Innovators on right side of the mattress
The sleep business is suddenly going to the mattresses.
The phrase, made popular by the mobster characters in the “Godfather” films and “The Sopranos” on television, roughly means going to war. And it aptly describes the newfound intensity of an industry that makes its money by provoking somnolence.
During the past few years, upstart e-commerce firms led by Casper, Leesa Sleep and Tuft & Needle have injected new vitality into mattress sales. These companies now pose a serious challenge to established speciality stores like Mattress Firm and Sleep Number, not to mention major retail chains like Sears, Macy’s and Costco.
The once-sleepy category is enjoying both a business and cultural renaissance. From 2011 to 2016, mattress sales from physical stores grew an average of 6.1 percent per year
to $14 billion, according to IBISWorld. The research group predicts that sales will grow 3.2 percent a year until 2021.
“Mattresses are now a cool thing to talk about,” said Jason Bennett, CEO of True Star Consulting in San Francisco and a former senior director of marketing for Gap Inc.’s Banana Republic brand. “You would never have thought that in years past.”
And the Bay Area has played a key part in the resurgence: Zinus, whose U.S. headquarters are in San Leandro, used to make mattresses for retailers like Walmart and Amazon but is now selling its own designs and brands online. San Francisco hosts Casper’s research and development center; Tuft & Needle’s co-founders previously worked in Silicon Valley.
“It sounds nerdy, but it’s exciting,” said Casper design director Jesse Menayan, who works out of the San Francisco R&D center. “I continue to be amazed about how much room there is to improve (on mattresses). The category is so dynamic, so diverse, and there are so many ways to solve problems.”
These firms have demonstrated that with some marketing savvy and technological innovation, even the most boring category can be brought to life. More importantly, they’ve shown that the easier retailers make it to buy something over the Internet, the more likely people are to do just that.
Mattresses don’t seem like an easy online sale. They’ve been hard to buy — largely due to bad service and high prices in the offline world — and they’re big, bulky and hard to transport. Most people typically wait a decade or more before replacing a mattress.
“There hasn’t been a lot of innovation for a long time,” said Colin Lawrie, president of Zinus.
Just as automakers persuaded drivers to replace their cars more often, the mattress upstarts are trying to sell people on more frequent bed changes. Lawrie is recommending that customers change mattresses every five to seven years. (For what it’s worth, Prevention magazine recommends replacing your mattress in that time frame if you don’t sleep well.)
Part of the reason: Mattress sales slumped even after the Great Recession, which lasted from 2007 to 2009, while spending was still depressed. Since then, the economy has improved, which means consumers now have more money to make big purchases they had previously avoided.
“When the economy is performing poorly, consumer confidence can become so low that many consumers refrain from purchasing new bedding altogether,” the IBISWorld report said. “Nevertheless, consumer confidence has grown steadily over the past five years as the employment rate, household incomes and the housing market recovered.”
And thanks to advances in polymer chemistry, shipping is getting easier. Firms like Casper can produce mattresses from cheaper materials and allow the product to be folded into a box for shipment, and then unfolded at a customer’s home. Don’t like it? Stick it back in the box. As a result, online mattresses are priced as low as $300 and sellers can offer no-cost returns.
Cheaper, more portable mattresses especially appeal to cost-conscious Millennials who are constantly on the move, Bennett of True Star said. Consumers 34 or younger accounted for 30 percent of all retail matttress sales last year, making them the largest customer group, according to IBISWorld.
Given the explosion in wellness products and services, people are paying more attention to how sleep — or lack of it — affects their overall health, Bennett said. From memory foam and high-thread-count sheets to sensors and mobile apps designed to measure sleep cycles, consumers seem more willing to invest in a good night’s rest.
Yet the industry is still highly fragmented: Sleep Number and Mattress Firm together control about 36 percent of retail sales, IBISWorld said, while Tempur Sealy and Serta Simmons dominate conventional manufacturing with 60 percent of the market. That leaves a lot of mattresses up for grabs.
Casper, based in New York, opened its R&D center in San Francisco only a year ago. The 5,000-square-foot facility on Treat Avenue employs 40 researchers, scientists and engineers.
Menayan, Casper’s design director, said the company wanted to take advantage of the area’s deep talent pool, especially as it applies to sensors, data and software.
“There’s a lot happening in the Bay Area,” he said.
Casper’s focus is now to develop mattresses that better conform to variations of the human body, including size, weight and shape.
“There’s a super deep body of knowledge in sleep ergonomics,” Menayan said. “We raised the bar big time.”
That tech innovation is laudable. But Casper has also been pursuing another form of innovation. It sued three online mattress reviewers in April 2016. One of them, Sleepopolis, recommended a Casper competitor, Leesa. In July, a new company, JAKK Media, bought Sleepopolis — with the help of a loan from Casper, and the mattress company dropped its suit.
Sleepopolis now recommends Casper mattresses.
Now that’s a move that would make Tony Soprano proud.