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The Great Mattress Conspiracy: Why Are There So Many Mattress Firm Stores?36:17
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Conspiracy theories! They're everywhere these days (thanks a lot, internet).

But this one is a new one to me — it's about Mattress Firm, the mattress store you've probably seen, well, everywhere, if you live in the U.S.

Check out this comment on r/AskReddit answering "What conspiracy theory do you 100% buy into and why?"

Mattress firm is some sort of giant money laundering scheme. They are fucking everywhere and always empty. I remember seeing 4 mattress firms all on each corner of an intersection once, there is no way there is such a demand for mattresses

edit: a few people seem confused, I'm talking about multiple of the SAME mattress store all in close proximity to each other, not different mattress companies. Like if there were 4 different companies all next to each other I get that but these are the same company. Edit3: rule 4 for the link sorry boys

I had to see this in action for myself, so I dropped WBUR's location on a map (the little house) and called up the Mattress Firm stores within an approximately 10 mile radius (the blue pins).

That's a lot of mattress stores within a half hour drive of my office! There are literally two across the street from each other in Cambridge! Maybe there is a conspiracy??

Same, Fry.
Same, Fry.

This week's episode delves into this incredible mystery, and it's also a collaboration between us and Household Name, a podcast from Business Insider about companies you know and stories you don't.

Amory and Household Name's Dan Bobkoff tackled this question: What is the deal with Mattress Firm stores? Why are they everywhere? Why are they sometimes, like, across the street from each other?

They break it down into three parts:

  1. Overmattressifcation (yes we just made that up)  — What's with all those stores?
  2. The Sleaze Factor — From the vibe of the stores themselves to the prices you pay, something just feels off about Mattress Firm.
  3. The Parent Trap — Mattress Firm's new owner might be our best shot at finding evidence of financial fraud.

One: Overmattressifcation

Amory and Ben actually headed to a Mattress Firm store, in person, to see if someone there would talk to them. No one at Mattress Firm has spoken to us on the record about it... yet. Our invitation stands.

It turns out, having stores within close proximity to each other might actually be a reasonable business strategy, says Seth Basham, who works for Wedbush, an investment firm. He spends a lot of time talking to people in the mattress industry.

"Their stated premise strategy is called relative market share," he says. "So they want to be a leading market share player in any given local market [...] so that they can drive economies of scale in advertising as well as distribution."

They're essentially trying to be your first choice when you're buying a mattress by being your only choice. Over the last 10 years, they've been buying out regional chain after regional chain of mattress sellers.

It doesn't cost much money to keep the lights on and pay staff, says Basham.

After the chain bought Sleepy's in 2015, they controlled more than 25 percent of mattress sales in the country. But they may have gotten over their heads, says Basham.

"Their results have been what I might call an unmitigated disaster since they acquired Sleepy’s," he says.

Mattress Firm is suing two of the real estate executives that were previously fired from the company. They claim those two executives were scheming to cash in on some of the real estate deals, and that the company had to sign really long leases or overpay for some locations.

So the company is facing financial issues — but that doesn't lend credence to the money laundering conspiracy. Onto....

Two: The Sleaze Factor

Does anyone really like shopping for a mattress? You buy one maybe every 10 years, it's a lot of money, and you're never quite sure if you just paid too much.

Mattresses, as you might suspect, have a huge markup — around 50 percent for most stores, according to Michael Magnuson, who runs GoodBed.com.

He calls buying mattresses a "grudge" purchase. Not a lot of people get excited about buying a mattress.

"Meaning, you can really screw up your mattress purchase, you have to pay attention to it, but if you get it right, it's not like 'Oh my gosh, my social status goes up...' " says Magnuson. "You don't get that great Instagram moment from buying the perfect mattress, so it's kind of a grudge purchase. People know they can't blow it off, they know they gotta spend a lot of money on it, but they don't want to. It's not fun."

And Mattress Firm, like many retailers, uses sales techniques like "sale." Everything's on sale! You feel better about spending $2,000 on something if it was "previously marked" at $4,000.

It's shady, but it is not money laundering.

Three: The Parent Trap

This one might actually have some teeth. Mattress Firm is owned by Steinhoff International, the second-biggest furniture retail company in the world, right after IKEA.

And, surprise surprise, Steinhoff is the subject of a massive criminal investigation. It is not money laundering, but it is actually more interesting.

Dan connected with James-Brent Styne, who has written about Steinhoff's dealings in South Africa, where the company is based. They've been there since 1996, when the company's founder, Bruno Steinhoff, moved there from West Germany.

But the name to remember is Markus Jooste, who used to be Steinhoff's CEO. Until everything went haywire, Steinhoff was one of the biggest companies on the Johannesburg Stock Exchange. They employed 50,000 people in South Africa. Their top executives spent lavishly in public, with yachts and expensive cars and wines.

Nobody in South Africa seemed to care, until Dec. 5, 2017, when Jooste resigned, completely out of the blue.

Turns out, Steinhoff may have been brushing some financial irregularities under the bed for years. South African police are now looking at alleged fraud. And it’s facing probes from regulators and investigators around the world. It’s accused of years of financial fraud. And when Jooste resigned, it triggered the biggest collapse in South Africa's corporate history.

While authorities investigate the company, Steinhoff itself has hired auditors to look into the apparent fraud at the company and track down who did it. There are also questions about the taxes it did or didn’t pay. We still don’t know the full extent of what happened.

Weirdly, back in August 2016, Steinhoff made what looks like an incredibly stupid move. They bought Mattress Firm for $2.4 billion, more than twice what the company was worth.

And right after Steinhoff made that purchase, Jooste had a big falling out with one of the major suppliers of Mattress Firm, Tempur Sealy, which hurt both companies' sales.

Tempur Sealy is even suing Mattress Firm now for selling a mattress it says sounds and looks a lot like the Tempur-Pedic.

So, again, we've arrived at another mark against a money laundering conspiracy. This whole thing is weird, but a conspiracy? Probably not. But it was fun while it lasted, right?


Thanks to artist u/NPaull for this week's artwork.

We're on Twitter at @endless_thread and on Reddit as /u/endless_thread. Subscribe to the podcast with Apple PodcastsStitcherRadioPublic or RSS.

Meghan B. Kelly Twitter Digital Producer
Meghan is a digital producer for WBUR.

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