Competition in the online mattress business is fierce. To stand out, Casper will shift to become more than just a mattress-in-a-box company.
Casper charged into the bedding market five years ago by shipping cheap mattresses in a box directly to customers’ homes for free. Today, Casper has a digital business, including on Amazon, and sells at more than 1,000 Target (TGT) stores in the United States and Hudson’s Bay in Canada. It has also opened more than 20 of its own brick-and-mortar stores in North America and started selling pillows, sheets, quilts, bedroom furniture and even dog beds. That rapid expansion helped sales top $400 million last year.
But the online market for beds has become saturated. The partnerships, stores and name recognition have given Casper the early lead. Yet online startups like Leesa, Purple and Tuft & Needle are gunning for Casper’s No. 1 position. Walmart (WMT) and Amazon (AMZN) have recently launched their own mattress brands. Allswell, Walmart (WMT)’s online brand, is currently on a “tiny home” retail tour across the country to gain name recognition and interact with customers.
With competition bearing down, Casper is shifting gears to differentiate itself from its rivals. It wants to become a full-fledged sleep technology company that deals comprehensively with tackling a good night sleep.
“What Nike did for exercise, what Whole Foods did for organic foods, we want to do for sleep,” said Casper CEO Philip Krim in an interview with CNN Business Thursday.
He predicts that becoming a “top of mind brand to get a better night of sleep” with customers will give Casper a leg up on its online mattress rivals and big incumbents like Serta Simmons Bedding, which has roughly $3 billion in sales.
Casper recently debuted a “glow light,” an app-connected night lamp designed to help people fall asleep more easily. It starts at $99. Expect to see Casper offer more tech-focused sleep products and gadgets for customers’ bedrooms in the future, Krim said.
“Everyone could use more attention to their sleep,” he said. “The next big area for us will be around temperature control. We have ideas around scent.”
Casper has other plans too, including opening up 200 stores in the next few years. Stores help Casper get its brand in front of new customers and give them a chance to test out mattresses before buying.
Casper also wants to grow in Europe and Asia.
“Geographic expansion is definitely part of our strategy,” Krim said. “We think what’s made us successful here will make us successful in Japan and China.”
Global expansion and entering new markets don’t come cheap or easy. On Wednesday, Casper raised $100 million in a round of funding, valuing the company at $1.1 billion. Casper also added the CEO of Canada Goose and the former CEO of Neiman Marcus to its board of directors to help lead the company through its next phase.
To ramp up capital for its expansion, Casper could be the next company to join the IPO party. Earlier this week, Reuters reported that Casper is seeking to hire underwriters for a public offering. Matthew Kennedy, senior IPO market strategist at Renaissance Capital, expects the company to file initial paperwork for a public offering in the coming months.
Krim declined to comment on plans to go public.
Even if it goes public, the road ahead for Casper won’t be easy. Other companies also see opportunities to sell better sleep to customers. Apple has added new sleep features to its iPhone, Bose designed “Sleepbuds” headphones and Best Buy has identified it as a growth area. Arianna Huffington’s new company, Thrive Global, added a “Sleep Well” section earlier this month.
High margins on mattresses could make Casper appealing to investors, but Casper lost money last year, according to The Information.
Yet Wall Street is hungry for fast-growing consumer names like Casper, Rent the Runway, exercise bike company Peloton and PopSockets, which makes grips and cases for cell phones, said Kennedy from Renaissance Capital. All of these companies are reportedly plotting IPOs.
“The retail apocalypse has gotten a lot of attention. These are the replacements,” Kennedy added.
Going public isn’t the only route Casper can take either. It may be also exploring a sale, including to Target, which invested in Casper in 2017 and helped fund its latest haul, Kennedy said.