Looking for a new mattress?

[cameray]

Before going out to purchase that new mattress you might want to read this...

In the mattress industry, private equity firms bought Sealy and Simmons, the number one and number two brands by a mile. They stopped really competing against each other. They cut costs, and they raised the prices of the mattresses. They started focusing only on the top end and stopped even making mattresses really for middle-income people that cost less than $1,000. So basically simplifying this over time, as they bought Simmons and sold it to another PE firm three or four years later, and same with Sealy, the buyers -the sellers would make a lot of money, and the buyers felt, well, we can keep raising prices because there's no competition. We own Sealy, and we own Simmons. It's different firms, but they both have the same aim: to make a short-term profit, not to beat each other up on price. What happened over time was they couldn't raise the prices anymore, and the prices were raised double the price of inflation, double the rate of inflation. They cut the beds in half, so you came up with no-flip mattresses.

So you don't have to flip it, but there's another reason why you don't have to flip it.

Initially, they made the mattresses thick. They kept putting - creating thicker and thicker mattresses so they had an excuse to keep raising and raising the prices. So they thought, both Sealy and Simmons both had the same thought. The private equity firms that owned them both thought, well, why don't we cut costs significantly and cut the beds in half and introduce these no-flip mattresses.

Simmons did it first, early this decade. Sealy stood back. Sealy even made a statement when Simmons did it, saying we would never offer a no-flip mattress. That's why you should buy our mattresses. Simmons's sales didn't rise, but their earnings went through the roof. The private equity firm that owned Sealy at the time, which was Bain Capital - the same firm that Mitt Romney owned during that period, the Republican presidential candidate - decided okay, well, we'll change tack. You know, even though our market share is growing, their earnings are going through the roof, and that's what we care about. So then they introduced no-flip mattresses, and now and for the last six or seven years, Sealy and Simmons only offer no-flip.

Are their no-flips any better or worse than the two-sided ones?

Well, they certainly have less of a life. You can't flip them, so just like a tire, you know, when you rotate your tire, you know, beds that used to last 15, 20 years on average - and those were Sealy and Simmons beds - now these beds last six, seven years.

What's the state of Sealy and Simmons now?

Now they're both in a really tough state. Simmons just got bought by - went bankrupt, and it got bought by Serta. So that means Simmons, a company that's been around for more than 100 years, doesn't exist anymore. A quarter of their employees were laid off in the last year, and now - I shouldn't say - the private equity firm that owned Serta bought them and says they'll keep them independent, but that's a little hard to buy.

As far as Sealy, they were veering towards bankruptcy, and their private equity owner, Kohlberg Kravis Roberts, put in some more money in the company to keep it going, but Sealy is also having some problems, though they're probably a step above where Simmons is.

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[roundcorners]

that is why I always liked... Custom Comfort Mattress they are local and make comperable products....

 

[Talyssa]

i got my mattress at custom comfort too.  They both make and sell their products so there's no additional markup from going through a store, you get  to support a local business (they make them here too), and the sales people don't get paid by commission.