251. Are We in a Mattress-Store Bubble?

The 'Freakonomics Radio' episode 'Are We in a Mattress-Store Bubble?' begins with a survey of mattress stores in Schererville, Indiana, where a striking number of mattress stores, particularly those owned by Mattress Firm, are found within close proximity to one another. The narrative follows producer Bill Healey as he documents the abundance of mattress retailers in this small town, including Mattress Firm, Sleepies, and other local stores, highlighting the seemingly excessive retail presence in a limited geographic area.

The episode delves into the reasons behind the proliferation of mattress stores in the United States. It discusses the high profitability of mattress retailing, with markups reaching 100% or more, contrasting starkly with the low margins of other retail sectors. The low overhead costs associated with mattress stores, such as minimal inventory and commission-based sales staff, contribute to the economic viability of running multiple stores even with low sales volumes. Additionally, pent-up demand following the recession has led to a resurgence in mattress sales, prompting companies to open new stores at a rapid pace.

The narrative also explores the consumer behavior surrounding mattress purchases. The infrequency of mattress buying, typically a few times in one's lifetime, and the desire to physically try out mattresses before purchase are discussed. Furthermore, the episode touches on the historical significance of mattresses as valuable possessions, which may contribute to consumers' willingness to accept high markups.

The conversation then shifts to the broader retail context in America, where there is an abundance of retail space per capita compared to other countries. This overabundance is not limited to mattress stores, suggesting that America's retail landscape is characterized by excess across various sectors. The episode concludes with a look at the emerging online mattress retail market, led by companies like Casper, which is challenging traditional brick-and-mortar stores despite currently holding a small share of the market.