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Casper Announces 200 Stores, and Mattress Firm Reportedly Eyes Bankruptcy

(Source: www.racked.com)

Over the last few years, headlines about stores have looked a little something like this: Mall brands are screwed; retail jobs are disappearing; stores are shuttering by the hundreds; department stores might become extinct; bankruptcy is the new black; and everyone must kiss Jeff Bezos’s ass to survive.

Right alongside these stories that mourn retail’s demise though is news that digital-first companies are opening locations of their own — and lots of them, too.

These dual chronologies morph together to demonstrate an important narrative about the succinct future of stores: Retail isn’t dying, it’s being radically transformed. And those that don’t keep up with this lifecycle should remember companies like Blockbuster and Radioshack (yikes).

The latest sector to colorfully illustrate this? The mattress industry. Earlier this week, sources told Reuters that Mattress Firm, the largest mattress company in the country, is looking into filing for bankruptcy. The company, which is owned by Steinhoff International Holdings, bought competitor Sleepy’s in 2016 and is now deciding how many of its 3,000 stores to close. (Racked reached out to Mattress Firm, which declined to comment.)

Meanwhile, Casper, the brand that kickstarted the mattress-in-a-box craze, announced it will be opening 200 stores across the country this year. Casper already has 19 stores, and earlier this summer, it debuted a slightly absurd store concept called “The Dreamery,” where it charges $25 for 45-minute naps, complete with fancy pajamas, Instagram-brand-favorite facewash, and meditative soundtracks to plug in to.

Casper’s latest stores won’t have the luxurious snoozing accoutrements of the Dreamery, but will follow the general aesthetic of its existing stores, which are bright and airy, and include mock bedrooms to show off its mattresses, sheets, pillows, and duvets.

That Casper is getting aggressive about stores at a time when Mattress Firm is considering bankruptcy is telling, says Neil Saunders, the managing director of GlobalData Retail.

“Many mattress stores are old-fashioned and take a hard approach to selling,” Saunders says. “Fun is the main thing that’s lacking. Buying a mattress is a serious business, both because products are often expensive and because it is something that consumers are going to use for years. However, that doesn’t mean the experience should be boring or dull.”

Casper CEO Philip Krim tells Racked that his company is thinking about selling mattresses in an entirely different way than old-school stores. Retail done poorly, he adds flatly, “is on the way out.”

“Casper stores are the antithesis of traditional mattress store experience that is notorious for sky-high markups and aggressive sales tactics.”

“Casper stores are the antithesis of traditional mattress store experience that is notorious for sky-high markups and aggressive sales tactics,” he says. “We are reimagining how people shop for sleep by listening to customers to create an atmosphere where they actually want to visit.”

Saunders notes that Mattress Firm hasn’t really adapted to the times. Casper has been around since 2013, and alongside it have launched competing mattress brands like Leesa, Allswell, Tuft & Needle, Layla, Purple, Helix, Nectar, Winkbeds, Snuz, and Tulo — I’ll stop there, but the list goes on.

Even though these brands have been threatening the mattress market for years, with Casper leading the way with $600 million in total revenue since its inception, a legacy company like Mattress Firm failed to innovate. On top of that, Saunders adds, “Mattress Firm has far too many stores and has grown rapidly through acquisition. Some of its stores have expensive leases which it now cannot afford, and it’s been caught off-guard with too many stores relative to the level of demand in the market.”

Mattress Firm’s store experience isn’t the only example of the company being stuck in old-age retail. It’s part of an industry that, as Krim points out, is “notorious for sky-high markups, commission-driven salesmen, confusing marketing jargon, and an uncomfortable in-store trial environment.”

On the flip side, while Casper is investing in stores, it’s also putting funds towards experience — money it can spend with the $239 million it has in funding. When it opened the Dreamery, for example, Casper senior vice president of experience Eleanor Morgan told Racked July that while rents are high in Soho, Casper wasn’t looking to the Dreamery store to help it sell products, but rather wanted to “build a community.”

“A big part of this is building a community of people that value sleep and want to share that with us,” she says. “They might join the brand family and ultimately become Casper customers, but the conversation around sleep is the main focus.”

Within a one-mile radius in Soho, there are a dozen brands that once boasted they were digital-only, and now have stores.

All this isn’t to say Casper can kick back. As a true direct-to-consumer brand, Casper should now be focusing on building a store portfolio because retail is the necessary path for growth. Clara Sieg, a partner at San Francisco-based venture capital firm Revolution, which invests in startups, says that companies can only last doing digital-only for so long.

They can’t just rely on targeting the same pool of customers through Instagram and Facebook, and so retail is truly the inevitable next step. Just take a trip to New York City to see for yourself. As Inc pointed out earlier this summer, within a one-mile radius in Soho, there are a dozen brands that once boasted they were digital-only, and now have stores — Bonobos, Outdoor Voices, Everlane, Away, Allbirds, M.Gemi, and Warby Parker, just to name a few.

“As internet-native brands aim to grab market share, developing unique and tailored retail experiences creates more intimate connections with consumers and provides additional validation of the brand,” Sieg says. “We view it as an opportunity to contextualize products in ways older brands have not, while developing an in-store experience that leverages integrated technology to avoid the constraints that traditional retail faces.”

So what’s the next phase for mattresses in all of this? As lifecycles go, the arrangement could mean that Mattress Firm will double down on e-commerce sales while Casper grows and grows its store presence until it’s out of juice from investors and takes an acquisition. Perhaps Walmart will swoop in, as it did with previous startups — although Target will probably get there first, since Casper mattresses are already sold in its store. Or maybe an even sexier and more innovative company than Casper will disrupt the mattress space once again.

No matter the outcome, one thing is clear in the rules of retail: Mattress companies that don’t innovate can count on one type of sleeping, and that’s sleeping with the fishes.

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