Mattress Store Financing
Someone once told me that the two most important products to invest money in are good shoes and a good mattress. Why? Because if you are not walking around in your shoes, you are probably laying in your bed. Investing in a quality mattress is a new trend that is revolutionizing the bed and mattress store industry, especially in a society that is valuing good health and sleep. Unfortunately, many American’s dread the process of going to replace a mattress because – let’s be honest – there are so many new types of mattresses and must have features that make the shopping process so incredibly complicated and confusing. No one wants misleading, confusing, and complicated data being thrown at them without any understanding of why this or that mattress is what they need. The bed and mattress store industry is also unique in that it is difficult for a consumer to buy a mattress based on another consumer’s review, which is often the way many customers shop today in many other retail industries. Each bed and mattress is incredibly unique; one bed does not fit all. Many bed and mattress store owners are becoming more customer conscious by focusing on the needs and wants of the consumer.
After the recession, many consumers stopped buying homes, leading to less bed and mattress purchases. Luckily, the bed and mattress store industry is bouncing back thanks to more disposable income amongst consumers and the growing real estate industry. In 2015, United States mattress manufacturers shipped over 39 million bed and mattress units, which is a 4.5 percent increase from 2014. Overall, wholesale revenues were over $8 billion in 2015 as well, leading to a 6.8 percent increase from 2014; this also led to the average bed and mattress unit selling price increasing 2.2%. The report put out by the International Sleep Products Association also showed that increased numbers are not going to slow any time soon for the bed and mattress store industry, with the global mattress market projected to reach $37.9 billion by 2020.
Bed and Mattress Store Industry Trends
While many bed and mattress stores are seeing increased profits, there are many new trends that are helping to propel these businesses. Many bed and mattress store owners have been known to aggressively market and advertise via a multitude of channels, however there are many other consumer demands that are shifting the way consumers purchase mattress units. To stay ahead of the competition, especially for smaller bed and mattress stores, focusing on these top trends are essential to competing against the top mattress store players.
- Sleeping for Better Health: Sleep is a biological need that is vital to maintaining a healthy body, mind, and overall lifestyle – surprisingly, this is a new trend that consumers are adopting. For years, many people focused on living a fast paced lifestyle with very little sleep, but with the growing concern for combating major health issues, American’s today are focusing on taking their health into their own hands. Studies have shown that sleep deprivation leads to lack of focus, limited attention span, and memory retention, all of which play vital roles in learning and processing new information. In correlation with learning new information, sleep deprivation also greatly impacts performance. All of these findings are becoming more obvious to consumers everywhere, which is leading to an increase in purchasing quality, expensive mattresses.
- Bed in a Box Revolution: Many consumers are placing online orders with the mattress store startup Casper; people are blown away with the low shipping costs for a superior product. Casper has helped shaped a new revolution of quite literally – a bed that can roll up and fit in a box. They have also marketed for ease and convenience with moving the bed (in a box) through the consumer’s house. We all know the hassles associated with actually moving a new mattress into the house. This new trend, once thought of as a fleeting revolution, is definitely here to stay, with major bed and mattress companies following suit.
- Consumer Focused Tools: Focusing on consumers is the number one priority for all bed and mattress stores, and the top concern from consumers is the inability to know how to effective pick one of the many mattress choices. This is where technology is playing a major role in the bed and mattress store industry. For example, Kingsdown, a major mattress company, created something called “bedMATCH”. This is a system that utilizes advanced diagnostic tools to calculate the best mattress for that specific customer based on body types and other variables. There are many other new technologies being produced by major players in the bed and mattress industry, so focusing on implementing more consumer focused technologies is vital in competing in the bed and mattress store industry today.
- Expansion of Luxury Bed and Mattresses: Surprisingly, many bed and mattress stores are finding greater success buy focusing on an affluent customer base that is willing to spend top dollar for the best that mattresses can offer – particularly with the retiring Baby Boomer’s. Many Baby Boomer retirees are growing more concerned with their health and are combating this by purchasing luxury mattress units that create an optimal night’s sleep. This are of the bed and mattress industry is continuing to expand and grown, so focusing on this area can help many mattress stores see increased profitability.
- Cool Sleeping: Temperature regulating beds and accessories have been a trend for the past couple of years, especially with the increased interest in memory foam products (which tend to make the consumer sleep hotter). For those bed and mattress store owners that invested early in sleeping cool technologies, you are ahead of the game, because temperature regulation is here to stay. Many major bed and mattress companies are still creating more efficient thermo-regulating and moisture-wicking products that fit consumer demands. However, this is where innovation will help – there is plenty of room to grow in this area, especially because a lot of the cool sleeping products out there are expensive. Consumers will be interested in more affordable but high quality cool sleeping products, so innovation is key in excelling in this niche area.
Types of Bed & Mattress Store Business Loans
|Bank||6-10%||3-7 years||14-30 days|
|SBA||6-10%||3-7 years||10-30 days|
|Line of Credit||5-15%||1 – 3 years||7-30 days|
|Alternative||6-25%||1-5 years||5-7 days|
|Cash Advance||1.16-1.55||3-24 months||1-3 days|
Mattress Store Bank Loans
Conventional bank loans are a great financing tool for any mattress store owner that is looking for good rates to purchase real estate, refinance real estate, refinance debt, obtain working capital, hire employees, make payroll and just about any other business need. With rates starting in the mid single digits, a bank loan or line of credit are simply the best financing options available. But with great rates comes increased due diligence, so a mattress store must have good financials and great credit to obtain bank-rate capital.
- Rates: 5-10%
- Terms: 1-25 years
Bed & Mattress Store SBA Loans
SBA loans are very similar to conventional bank loans, with the only difference being how the loan is secured. SBA financing is a form of bank lending where the government of the United States agrees to cover much of the lender’s losses should the borrower fail to fully-repay their loan. Uses for SBA financing include purchasing and/or refinancing real estate, refinancing and consolidation of debt, business acquisition, working capital, business expansion, etc..
- Rates: 6-8%
- Terms: 7-25 years
Alternative Mattress Store Loans
There are options for company’s that can’t get a loan through a bank or SBA lender, and the next best option would be a fintech business loan (or institutional loan). Alternative lenders offer financing for company’s with decent credit and cash-flow, who have been profitable one of the past two years. Alternative loans are generally shorter term, and main uses are usually for operating capital purposes.
- Rates: 9-25%
- Terms: 1-5 years
Mattress Store Cash Advance
Cash advances are a form of short term working capital in which a mattress store agrees to sell future revenues for cash now. The cash advance lender will analyze a company’s cash flow (from looking at either the credit card processing statements, business bank statements, or both) and then provides the company funding within 1-2 business days (and even same day in some instances). Depending upon the structure of the cash advance, the funding will either be repaid each day from the business bank account via ACH or through collecting a percentage of each days credit card transactions.
- Factor Rates: 1.16-1.50%
- Terms: 4 months – 2 years