Mattress Firm Has King Size Expansion Plans
Setting its sights on the future, Houston-based Mattress Firm has built an infrastructure to take the company to the next level.
Randall Shearin

The Mattress Firm’s flagship store, located along Gulf Freeway in Houston, is dubbed “Texas’ largest mattress store.” The store is located next to the company’s corporate headquarters (at left).

Shopping Center Business recently met with company executives at Mattress Firm’s headquarters in Houston.

Mattress Firm has grown tremendously over the past 10 years. The firm, whose roots are in Texas, grew throughout the state in the early 1990s. In 1993, specialty stores only accounted for about 19 percent of all mattress sales. Department stores and furniture retailers led the way.

Areas like the Value Center and Clearance Center (at rear in this photograph) allow cost conscious customers to quickly find bargains.

“In the markets that we serve, we’ve become a very significant player and are often the market share leader,” says Gary Fazio, president and CEO of Mattress Firm. “Product selection and store convenience are two important components in taking a leadership position.”

Inside the Mattress Firm, customers can choose from a wide variety of bedding styles and price points.

“The average mattress store will spend very little money on store build-out because they are less committed to the development of the property,” says Steve Stagner, chief operating officer. “Mattress Firm took a position 5 years ago that we were going to build a store that is more consistent with what a shopper would find at other well known national retailers.”

Mattress Firm uses appointments like ceramic tile and hardwood floors in its stores. In some of its larger stores, the company has even gone even more high end, with waterfalls and “spa-like” customer rest areas. The company spends about three times as much more than its competitors on appointments for its stores.

“We are doing better real estate, better store buildout and better merchandising,” says Gary White, the company’s director of real estate.

The Mattress Firm’s goal is to be a national specialty retailer of bedding. The company, at 300 stores, is poised to grow for the future, with plans to open 35 stores per year over the next few years.

The company’s training program for salespeople and management is intense as well. Similar to programs at Xerox and IBM, Mattress Firm doesn’t necessarily see the selling of mattresses as the ultimate goal for its college graduate hires. It wants to train them as managers and future leaders.

“At the end of the day, it is not just about a commission. It’s about a purpose-driven selling which is changing people’s lives,” says Stagner. “One of the positives of that is a lower turnover rate. We’re teaching them coaching and management practices that they can use for the rest of their lives. One of our biggest recruiting factors is that the average person make north of $50,000 in their first year out of school.”

Mattress Firm has made a major investment in its infrastructure over the past 2 years. In addition to the merger, the company also built a new headquarters and flagship store in Houston. Located along the Gulf Freeway, the headquarters building is formerly an old warehouse location for the company. Mattress Firm built out the warehouse into its corporate headquarters, a 54,000-square-foot facility complete with a training center, and all departments of the company. At the front is an 18,000-square-foot flagship store (dubbed “Texas’ largest mattress store”) where the company can test new ideas and products at its doorstep. The store also comes in handy for training classes, since practical applications can be seen just a few feet away.

Steve Stagner, chief operating officer (left) and Gary White, director of real estate, at the company’s headquarters’ store in Houston.

Along these lines, the company has also made several key executive level hires to take the company to the next level. Bill Dandy was hired as the company’s executive vice president of marketing, for example. He was with Michaels when the company grew from 300 to 1,000 stores and served as chief marketing officer for Dick’s Sporting Goods. Brian Bandarra was hired as vice president of sales from David’s Bridal, bringing a wide range of retail experience with him to Mattress Firm. Mike Marrie joined as chief information officer from a successful big box retail chain. Dan McGuire, a 25-year veteran of the industry, was given the responsibility for new business development.

The company tries to take locations on the street or have end cap locations in prominent shopping centers. The company has two store sizes: its traditional neighborhood stores are 4,000 square feet and its supercenter concept is 6,500 square feet. The company began opening its newest store type about 2 years ago, and already 62 percent of its stores have been converted to the prototype. The concept features a “first impression zone” that makes customers feel at home and then fits the mattress to their preferences.

Currently, the Mattress Firm has about 310 locations, about 260 of which are company owned. The balance of the stores are franchised units. The company has not opened a new franchise in 5 years, partly because it has been building a better platform and structure for this arm of the company.

“The growth has really come through selecting the right markets, getting the right absorption in those markets so that we can have a dominant leadership position in the market,” says Fazio. “We select markets where we can dominate the marketplace. We will have a heavy investment in advertisement, real estate and operations.”

Mattress Firm opened 32 stores in 2005 and the company expects to open 35 new stores in 2006, with as many following over the next few years.

The company prefers to locate in major metropolitan areas with a population of 2 million and greater. In markets smaller than that, it will consider franchising stores to independent operators. The company must have a critical mass to stretch its presence in the market. It does major advertising, both on television and radio, as well as print. The average person in Tampa, for instance, hears spots for the Mattress Firm 4 hours per year.

“We don’t rely on outside influences to draw people in,” says Stagner. “We spend the money to attract consumers to the shopping center.”

The company has a multi-faceted growth plan. It has accretive growth in all of its current markets, and it estimates it can continue to add more stores in every market it serves. In addition, the company has identified several new markets where it will enter over the next few years. The company has been building a more solid infrastructure for franchise growth, so it can eventually franchise stores to smaller markets.

With its growth plans, the company estimates sustained, brisk growth over the coming years. Sleep has been cited as one of the fastest growing industries in the U.S. and Mattress Firm is on top of trends like pressure relieving mattresses and pillows. A special gallery in some stores addresses these needs with a wide selection of the newest technology sleep surfaces that are designed to reduce pressure points and improve overall sleep. The company also has expanded its line to include bedroom furniture in some stores.

Mattress Firm has also been able to develop some competitive advantages in the business. It delivers a significant amount of the mattresses sold in its stores the same day with its Red Carpet delivery service. The delivery drivers actually roll out a red carpet, wear protective booties, and leave a mint on the pillow of a customer’s new bed once it is in their bedroom. In addition, Mattress Firm uses a private television network to send programming to all its stores. It can also use the network for sales and product training for employees. Finally, the company uses an independent service to secret shop all of its stores, to guarantee execution of the customer experience.

Poised for the future, the company is ready to grow.

“We believe that we’re taking the right steps in real estate, management and in-store product merchandising,” says Stagner. “We want to satisfy our consumer’s needs by being ahead of the trends and knowing more about the products to be a savvy retailer.”