Major Us Cities
Mattress Firm wants to increase its presence in a number of markets, including Los Angeles, Buffalo and upstate New York, and Detroit.
The retailer also recently launched a “store of the future” concept that incorporates technology and showcases brands in a shop-in-shop format. All new locations will become stores of the future, and up to 20% of its existing store fleet will be refreshed to this concept annually.
The company also is thinking about its online presence. It had over 62 million visitors to MattressFirm.com in 2021, and launched Sleep.com to help consumers understand “the health benefits of quality sleep.”
Mattress Firm Probably Wasnt Laundering Money But They Werent Making Great Business Decisions
We know that because Mattress Firm filed for Chapter 11 bankruptcy, which it emerged from quickly in Nov., 2018. The company had poured money into branding over the previous decades, taking over many of its competitors and opening new locations nationwide.
In 2014, online mattress retailers emerged, taking a huge bite out of Mattress Firms market share. The company couldnt adapt quickly, as it relied on brick-and-mortar locations to shore up its bottom line, and many of those locations had costly leases. Mattress Firm also alleged that two former employees were getting kickbacks for signing those leases, which were much more expensive than necessary . That might help to explain why some Mattress Firms were located within miles of one another. The company simply made bad calls and encountered some alleged corporate fraud along the way.
But in 2016, a South African retail company called Steinhoff purchased Mattress Firm for $3.8 billion, more than twice the latter companys market price. Was this evidence of money laundering?
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How Much Commission Does A Mattress Salesman Make
To bottom line is if you take all the business down you will average about 7% commission on your combined sales. Some deals can pay as much as 10% 12%, but those are few and far between. Most deals pay between 4% 6%, with some paying less than 1%. The average associate sells about $35K $45K a month.
The Truth: If You Can Return It But It Will Be A Hassle And It Wont Be Free
Be sure to ask about the return policy before committing to a purchase. Do they offer exchanges or store credit only? Are there pick up and restocking fees? Are there any specific requirements tied to the return? For example, if the mattress must return in a re-sellable condition, that means unused.
Since they cant sell your used mattress, retailers will try hard to make you keep it. This means making return policies short, more inconvenient, and costly.
Brands that sell primarily online, typically offer generous sleep trials, up to 100-nights, to give you more time to determine whether or not the mattress is right for you.
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What Could Be The Most Expensive Mattresses
Well, if you think your commission rate is low, then wish to sell one of these things to have more money.
You know some people are contented as to how simple and affordable mattresses work for them.
As long as it is comfortable and affordable at the same time, they will settle for it and enjoy sleeping on it.
But I am sure that you know how many people are living in mansions and castles around the world.
And one of those things that they look forward to is their mattress, in which they can rest and chill.
Do you know that some mattresses are way more expensive than a typical house for one family?
Yes, you read that you can buy some mattresses for over 20,000 Dollars up to a million.
With a million, you can invest in many things but then let me get it straight.
It may not be practical, but it provides unique features and high-quality materials that weigh the price.
Here are the five top most expensive mattresses you can find worldwide, and it is too heavy for ones pocket.
Indeed the mattress will pay off the price for a great and different experience.
How Online Mattress Companies Changed Things
Online mattresses companies have introduced a new way to shop for a mattress and bedding in general.
Instead of trawling among limited selections in a brick and mortar store, you can do a quick search online and order a mattress from your couch.
The biggest advantage of online mattress companies is its price. Their sales model eliminates mediators and overhead costs.
So prices are much lower compared to brick and mortar stores. You can now get a decent memory foam mattress for $700-$1,000 .
Even luxury hybrid, pillow top, and organic mattresses cost half or a third of store prices.
Online mattress companies have also eliminated the risk of buying a mattress that you are not sure youll find comfortable.
Instead of a 15-minute test at the store, online companies provide 60-100 days to test the mattress at home with free returns if you dont like it. Others like Nectar give you a full year.
Once you combine all this with the ease of shopping from home and the wide variety you can access by just your phone, its easy to see why people no longer want to go to big box stores to buy a mattress.
Entrepreneurs see this as an opportunity to enter the market before it becomes too concentrated.
The fact that theres still no clear market leader makes the opportunities all the more appealing to investors and entrepreneurs.
Its not just startups disrupting the old way of selling mattresses.
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Is Mattress Firm A Front For A Large
Mattress Firm stores are everywhere.
Its not uncommon to see two or three in the same shopping center, sometimes even across the street from one another. And not just two different mattress stores to promote competition, but the same exact store: Mattress Firm.
