How Casper sent Mattress Firm bankrupt

Mattress Firm filed for bankruptcy on Friday to escape hundreds of leases it could no longer afford in suburban malls and city streets.

The struggles of Mattress Firm have been partly self-inflicted. The company did not recognize that its market was evolving online until it was too late. She misjudged what buyers demanded – convenience and low prices – and ignored the threat that digital newcomers like Casper posed to her.

The company was constrained by its decision to buy Sleepy's distribution chain in 2015 for $ 780 million. Instead of investing in digital tools and shipping infrastructure, Mattress Firm has expanded its store base at the wrong time.

"This transformational acquisition unites the country's two largest specialty mattress retailers, offering customers convenience, value and choice," said the general manager of Mattress Firm at the time.

But more than 1,000 Sleepy stores have left the Mattress Firm distribution network. With the slowdown in store traffic, expensive leases have turned into albatross around Mattress Firm's neck.

In a document filed under Chapter 11, Stanger said his company had "too many sites close to each other".

Mattress Firm created its stores while an effective model of direct selling online began to appear.

Casper, along with Tuft & Needle, Leesa, Purple and Yogabed, took advantage of retailers' desire to maintain the status quo by offering customers a new solution to their bedding needs: shiping mattresses in a box at home , no additional cost.

"Traditional mattress retailers have been alienating their customers for decades and are now collapsing under pressure," Philip Krim, co-founder and CEO of Casper, said in an email. "Casper has revolutionized the industry with innovative products and a superior shopping experience."

Casper thought that buyers were tired of the traditional experience of buying mattresses: going to a store, testing a handful of mattresses for a few minutes and rushing to choose an expensive item designed to last for years. Customers were also shocked by complicated and expensive delivery options.

The company has attracted online attention with customers posting viral videos about themselves, which have helped the company achieve $ 100 million in sales in 2015.

Casper distinguished its business by offering the only mattress sold at the time of sales compared to its traditional competitors, as well as offering free delivery and a 100-day trial period at home.

Casper offered only three types of mattresses, which gave it an edge over stores offering a confusing range of soft, firm, foam, soft mattresses and everything in between.

Casper continued to sell online directly to consumers, incorporating bed frames, sheets, pillows and dog mattresses, and partnering with retailers such as Nordstrom, Target and West Elm to increase distribution. .

By the time Mattress Firm launched its own brand of Bed-in-Box, Tulo in 2017, she was too indebted to escape her troubles.

The rise of online businesses was not the only source of pressure on Mattress Firm.

In addition, Tempur Sealy International, one of the leading mattress suppliers, has stopped selling to the company as a result of a price dispute. And Mattress Firm's parent company, Steinhoff International, is mired in accounting difficulties that forced its CEO to resign last year.

Nevertheless, physical retail remains an important component of the mattress market.

In August, Casper announced that it would open 200 stores over the next three years in order to retain current buyers and reach new ones.

Mattress Firm hopes that a lighter store foot will allow it to remain relevant to customers who need a new bed.

"The process we started today will allow us to strengthen our balance sheet and accelerate the optimization of our store portfolio," said CEO Stagner.