Casper will open its first stores in Canada over the next 12 months in Ontario, Quebec, Alberta and British Columbia
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 internet-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-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 now-defunct rival Sears Canada began to wind its business down towards the end of 2017, Sleep Country’s same-store sales grew 10 per cent in 2016 when Sears was fully operational.
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. 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.”
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.