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Why There Are So Many Mattress Stores Everywhere

A lawsuit may finally provide an answer.

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Photograph by Scott Olson/Getty

In one Austin neighborhood, there are six Mattress Firms within a square mile of one another. In the company’s hometown of Houston, there are four locations on Westheimer between Bagby and Shepherd alone. In Mesquite, you can pick whichever side of I-635 you like at Town East Boulevard and get to a Mattress Firm within minutes. Out in the West Texas town of El Paso, you can fall in love with some memory foam at either the Cielo Vista Shopping Center, or go literally next door at The Fountains at Farah. Sleepy Valley residents can buy a new mattress at Tenth and Trenton, or if they don’t think they can make it that far north, they can make the less-than-two-mile drive down to Nolana and get a new bed there. There are 37 Mattress Firms in Austin alone—by comparison, the city has 43 Starbucks.

Mattresses aren’t a frivolous impulse buy—few people stroll by a store and decide to treat themselves to a new $1000 memory foam on a whim. Yet since 2010, Mattress Firm has opened more than 1,500 new locations across the country. So, what’s with all of these mattress stores?

A lawsuit filed in Harris County by Mattress Firm against Alexander Deitch, vice president of Colliers International, and two former real estate executives, Bruce Levy and Ryan Vinson, offers a potential explanation. As commercial real estate website Bisnow explains, the company alleges that expansion was fradulent:

Mattress Firm claims Levy, Vinson, Deitch and a group of developers conspired to push Mattress Firm into more, and more expensive, locations as it grew to operate its current portfolio of more than 3,500 stores.

Mattress Firm alleges the cohort was responsible for leases signed for above-market prices, then conspired to sell the properties where the company’s new locations opened for substantial profits. It claims Deitch and Levy secretly owned stakes with the developers that owned some of the properties, and used their control of Mattress Firm’s real estate decisions to profit personally from the sales. Mattress Firm’s internal investigation uncovered the alleged fraudulent activities, it said, and it fired the two executives last year.

Drawing the line between fraud and aggressive expansion is at the heart of Mattress Firm’s lawsuit. The lawsuit claims one portion of the scheme alone — a $50K broker fee per lease — could have cost the retailer at least $40M in excess payments. That accounts for roughly 800 locations.

This comes at a time of unrest in the mattress industry. In 2015, Texas Monthly‘s John Nova Lomax took a look at Mattress Firm’s growth as web-based direct-to-consumer retailers like Casper made their own push into the mattress space. As more online retailers emerge, the competition has only grown more fierce over the past two years. There are high margins—a $3,000 mattress costs around $300 to make—but retailers, both online and in physical stores, are selling a commodity often bought once a decade like it’s a luxury good.

It makes for a cutthroat industry—one with its fair share of lawsuits. In addition to Mattress Firm suing its former executives and online retailers suing online reviewers, the company filed a suit against Tuft & Needle, one of the many direct-to-consumer web retailers, in October. That suit alleged that ads from Tuft & Needle targeting “greedy” mattress stores and describing those retailers as a “scam” (and which use variations on the Mattress Firm logo) were defamatory and diluted the company’s trademarks. This week, Tuft & Needle fired back, threatening a countersuit and arguing that its ads were commentary and parody, which are protected by the First Amendment.

Apparently, mattress retail is an industry where competitors have to sleep with one eye open. But if reading about the feuds has left you exhausted, there’s a lot of locations where you can get yourself a new bed to sleep it all off.

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  • anonyfool

    TL;DR – company insider bought/rented sites from real estate company he got kickbacks from and inflated the rental terms so the *external* company would maximize profits from the mattress company tenants.

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  • ** As commercial real estate website Bisnow explains, the company alleges that expansion was fradulent **

    Fradulent, huh?

  • Satalink

    Sherwin Williams is another one — I’ve always wondered HITF does that company afford so many locations. I never see anyone in their stores.

    • Alyssa Burgin

      Sherwin Williams contractor-grade paints are (unfortunately!) the go-to product for painting subs everywhere. You don’t see the commensurate number of patrons in the stores because paint is ordered in vast quantities and typically picked up by one person. SW contractor-grade paint is otherwise known as “water.” It’s junk. But SW goes after builders and gives them deals. This former general contractor did not buy what they were peddling.

  • Always suspicioned they were laundering money for the Zetas or other drug-related gangs. Every time there’s a turf war, they go “to the mattresses’, you know …

  • Manuel Labor

    Walgreens and Eckerds/CVS figured that out years ago. They’re in the real estate business. Selling consumer goods brings cash flow until the real estate goes up. They prefer corners. It’s like owning self-storage units.

  • D Davis

    https://www.reuters.com/article/us-steinhoff-intlnl-results/steinhoff-scandal-knocks-12-billion-off-value-in-blow-to-tycoon-wiese-idUSKBN1E11U8
    Shocked Steinhoff shareholders have wiped more than $12 billion off its value since it revealed “accounting irregularities” and parted ways with its chief executive, in a dramatic fall from grace for the South African retailer.

    Steinhoff has been on shopping spree since 2011 when it took over French furniture retailer Conforama. Last year’s string of acquisitions included Mattress Firm and Poundland, thrusting it firmly on to investors’ radar screens.