Retail Pulse: Mattress Firm Mulls Bankruptcy; Walmart Plans Robotic Grocery Pickup

Brick-and-mortar retailers have sought to reduce their retail footprint in hard times, and Mattress Firm, Inc. is no exception. The brand could close between 600 to 1,000 of its 3,000 locations this year, according to some predictions – and is reportedly considering bankruptcy, people familiar with the matter have told Reuters.

Steinhoff International Holdings NV, which acquired the company in 2016, has reportedly sought to restructure some of its subsidiaries’ debt. And, as a brand, Mattress Firm itself has faced some challenges: In 2017, former supplier Tempur Sealy International Inc. ended its contract with Mattress Firm, a move that narrowed the retailer’s selection.

Now, Mattress Firm is reportedly pondering bankruptcy, and analysts say that might be a good strategy for the retailer: Peter Keith of Piper Jaffray & Co. told the Houston Chronicle that “bankruptcy for Mattress Firm would make sense, as it would allow them to reposition their real estate portfolio and close stores to become profitable.”

At the same time, brick-and-mortar retailers like Mattress Firm are up against a formidable force of eCommerce: They face a barrage of competition from bed-in-a-box eCommerce upstarts like Casper. Most notably, Casper seems to be on an opposite trajectory from Mattress Firm: The mattress and sleep retailer is looking to open the doors to 200 brick-and-mortar stores.

The growth of companies like Casper comes as the idea of buying a mattress online had previously been dismissed as something that wouldn’t possibly work – like Amazon selling apparel at a time when market observers thought consumers would only buy clothing in person. “If you told [shoppers] 10 years ago, ‘You’re going to buy a bed-in-a-box and you’re going to love that,’ they’d say ‘What?’” Brian Yarbrough, a consumer research analyst with Edward Jones, told The Washington Post.

But online mattress retailers have a unique business model to make customers comfortable with buying a mattress online: They offer the opportunity to try it out for a few months. If the mattress doesn’t work out for the customer, companies may offer full refunds. In other words, consumers can sleep well at night with their new purchases.

As for Mattress Firm, sources told Reuters that the company’s plans are still in flux and that final decisions have not been made. But Keith, the Piper Jaffray analyst, told the Houston Chronicle that the company may wait a bit to potentially file for bankruptcy – until Labor Day, which is a popular time for mattress sales. That move could provide Mattress Firm with the funds to go on for about a month, and put it in a stronger position if it moves into bankruptcy proceedings.

In Other Brick-And-Mortar News…

Amazon and Whole Foods Market announced the launch of curbside grocery pickup in Sacramento and Virginia Beach. In a press release, Amazon said the service will come to more cities throughout the remainder of the year. With curbside delivery, Prime members can shop at Whole Foods Market online and pick up their order in 30 minutes without having to get out of their car.

To take advantage of the new service, a Prime member would place their order via the Prime Now app and choose the pickup option during checkout. They can choose free pickup in an hour or more on orders of $35 or greater, or pickup in 30 minutes for $4.99. Once the customer arrives at the store and parks in a reserved spot, a shopper from Prime Now will place their groceries in the car.

In other online grocery pickup news, Walmart has announced that it will be testing robots to help fill online grocery orders quicker. According to a press release, the company said it is collaborating with the startup Alert Innovation to launch a pilot using the automated robot, which is being called Alphabot.

The Alphabot system was developed for Walmart and will be installed at its supercenter in Salem, New Hampshire as part of its grand re-opening. A 20,000-square-foot extension, which will be connected to the store, will be home to the new system and also serve as the grocery pickup point with drive-thru lanes for customers.

And it seems the anticipated deal between Rite Aid and Albertsons — which would have seen the pharmacy and grocery chains merge — has reportedly been called off. According to The New York Times, the deal had lost the support of Rite Aid shareholders.

The news that the plug would be pulled came just before a special meeting of Rite Aid shareholders to consider the merger, though that meeting is officially off the agenda now that the deal has been called off. The firms agreed that termination of the merger was a mutual decision, and no one owes anyone any money.