I read recently that the industry average gross margin was 48%. Mattresses are consistently at or near the highest margin in the furniture category. A mattress outlet owner or salesman that had a customer (or even better yet many customers) that didn't negotiate would be making plans for their next 5 star vacation or luxury car. At the very least never buy a mattress at the same time as you are trying them out in the store. Once you know what you like, go home (no matter how "good" their offer to buy "right now"), do some online research into prices and value, and then go back with a clear idea of how much you are willing to pay for the mattress you want. When and if you go back, bring your evidence with you.
Just to make the point a little more ...... $1600 per SQUARE FOOT. Lets see, If I have a 1500 sq ft showroom and multiply by 1600 that equals $2,400,000. I could pay a lot of wages, lease payments, phone bills, advertising, and other expenses with that and have a very nice return on my little 1500 square foot showroom. And that's based on what they actually sold their mattresses for, not on what they "tried" to sell their mattresses for.
Online sales are of course a bonus as they don't have any "square feet" for that part of their operations.
And these numbers are not for the whole industry as they don't have numbers for every retail outlet in the country ... some of whom are selling for much higher prices than some of the outlets mentioned here.
Just to make a point a little more, like anything else there is a gross margin at every level of the supply chain, from the chemicals and raw materials used to make the mattress, to the foam manufacturers, to the mattress manufacturers, to the major distributors, to the minor distributors, to the retailers etc.
There are also many people on this forum with a lot more experience than I have and it would be well worth listening to any advice they have to offer or negotiating tips they may give you.
Gallery, Select Comfort lead in performance
By Clint Engel -- Furniture Today, May 28, 2008
High Point — High Point— It's getting to be a broken record, but Gallery Furniture again took the crown in two out of three Top 100 performance categories, duking it out with Select Comfort, which was tops in the third.
The Houston-based Gallery, No. 56 on the Top 100, was the sales-per-square-foot leader, reporting an average of $1,600 — blowing away all comers as well as the $289 median for the 49 companies for which estimates were available.
Gallery's stock turns also were tops (again) among the Top 100, turning an average of 28 times.
In both categories, No. 12 Select Comfort was second again with sales per square foot averaging $1,264 —the only other retailer to top $1,000 — and stock turning an average of 23 times.
The Minneapolis-based airbed maker and retailer was the leader in the gross margin category with a 59.4% average, followed by No. 91 Domain at 52.1%, and No. 3 Pier 1 Imports at 51.6%.
Gallery tied for fourth with No. 72 Norwalk — The Furniture Idea and No. 64 Dial-A-Mattress, all with 50% average margins.
Gallery and Select Comfort were the only companies to appear on the Top 10 of all three performance categories — again — while No. 1 Rooms To Go, No. 64 Dial-A-Mattress and No. 75 Sit'n Sleep made it on two of the three lists.
RTG posted the third-best sales per square foot at $900 and the 10th-best stock turns — averaging 8 times.
Long Island City, N.Y.-based Dial-A-Mattress tied for third with an average gross margin of 50%, and was fourth again with stocks turning an average of 16 times.
Gardena, Calif.-based Sit 'n Sleep, which appeared twice last year and the year before, posted the seventh-best stock turn rate, an average of 11 times, and the ninth-best sales per square foot.
The median inventory turn for the Top 100 was 5.6 times based on 33 estimates, an improvement over the 5.4 median turns for last year's Top 100. With 25 estimates, the median gross margin was 46%, up from 45% for the Top 100 last year.
Despite Gallery's strong sales-per-square-foot performance — bettering its number last year by $230 — the median of $289 in sales per square foot for this year's Top 100 was below the $300 median for last year's group.
| Top 10 in sales per square foot |
| For furniture, bedding and accessories |
| RANK || COMPANY || AVERAGE SALES PER SQ. FT. |
| 56 || Gallery Furniture || $1,600 |
| 12 || Select Comfort || 1,264 |
| 1 || Rooms To Go || 900 |
| 44 || Room & Board || 647 |
| 83 || Darvin Furniture || 615 |
| 71 || Walter E. Smithe Furniture || 584 |
| 31 || Mathis Brothers || 568 |
| 42 || Harlem Furniture || 535 |
| 75 || Sit 'n Sleep || 500 |
| 68 || Jerome's || 462 |
| Top 10 in average stock turns |
| For furniture, bedding and accessories |
| RANK || COMPANY || AVERAGE STOCK TURNS |
| 56 || Gallery Furniture || 28.0 |
| 12 || Select Comfort || 23.0 |
| 88 || PMD Furniture Direct || 20.2 |
| 64 || Dial-A-Mattress || 16.0 |
| 44 || The RoomStore/The RoomSource || 12.5 |
| 67 || Bernie & Phyl's Furniture || 12.5 |
| 75 || Sit 'n Sleep || 11.0 |
| 48 || Furnitureland South || 10.0 |
| 28 || American Furniture Warehouse || 8.6 |
| 1 || Rooms To Go || 8.0 |
This message was modified Oct 20, 2010 by Phoenix