THINKING OUTSIDE of the BOX

CASPER TO BRING RETAIL STORES, MANUFACTURING TO CANADA FOR ITS BED-IN-A-BOX BUSINESS

TORONTO • Casper helped to define a new business model for online mattress retail with the debut and meteoric rise of its foam bed-in-a-box four years ago.

Now, like Amazon.com Inc., Warby Parker and Frank and Oak, the New York-based company is looking to further cement its place in the market with bricks and mortar stores — a strategy that seems antithetical to the model it helped create, but one that chief executive Philip Krim believes is important to reach even more new customers.

“Our philosophy was never business model first, customer second,” said Krim in an interview, confirming that Casper will open its first stores in Canada over the next 12 months in Ontario, Quebec, Alberta and British Columbia, beginning with two Toronto locations this spring. “In our category, a ton of consumers still want to lay on the product, and touch and feel the product, and understand what they are buying before they buy.”

Casper and a slew of rivals such as Leesa, Endy, and Tuft & Needle have upset the traditional model of mattress manufacturing and retail over the last five years by offering fixed-price models, end-to-end delivery and return policies that allow customers to get a full refund if they don’t like the product after sleeping on it for multiple nights.

The system appealed to internetsavvy millennials and condo-dwellers: without an unwieldy box spring, it’s both cheaper and easier to receive a product the size of a bar fridge than it is a full-size mattress.

They have rewarded Casper in kind since it debuted in 2014, with sales hitting US$300 million last year.

Canada is a particularly fertile market for the overall category, with sales of mattresses rising six per cent last year to $1.8 billion last year, according to market research firm Euromonitor.

Sleep Country, the biggest specialty mattress retailer in Canada, continued to make strong gains in 2017 with revenue rising 12.3 per cent to $588 million and strong same-store sales growth of 8.8 per cent. And while nowdefunct rival Sears Canada began to wind its business down toward the end of 2017, Sleep Country’s samestore sales grew 10 per cent in 2016 when Sears was fully operational.

While he wouldn’t disclose sales of Casper in Canada, Krim said the company’s sales are growing faster here than they are in the U.S.

“(Canada) is an appreciable part of the overall business,” he said. “It will bring additional capacity to the system so we can continue to keep up with the demand.”

Casper will also open a Canadian office this year and begin using Canadian manufacturers to make mattresses destined for this market as part of its ongoing expansion efforts. While Canadian online rival Endy has used made-in-Canada manufacturing as a point of difference to help market its mattresses, Krim said shifting Casper’s Canadian mattress production to Canada is more about meeting demand than lowering distribution costs.

Alex Arifuzzaman, partner in Toronto retail specialists InterStratics Consultants, said companies such as Casper have demographics on their side — millennials and the subsequent generation are more comfortable Casper chief executive Philip Krim says many customers still want to still want to “touch and feel the product.” than earlier generations when it comes to buying goods online, and mattresses are typically bought more by young people first settling in to a household.

The bed-in-a-box business must be lucrative enough for Casper to take a gamble on retail stores, he added, having