On top of how many Mattress Firm stores there seems to be, there are also all the other brick-and-mortar mattress companies out there, such as Mattress World and BedMart.
In fact, there are currently more mattress stores than McDonaldsor Starbucksin the United States, most of which are Mattress Firms, according to USA Today.
Illustrating this point, 42.6% of Mattress Firm stores are within a one-mile radius of one another, according toBusiness Insider.
The average American only buys a new mattress every seven to 10 years. Plus, most millennials are having their mattresses delivered straight to their doors with bed-in-a-box services, according to USA Today.
So why are there so many Mattress Firms?
A conspiracy theory recently went viral on Reddit after a user suggested that Mattress Firm was a front for a large scale money laundering scheme. How could a company with such a slow-moving product manage to keep so many stores open, many Reddit users wondered.
Mattress Firm is some sort of giant money laundering scheme, one user wrote. I remember seeing four Mattress Firms all on each corner of an intersection once, and there is no way there is such a demand for mattresses.
But whats really going on?
The Company Gave Over $1 Billion To Its Stockholders In September
On Sept. 24, 2021, four days after the company announced that it was exploring a potential IPO, Mattress Firm paid a $1.2 billion dividend to its common stockholders.
Those stockholders include Steinhoff International Holdings former lenders and members of the company’s executive team.
The company obtained the money to distribute by taking out a $1.2 billion loan on Sept. 24.
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I Wonder: Why Are There So Many Mattress Firm Stores
BOISEIf youve driven down any major thoroughfare youve probably seen them: large buildings with high windows and big glowing signs. Inside, dozens of places to rest your head.
Mattress stores are popping up all over the valleyand one chain has taken the idea to new heights. In three years of following #BoiseDev, its the question I get most often:
Was just talking about this. Im endlessly fascinated by the number of mattress stores near the mall and on Eagle. WHY.
Melissa Davlin
Does Ada Co. really have enough mattress buyers to keep that many of these stores in business? Theres one on every other corner!
Tami
Mattress Firm had a toehold in the Boise market with a smattering of stores when it acquired Sleep Country USA in 2015.
Now, the sleeping giant has a unique concentration of stores which are often in close proximity, leading many to wonder: why so many?
Consider thisat State St. and Glenwood, Mattress Firm has a pair of locations that are just 300 feet apart from door-to-door.
But if dodging cars across seven lanes of Glenwood is overwhelminghead out to Eagle Rd. & Lanark, where two Mattress Firm locations are less than 200 feet apartand sit literally right next door to each other.
In all, Mattress Firm has 11 locations in Ada and Canyon Counties . No single store is more than one mile from a sister outlet.
The answer, it seems, boils down to simple ease of access:
Makes sense, right? But why so many stores so close together?
What Is A Sales Representative Agreement
A Sales Representative Agreement is an agreement used by a business to appoint its sales representatives. The agreement sets forth the status of the sales representative as either exclusive or non-exclusive, designates the representatives sales territory, and indicates the products s/he is authorized to sell.
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Advertising Expenses May Increase
The retailer is expecting that advertising expenses will continue at their current level or increase. Furthermore, the company states that it cannot assure that “the net income from new customers we acquire will ultimately exceed the cost of acquiring those customers.”
Mattress Firm advertising expenses
| $950 million |
The Mattress Firm Bubble A Look At Its Retail Locations As It Files For Bankruptcy
Mattress Firms stores tend to be clumped close together nearly half of all of its stores are within a one mile radius of each other.
Mattress Firm is the largest mattress retailer in America with 3,420 store locations across 49 states and Washington D.C. Over the past decade, it bought out competitors such as Sleep Train, Sleep Country USA and Sleepys. The Sleepys deal happened in 2016, the same year that Mattress Firm was acquired by Steinhoff International for $3.8 billion.
Today, the coast-to-coast sleeping giant is reportedly facing bankruptcy.
According to a Reuters exclusive, Mattress Firm may be filing for bankruptcy protection as soon as the end of this week. This is likely spurred by its rapid expansion in spite of several mattress-in-a-box competitors breaking out in recent years.
UPDATE: Mattress Firm officially filed for Chapter 11 bankruptcy today, with CEO Steve Stagner stating, we will exit up to 700 stores in certain markets where we have too many locations in close proximity to each other.
When we last wrote about Mattress Firm, there were several concerns with the company, such as executive turnover, peculiar Google reviews and, of course, redundant locations. Now that this bankruptcy will affect its retail footprint, especially in those redundant locations, its worth revisiting the Mattress Firm bubble effect with new data insights.
Here are the top-ten states that have the largest percentage of repetitive stores:
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