CUSHIONING THE BLOW
Houston mattress maker donated items after Hurricane Harvey
HOUSTON—The unassuming red brick building surrounded by a cement yard, tire shop and taqueria is not the kind of place where one might expect to find a mattress store.
The Houston Chronicle reports that for more than two decades, Texas Mattress Makers has been operating inside this former International Harvester factory in the East End, quietly carving a niche in a city where corporate mattress firms seemingly have a presence in every strip center.
“We’re not your typical mattress store,” CEO Youval Meicler said. “We don’t want a store at every corner.”
Texas Mattress Makers has been expanding its market share despite stiff competition from mattress giants and bed-in-a-box upstarts.
The Houston-based manufacturer and retailer saw a 20 percent uptick in sales after Hurricane Harvey hit last August, as thousands of flooded Houstonians sought replacements mattresses. The company teamed up with Astros star Carlos Correa and other local celebrities to raise money for Houston Children’s Charity and donate hundreds of beds to kids affected by the storm.
In January, Texas Mattress Makers opened a second showroom and warehouse in Katy to gain market share in the growing suburbs. The company found that as Houston’s population grew westward, few suburban customers made the long drive to its 4619 Navigation store near downtown to buy a bed. Although Meicler declined to share sales figures from its Katy location, 5026 E. Third St., he said he expects sales to grow with a second location.
Most recently, Texas Mattress Makers vaulted onto the national stage when it was featured on CNBC’s “Billion Dollar Buyer” with Tilman Fertitta.
Since the show aired in late January, the company has been overwhelmed with hundreds of calls and emails from around the country and as far away as Israel. Traffic to its website quadrupled, and dozens of people walked into its two showrooms, asking where they could purchase “Tilman’s mattress,” Meicler said.
Although Meicler declined to say how big of a sales bump he’s had since the show, he said he welcomed the national exposure.
“It blew me away,” Meicler said. “Our business is doing very well and the show only enhanced our business, there’s no doubt about it.”
Texas Mattress Makers started in 1989 as a mattress wholesaler selling beds to furniture stores. After the Great Recession slowed business, the company pivoted to become a mattress retailer, building and selling custom mattresses to individual buyers. Today, about 60 percent of the company’s business is retail and the remainder is wholesale.
Texas Mattress Makers employs about 100 employees and produces an average of 155,000 units a year, including mattresses and box springs. The average price for a queen-size mattress set ranges between $1,200 and $1,500. The company reported $27 million in revenue in 2017.
Texas Mattress Makers is a small player in the roughly $15 billion bedding industry worldwide.
By comparison, Mattress Firm—the Houston-based industry leader with a 33.6 percent market share— employs more than 10,000 workers and operates 3,500 stores and 75 distribution centers nationwide. The company generated $2.5 billion in sales in 2015 before it was acquired by Steinhoff International and became private in 2016, according to IBISWorld, a business research firm.
Mattress Firm’s CEO and
If you take care of the customer, you’ll always be successful.” —Youval Meicler, CEO, Texas Mattress Makers
president Ken Murphy stepped down earlier this year as the retailer faces financial uncertainty amid an accounting investigation of its South African parent company.
Small companies can compete against large corporations if they can offer something different, said Utpal Dholakia, a marketing professor at Rice University who has studied the mattress industry. For Texas Mattress Makers, it’s the focus on customer service, he said.
“They’re providing a customized mattress designed for you,” Dholakia said. “That’s a solid differentiator.”
Customers can pick from 47 different mattresses of varying sizes, softness and materials. The company manufactures mattresses in the back shop and ships them straight to buyers.
There are no middlemen. With two locations totaling 13,000 square feet, there’s also little overhead. And instead of having pushy sales people, the company employs former production workers who know their mattresses inside and out and don’t work on commission.
“If you take care of the customer, you’ll always be successful,” Meicler said.
