For years, consumers thought of their mattresses as “big white rectangles,” says Mary Helen Rogers, spokeswoman for the International Sleep Products Association and the Better Sleep Council, its consumer education arm. No more. For many people, their bedrooms have become second living rooms and home offices, and favorite places to watch television, read books or check social media. That bodes well for mattress retailers.
On the flip side, competition within the mattress market is growing stiffer. Bed-in-a-box and direct-to-consumer mattress companies are “putting pressure on the traditional multi-step retail supply chain,” says Chris Randall, managing director with L.E.K. Consulting.
Minneapolis-based Sleep Number Corporation has been front and center within the change. “Over the past decade, the industry has shifted from domination by traditional brands to encompassing disruptors,” says Andy Carlin, executive vice president and chief sales and service officer. To continue to compete, the company is focusing on both its online and bricks-and-mortar channels and recently completed converting all its mattresses to incorporate its proprietary SmartIQ technology platform.
DIGITAL TO BRICKS-AND-MORTAR
As in most other industries, many disruptors in the mattress sector start as digital enterprises and then launch bricks-and-mortar stores. A case in point: It was reported in August that Casper Sleep Inc. would open 200 stores over the next three years. The brand also is in more than 1,000 Target stores across the country. Conversely, many traditional mattresses, once exclusively offered in physical stores, now are sold online.
Even as online sales of mattresses grow, they have yet to dominate the industry. While ISPA still is collecting numbers on the breakdown between purchases made online versus those in physical stores, a survey it conducted in May asked respondents how likely they would be to purchase a mattress online. About one-third said they’d be likely; almost half said they’d be unlikely. Millennials led those saying they were likely, at 56 percent. One third of Generation X said they would, and 17 percent of Baby Boomers.
Yet even as the mattress sector grows more crowded, the “pie isn’t shrinking,” Rogers says. “I think it’s growing for all of us, as long as we pay attention to what consumers need.”
Paying attention to consumers’ needs has helped drive the volume of research that goes into today’s mattresses. The result has been an ever-growing range of mattress types — air, spring, foam and hybrid mattresses to name a few — as well as numerous comfort layers. In addition, performance fabrics that can wick away sweat or keep sleepers from getting too hot now are common. Some mattress styles feature massage and lighting options, as well as dual controls.
Consumers who’ve become used to frequently upgrading their phones, computers and other devices are bringing this attitude to their mattress purchases. ISPA research conducted in late 2016 revealed that the mattress replacement cycle had sunk below 10 years for the first time, Rogers says.
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Just as important, the growing volumes of research that link sound sleep to overall health and wellness presents an opportunity for mattress companies. The challenge is connecting this insight to their products, Randall says. “Established brands need to evolve their product lines and business models.” One way is by acquiring the capabilities of the upstarts, such as Serta Simmons’ acquisition of Tuft & Needle, announced in August.
SLEEP NUMBER’S STRATEGY
Sleep Number is taking a multi-pronged approach to remain competitive. Its 560-plus stores cover the country and present “a huge competitive advantage,” Carlin says, noting that bricks-and-mortar locations enable Sleep Number to “bring the technology in its bed to life.” Visitors can see, touch and experience the science behind its Sleep 360 smart beds, which incorporate SleepIQ technology.
SleepIQ responsive air technology enables the mattress to automatically adjust when a person moves during the night. The full body sensors take hundreds of measurements per minute, including heart rate, movement and restlessness, to obtain a score. Over time, the system learns when the person is sleeping well and adjusts the mattress to help them continually achieve a good night’s sleep.
“It does what no other bed does — it responds in real time to the sleeper,” says Julie Elepano, senior manager of product brand with the company. This boosts the likelihood a sleeper remains asleep all night long.
Over the past year, Sleep Number converted all its mattress lines to Sleep 360 smart beds; initially, only its higher end lines incorporated the technology. “To remain cutting-edge, all our beds need to be smart,” Elepano says.
Other available features include foot warming technology that turns on some 30 minutes before the sleeper is headed to bed. When the bed senses the person has climbed in, it shuts off to prevent overheating. According to Elepano, research has shown that people fall asleep faster when their feet are warm. For those who tend to get hot while they sleep, a fan mechanism can be added.
How reliable is SleepIQ technology? As with any product that incorporates internet of things technology, challenges can occur: For instance, if the bed is on the third floor and the router in the basement, a reliable connection may be a challenge, Elepano says.
Along with its physical presence, Sleep Number is aggressively pursuing its digital presence; Carlin says customers often use the website for research and then head to a store to experience the product.
Even as disruption in the mattress category intensifies, Sleep Number’s SleepIQ technology platform leaves it “cutting edge, yet accessible,” Elepano says. The company recently teamed up with the National Football League: Just as many other consumers have recognized, more coaches and players now view sleep as one key to competitiveness. “The NFL recognizes how important sleep is,” she says. “Coupled with diet and exercise, it can make a difference.”
That difference is showing up in Sleep Number’s top and bottom lines. The company’s sales for 2017 jumped 10 percent to $1.44 billion; earnings per share shot up 41 percent, to $1.55. The results continued into 2018: For the six months that ended June 30, 2018, net sales rose about 4 percent, from $679 million to $705 million. Net income per share increased about 16 percent.
Sleep Number will continue to advance its SleepIQ technology and is working on ways to exert an even greater impact on overall health and wellness, Elepano says. Its lab team is looking at ways to use SleepIQ technology to alert users and/or caregivers to cardiac events or sleep apnea. The research team at Sleep Number also is working on the capability to provide “out of bed” alerts that caregivers can use to monitor their patients.
The company recently announced partnerships with several national organizations to improve the overall well-being of 1 million youth through better sleep by 2025. It’s doing this by conducting research on young people’s sleeping habits; educating young people, parents and others on youth well-being; and making product donations.
As the mattress industry continues to experience disruptions, Sleep Number is positioning itself to remain a
Karen M. Kroll is a business writer based in Minnetonka, Minn.