What is the future of mattress retail? Will it be in-store or online? While the pandemic initially revealed how essential it was to have a nimble ecommerce program in place—it is becoming increasingly clear just how important brick-and-mortar continues to be at this stage. Whether through stand-alone showroom spaces or traditional retail partnerships, more and more direct-to-consumer mattress brands are embracing in-person shopping and seeing real sales benefits as a result. Now, with more states lifting their COVID-safety mandates as vaccination rates go up, retailers and brands are reinvesting in brick-and-mortar—and reimagining the in-store experience for a post-pandemic world.
The Ecommerce Boom
The growth of the ecommerce sector has been a long time coming. But, like most things, the onset of the pandemic threw the retail industry’s expected trajectory for a loop. According to the Department of Commerce, ecommerce sales jumped to $70.1 billion in March of 2020 from $61.7 billion the month before—and increase of 18.2% from the year prior. Retailers that had a well-established online strategy in place soon emerged as leaders, while those without scrambled to meet the new digital demands.
Industry insiders quickly drew different hypothetical conclusions from this sudden shift. Some predicted that consumers would become so comfortable with shopping online when they had to that they would be more hesitant to go back to old fashioned in-store shopping when things started to open back up. Others postulated that, after so many months away, the very idea of roaming around a store would feel novel, even exciting—leading to upswing in in-store traffic. Now, 15 months after the start of the pandemic, it’s clear that the true outcome likely lies somewhere in the middle.
Why Physical Retail Remains Vital
In fact, for many DTC mattress brands, the pandemic has only reinforced just how necessary it is to have a physical retail location. "Direct-to-consumer brands obviously found great traction and great success through their e-commerce and digital platforms. But that has become a pretty crowded space," Tyler Higgins, leader of the retail practice at AArete, told RetailDive recently. "They started to realize that even despite the pandemic — the pandemic definitely slowed everybody's plans down — that brick-and-mortar stores hold just some unique value that is near impossible for them to gain just through kind of a digital footprint.”
That is in part because the cost of doing business solely online has gotten exponentially more expensive over the years. Ecommerce was once considered to be the more affordable business model; hosting a website had less overhead than managing a physical retail space and digital advertising offered a cheaper alternative to more traditional marketing avenues. But as more competition entered the category, the cost of acquiring new customers online has grown to prohibitive levels. In 2019, Casper’s sales and marketing expenses hit $154.6 million—a 22.5% increase from the year before—while Wayfair’s jumped a staggering 41.5% to hit $1.1 billion. And that was before the pandemic. With more and more brands investing in their ecommerce strategies over the past year, the direct-to-consumer online model is no longer the silver bullet it once was. It is no surprise that more of these digitally-native brands are turning to traditional retail practices.
Notably, Casper has invested heavily in its retail partnership strategy in the past year. The company has has expanded its distribution to more than 20 retailers—including Nordstrom, Sam’s Club, Ashley HomeStore, Denver Mattress and Mathis Brothers. The approach has paid off. While DTC channels still account for the majority of Casper's sales revenue, that side of the business logged just a 11.1% increase in Q1 of 2021 while its wholesale division saw an impressive 53.7% jump.
Of course, that bump cannot be attributed to the inherent value of traditional in-store retail alone. Casper has spent years building brand recognition through its digital strategy, and late last year introduced a new team dedicated to supporting these retail partnerships. "Our field team's tailor approach ensures that our brand equity holds once a customer walks into one of our retail partner locations and empowers sales associates to have informed conversations with customers about Casper's products and technology," Emilie Arel, chief commercial officer, said on a recent call with analysts. "This strategy has been a real unlock for us at our partnered trial doors.”
One thing is clear: DTC mattress brands cannot survive on ecommerce alone, just as traditional retailers cannot thrive without a quality digital strategy. In some ways, the delineation between in-store and online, start-ups vs legacy brands have been effectively eroded.
So what comes next?
A Return To Brick-And-Mortar
After a year of investing in ecommerce, experts say the retail industry is shifting its attention back to the brick-and-mortar space. "There's a lot of discussion that retailers, including DTC brands, are going to be stepping on the accelerator in the middle to end of this year to focus on stores getting opened in 2022," Ben Lazzareschi, executive vice president of Retail at JLL, said in RetailDive. "We anticipate that they are going to be expanding at pre-pandemic levels.”
Between big box retailers reevaluating their physical footprints and legacy brands closing up shop for good, the physical retail landscape has changed drastically in recent years—there were more than 8,700 store closures in 2020 alone. On a practical level, this has created a surplus of available retail spaces. And with many retail landlords still offering deals to lure business back into these empty spaces—2021 may be the first year in a long time that more retail stores actually open than close.
With more competition joining the brick-and-mortar sphere, traditional retailers will have to, once again, step up their game. Is your store offering convenience? Expertise? Fun? After more than a year of staying home and shopping online, people are looking for something new and interesting to catch their attention.
“Humans are social creatures,” Matt Silvers, vice president of Project Management Advisors, explained in RebusinessOnline. “Retail establishments give us the opportunity to see and be seen, to make small talk with strangers and to experience something fresh or different. The retail mix is undoubtedly changing, but the desire to find the new and novel experience is not.”
Rather than simply going back to the way things used to be, now is the moment to reimagine what the brick-and-mortar experience can be—and how it can compliment your online strategy. If you don’t, you’re at risk of being left behind.