Dive Brief:

• Serta Simmons Bedding and Tuft & Needle on Tuesday announced they have entered into a definitive agreement to merge, for undisclosed terms.

• Tuft & Needle co-founders J.T. Marino and Daehee Park will report to Serta CEO Michael Traub and join the company's leadership team, according to a press release emailed to Retail Dive. In addition to leading Tuft & Needle, they will help drive Serta's continued transformation into an omnichannel, consumer-centric company, the companies said.

• Following the close of the transaction, expected in the next 60 days, each brand in Serta's portfolio (which also includes Beautyrest, Simmons and Tomorrow), will remain independent, the companies also said.

Dive Insight:

Major changes in the mattress sector, spurred by manufacturing advancements, strong home improvement sales and a shopping experience pioneered by startups, have led to major disruption in mattress retail. 

For years, mattress manufacturers like Serta (which has operated since 1931) and their partner retailers have kept consumers on their toes with markdown and selling strategies that made it difficult for consumers to price compare. 

Online pure-players like Tuft & Needle​, Casper, Leesa, Yogabed and Purple, cut through that by eschewing special sales or markdown events in favor of keeping their "mattress-fits-most" offers in basic bed sizes at one price and offering long try-out times and free returns. These companies are also increasingly turning to brick-and-mortar retail to make choosing a mattress easier. 

The ensuing disruption has led to many partnerships between traditional players and the newcomers. Target, for example, displays and sells bedding from Casper (which is plotting 200 of its own stores across North America) and reportedly almost bought the company outright for $1 billion. Williams-Sonoma brands West Elm and Pottery Barn meanwhile have partnered with Leesa Sleep, and Purple has expanded its partnership with struggling retailer Mattress Firm.

Serta said bringing on Tuft & Needle will strengthen its market leadership position and help it expand in the direct-to-consumer segment while also helping the startup scale. The combined company plans to offer new product lines, enhanced services and better value to consumers.

Thanks to the merger, Serta's retail partners will also have "access to new offerings that will include advanced consumer insights, avenues for generating higher foot traffic and consumer-centric innovations as key drivers for growth in the evolving market" — the development of which will be led by Tuft & Needle, per the release.