Mattress companies make big boom in Houston
Profit margins can gross 30-40 percent, Consumer Reports say
HOUSTON – Finding a mattress store on any given block in Houston isn’t difficult.
Terrance Randle, the director of sales for Mattress One, one of Houston’s biggest mattress retailers, knows it firsthand.
"You definitely have more furniture and mattress stores here in Houston,” Randle admitted.
Of the 129 Mattress One stores in Texas, 97 of them have opened in Houston in the past four years. Mattress Firm, another major mattress retailer, boasts more than 145 stores in the Houston area.
And the mattress business is a profitable one.
According to Consumer Reports, mattresses can carry the highest markup of any product. Mainstream mattress brands can carry gross profit margins of 30 to 40 percent, and more luxurious models can bring in an even bigger profit, with margins around 50 percent, according to the report.
“We’ve all seen 50 percent off sales on mattresses, and they’re still making money even when they give you 50 percent off, so what does that say about the markup on mattresses?” Edgar Dworsky, founder of ConsumerWorld.org, said.
Randle acknowledges that, but noted that the profits have decreased slightly with more and more money spent on advertising.
“You do have back-end expenses,” Randle said. “Advertising, marketing and then the cost of real estate.”
Even so, Randle noted that companies can keep costs low by staffing stores with only one or two employees at a time, and opting for less expensive suburban real estate.
Globally, the mattress industry seems to be growing at leaps and bounds as well.
A report from Global Industry Analysts projects the global mattress industry will reach more than $24 billion in 2017.
Houston is seeing a piece of that, too.
"A lot of it is just because of the population (growth in Houston),” Randle said. “You know, it's consistently growing. It's getting bigger and bigger all the time, so, you know, everybody needs a mattress to sleep on."
Some consumer reports suggest people put off big purchases -- like mattresses -- during economic slumps.
And as the economy starts to strengthen, so do mattress sales. Most people spend between $800 and $1,200 on a mattress purchase, according to Consumer Reports.
In addition to brick and mortar stores, there is a burgeoning online market for mattress sales catered to millennials. Companies like Casper and Leesa advertise their “mattresses in a box,” which get shipped directly to the consumer’s home without ever having to step foot inside a store or shopping mall.
Dworsky pointed out that many people still prefer to “showroom shop” for mattresses, and enjoy the ability of actually testing one out before they shell out hundreds or thousands of dollars.
He explained the best way to shop for a mattress is to visit the store armed with information.
“You come in prepared. You don’t just say, ‘I’m a nice guy, can you do better on the price?’ If you can come in with a competitor’s ad for an essentially similar mattress, that’s good ammunition,” Dworsky said.