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FILE PHOTO: A Mattress Firm, a Steinhoff brand, is being held in Encinitas, California, United States, January 25, 2018. REUTERS / Mike Blake / Photo File (Mike Blake / Reuters)
Mattress Firm, the largest mattress chain in the country, filed for bankruptcy Friday as the latest retailer to succumb to growing online competition.
The Houston-based company, which has 3,400 branches across the country, plans to close 200 stores in the coming days and up to 700 by the end of the year, according to its bankruptcy record. The company indicated that it did not anticipate delivery delays and would continue to pay its suppliers in full.
[[[[Why mattress buyers prefer to click a button rather than lie down in person]
"Before the end of the year holiday season, we will close up to 700 stores in some markets where we have too many sites close to each other," said Steve Stagner, managing director of Mattress Firm, in a statement. He added that the company would use savings from closing stores to "improve our product offering, provide greater value to our customers and strategically expand into existing markets, where we see the best opportunities for serve our customers ".
Mattress Firm is the latest in a chain of national retailers, including Brookstone and Nine West, to declare bankruptcy as consumers flock online. The company, founded in 1986, has long been a stronghold of the mattress industry. In 2015, it purchased $ 780 million from its competitor Sleepy's and announced plans to expand in the northeastern and mid-Atlantic regions.
However, analysts say the company has too many sites and too few to cope with the rush of online competitors that appeal to buyers with more convenient and transparent pricing.
"It's a wake-up call for traditional mattress chains: the 1960s model no longer works," said Bob Phibbs, general manager of the New York-based retail firm The Retail Doctor. "The traditional purchase of mattresses did not seem to be important. This made them feel that they were being used.
In short, buying a mattress often looked like buying a used car: customers did not really know how to compare one model to another and the impressive number of promotions and discounts was making them fear not to get a good price. .
"The reality is that mattress manufacturers have been ripe for disruption," said Phibbs.
The bankruptcy of Mattress Firm comes just days after Amazon.com announced its entry into the online business of bed-in-a-box, popularized in recent years by companies like Casper, Tuft & Needle and Leesa. Walmart has launched its own brand of upscale mattresses online, Allswell, earlier this year. The basic premise of every brand is the same: buy a mattress online and try it at home. If you do not like it, they will refund you in full. (Jeffrey P. Bezos, founder and CEO of Amazon, owns The Washington Post.)
[Mattress start-up Casper is opening its first store — with complimentary naps]
Mattress Firm also had other problems: last year, she lost an important contract with Tempur Sealy International and her parent company, Steinhoff International Holdings, found herself plunged into an accounting scandal.
"Between declining sales and over-expansion, Mattress Firm has had a tough battle," said Stephanie Lieb, a bankruptcy lawyer with Trenam Law, based in Tampa. "If consumers go to a brick and mortar place, it's because they want better service. Not just a mattress.
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