What Recent Partnerships And Mergers Might Mean For The Industry

As an industry, traditional mattress manufacturing and retail have been in turmoil for over a year now. With the rise of sleep product start-ups touting technologically sophisticated ways to drive traffic to e-commerce shops and close new digital customers, online bedding brands have had more success than most may have expected. But so many of these highly successful and digitally native brands have turned to retail partners to continue driving growth for their companies (i.e. Leesa and West Elm/Pottery Barn, Casper and Target, Purple and Mattress Firm).  And, with traditional manufacturers developing more robust digital marketing programs for retailers, creating easy-to-use eCommerce sites and continually meeting the need for a more engaging customer experience in brick and mortar stores, it definitely feels as though the start-up business model and more traditional mattress players are beginning to meet in the middle. Taking that premise a step further, a major (traditional) industry player and a newer household name from the direct to consumer market recently decided to combine companies.

While it’s unclear who initiated the deal, Serta Simmons Bedding LLC (SSB), the Atlanta based company that owns and manages the Serta and Beautyrest portfolio of products, and Tuft & Needle (T&N), a direct-to-consumer mattress start-up that’s been around since 2012, recently announced that they are in the process of joining forces. Here are some quick details on the deal:

  • The actual terms of this deal have not been disclosed.
  • The co-founders of Tuft & Needle, J.T. Marino and Daehee Park, will report to Serta Simmons (SSB) CEO, Michael Traub in roles on the SSB leadership team.
  • The overall goal of the merger is for SSB to employ Tuft & Needle techniques to continue developing as an omni-channel and consumer focused company (particularly eCommerce management).
  • SSB brands Beautyrest, Serta and Tomorrow will remain independent of Tuft & Needle.

In this particular situation, both brands stand to gain so much from the other and in combining capabilities will likely become a force to be reckoned with, if they weren’t already. According to SSB CEO Michael Traub, “The merger will change the industry in a significant way. We will be able to serve consumers unmatched both online and in-store.” The merger is being called a merger to specifically indicate that both companies intend to undergo notable transformation together, truly utilizing both their strengths to compensate for each other’s weaknesses and build a hybridized sleep giant. In the case of SSB, Tuft & Needle joining the team will help the traditional brand expand its digital capabilities and SSB will also gain access to the data collected by Tuft & Needle over its years as an independent D2C start-up.

JT Marino, T&N co-founder says, "Under Michael's leadership, SSB is actively driving toward evolution within the company and the greater market. By joining the SSB team, we look forward to fully leveraging each organization's strengths and accelerating our trajectory together towards the vision of being recognized as the global leader in sleep. Tuft & Needle will continue to build our brand and culture in our unique way, while immediately beginning to infuse our learnings and capabilities into the broader SSB organization." T&N on the other hand, gets the capabilities of SSB’s 30+ factories across the country, the brand’s strong name recognition and its manufacturing prowess.

This week also brought news of an exclusive partnership of a different nature, one that didn’t receive quite as much popular attention. Eclipse International, a mattress manufacturer with an extensive licensing network, has entered into an agreement with Talalay Global, a manufacturer of talalay latex mattresses, toppers and pillows – all sold under different brand names. Eclipse will now be the sole producer of Talalay’s line of finished mattresses, Pure Talalay Bliss. This strategic partnership allows Talalay access to Eclipse’s complex network of 65 licensees across 39 countries and allows Eclipse to easily provide a unique, new product to its portfolio making its licensees and end-customers happy.

“Our licensees are very excited to get Bliss into their product portfolio because of the explosive growth in the luxury segment of our business and consumer interest in the health, quality and performance of Talalay products,” said Stuart Carlitz, CEO of Eclipse International. “Because of our extensive experience successfully manufacturing and selling luxury products, this is a brand that our group will be able to really develop and grow domestically and internationally.”

While these two industry stories might not have everything in common, they do signal an interesting phenomenon in the industry right now. As the competition for a slice of the mattress industry pie continues to grow fierce, some brands are teaming up to become stronger, creating strategic alliances to improve their business models and ultimately better serve retailers and consumers. It will be interesting to see if other companies follow suit and if, as Michael Traub says, this major merger will have a significant impact on the rest of the industry and what exactly it will look like.

Read more here, here, here, here, and here.

This article originally appeared in Sleep Retailer eNews on August 23, 2018

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