U.S. bed-in-a-box firm wakes up to ripe prospects with new stores

Ottawa Citizen - - FINANCIAL POST - HOL­LIE SHAW hshaw@na­tion­al­post.com

Casper helped to de­fine a new busi­ness model for on­line mat­tress re­tail with the de­but and me­te­oric rise of its foam bed-in-abox 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 web-savvy 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-sized 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 now-de­funct ri­val Sears Canada be­gan to wind its busi­ness down to­ward the end of 2017, Sleep Coun­try’s same-store sales grew 10 per cent in 2016 when Sears was fully op­er­a­tional.

While he would not 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 madein-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 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 thus far ben­e­fited from a busi­ness model with­out the over­head costs of rent, fix­tures and store em­ploy­ees. “They are priced well, but if you don’t have to pay for show­rooms, you maybe have a lit­tle edge on price,” Ari­fuz­za­man said.

But a phys­i­cal store pres­ence can also ce­ment a brand’s rep­u­ta­tion with a broader base of con­sumers.

Casper now has 18 of its stand­alone stores in the U.S., and the com­pany be­gan sell­ing mat­tresses across a much larger re­tail foot­print last year af­ter strik­ing a re­ported US$75-mil­lion deal to sell prod­ucts at more than 1,200 Tar­get lo­ca­tions.

“We have mul­ti­ple con­ver­sa­tions on­go­ing with Cana­dian part­ners” about strik­ing a sim­i­lar ar­range­ment on this side of the bor­der, ac­cord­ing to Krim.

In ad­di­tion, Casper has been sell­ing its pil­lows at 30 Indigo stores across Canada since the fall, and had strong sales in a Jan­uary pro­mo­tion that used some of the book chain’s lo­ca­tions to dis­play the mat­tress and take on­line or­ders, said Ni­cole Tap­scott, Casper’s gen­eral man­ager for Canada.

New York-based Casper saw sales for its pop­u­lar foam bed-in-a-box hit­ting US$300 mil­lion last year. CEO Philip Krim says the New York-based re­tailer is look­ing to reach more new cus­tomers by open­ing brick and mor­tar stores in Canada over the next 12...

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.