The mattress industry is a mature but crowded market with nearly 12,000 players and an expected annual growth rate of 2 percent annually between 2017 and 2022, IBISWorld reports. However, traditional mattress companies, like other brick-and-mortar retailers, are facing increasing competition from e-commerce players such as Casper, Leesa and Lull.
Although these “bed-in-abox” companies represent a small share of the mattress market, it’s growing. Casper reported more than $200 million in online-only sales in 2016, according to IBISWorld.
Texas Mattress Makers has seen some impact from the rise of e-commerce players in the market, Meicler said. While the company has shed some sales to online competitors, it’s also picked up new customers, he said.
“We have every week at least a dozen people who say we’ll never do that again,” Meicler said. “Everyone is built differently. One size doesn’t fit all.”
Online competition won’t likely upend the traditional mattress business, Dholakia said. Unlike most durable goods that can be purchased sight unseen, mattresses are highly experiential. Most people don’t feel comfortable buying a mattress unless they have tried it out, he said.
In addition, there’s a large profit margin built into mattress sales, Dholakia said. The professor estimates that a typical mattress store in Houston has to sell one mattress a day to break even.
“Mattresses is one of the product categories that’s relatively safe from online cannibalization,” Dholakia said. “It’s an expensive product with relatively high gross margins. You can make good money.”
Fertitta, owner of the Landry’s empire and the Houston Rockets, has taken notice of Texas Mattress Makers. The Houston billionaire showcased the company in a special episode of “Billion Dollar Buyer” dedicated to Houston firms working to recover after Harvey. In each episode, Fertitta meets with small businesses, evaluates their operations and products and decides whether to strike a deal with them.
“This episode is a little bit different because it gives Americans all over America a chance to see what really happened here and how Houstonians stepped up to help each other,” Fertitta said before the show aired in January.
On the show, Fertitta asked Meicler to build him a custom mattress set for his Golden Nugget casino-resort in Las Vegas, which is undergoing a multimillion-dollar renovation. The Landry’s CEO put Texas Mattress Makers through a gauntlet of tests, including a blind mattress comparison survey with Galleria shoppers and a 30-day sleep test conducted by Landry’s top executives.
Ultimately, Texas Mattress Makers delivered, and Fertitta placed a $1 million order with the company for 1,000 mattress and box spring sets. He also donated 500 mattresses to Harvey victims through Houston Children’s Charity, of which Meicler and Fertitta are both members.
Meicler, who has donated some 1,500 beds to the children’s charity over the past four years, said he met Fertitta briefly through the organization. But it took a more personal connection to land a spot on “Billion Dollar Buyer.”
Meicler’s stepdaughter, Rachel Gordon, went to school with the son of Fertitta’s lawyer.
“That’s how the show got to us,” Meicler said.
Gordon, chief marketing officer at Texas Mattress Makers, said she was initially skeptical of Fertitta’s offer to go on his reality TV show. However, Gordon said she was pleased with the way “Billion Dollar Buyer” portrayed her company and city in Harvey’s aftermath.
During one scene from the episode, the show took viewers on a tour of Gordon’s home near Brays Bayou, which took on 3½ feet of water during the hurricane.
“I was proud of the way it showed people who we are as a company,” Gordon said. “It showed the human aspect of the business.”
When Meicler moved to Houston in 1979, he never envisioned one day owning a company, much less being featured on national television.
The Israeli immigrant, who grew up on a farm, was 21 years old when he walked into a Houston furniture factory and asked the owner for work. Meicler was handed a broom and told to clean the floor. He swept until it was spotless.
Over the next 11 years, Meicler worked in every department, milling woodwork, driving trucks and even selling furniture. He moved up the ranks until he became president of the company now known as Texas Mattress Makers.
It was the quintessential American dream, Meicler said.
“At the time, all I wanted to do was buy a used car with AC and heat,” Meicler said. “I couldn’t have imagined one day living in the U.S. and owning a company.”