Bed sales are waking up during the COVID-19 pandemic mostly because our daily lives have been totally upended.
“People are staying home and they’re investing in getting the best sleep possible. And I think what this environment has done is just pulled forward a lot of trends, and people are obviously very focused on wellness,” Casper co-founder and CEO Philip Krim tells Yahoo Finance.
Krim is on the mark here. Let’s go through a typical day for some folks right now.
Thrust into work-from-home situations seemingly overnight back in March, the bed has become the command post for Americans. It’s where Zoom calls are comfortably done in the attempt to win new business or hold onto business during what has amounted to a severe U.S. economic downturn. What better place to project calm resolve during a tense business negotiation on a video call (with the camera turned off, naturally) then under a blanket on the bed with a teddy bear nearby.
Or in the case of this overly caffeinated journalist, where you interview the CEO of Coca-Cola using Microsoft’s Skype (yes, I told him I was in a bedroom and no, I was not under a blanket).
And after that fifth Zoom call ends just before noon, the good ole’ bed is where you may get busy with a partner who is also working from home or is just home because they have been laid off. That romp between the sheets was definitely not the norm six months ago if both people worked in the office, but could be the norm for the foreseeable future.
When the traditional bedtime is reached, one is often so tuckered out from the blurring of work/life boundaries that you crave awakening fresh the following day as to do it all over again with some degree of success.
Whatever angle you attack it from here, the same conclusion from the new daily routine is being rendered by the general public. People have finally realized their cheap, 10-year-old beds suck and new fancier ones made from a variety of special foams could help improve their revised daily life and mental well-being.
And here are the numbers that have just started to trickle in to back these claims up.
Krim’s Casper — known for its high-tech foam mattresses, online-first business model and hearty marketing campaigns — reported first quarter sales increased 26.4% year-over-year to $113 million. In April, Casper’s sales rose 15% from the prior year, led by e-commerce growth of over 35% and growth at retail partners of more than 20%. What makes these numbers even more impressive is that 1) mattresses aren’t a cheap purchase and we are in recession; 2) Casper’s retail stores have been closed since mid-March and 3) people are buying mattresses without trying them out, per the traditional custom in bedding.
“I think people are just rethinking about every room in their house and doing larger purchases that they had put off,” explains Krim, adding that Casper is also seeing strong demand in ancillary products such as sheets and pillows.
Casper isn’t alone in the sales surge, its fellow online focused rival Purple is also seeing considerable momentum.
Purple’s first quarter sales surged 46.3% to $122.4 million. Direct-to-consumer orders in April exploded 170% to $54 million year-over-year. Demand is so hot at Purple — synonymous with its purple grid technology for its beds and pillows — the company recently ended its temporary furlough for the vast majority of its manufacturing employees. The company was operating at full capacity before the important Memorial Day weekend shopping period.
“In our case, before COVID-19, more than half our mattresses were sold through brick and mortar (not half our revenue, but more than half our mattresses). That has shifted almost entirely online. That brick and mortar premium customer is still buying. We have effectively seen no decrease in unit sales over the last 1-1/2 months. Just a seismic channel shift in where the customer is buying (offline to online),” Purple CEO Joe Megibow tells Yahoo Finance.
Even Tempur Sealy — seen by many on Wall Street as a market share loser to the seemingly hipper Casper and Purple — has gotten in on the sales spike. First quarter sales rose 19% to $822.4 million, led by a 24.5% increase in North America.
Spending on sleep
Keep in mind how out of the ordinary these sales gains are for the bedding industry. U.S. furniture and bedding industry sales rose a meager 2.8% in 2019 — that marked the slowest growth rate since 2016, according to U.S. Department of Commerce data.
Investors have subsequently flocked to the bedding stocks in the past month:
Casper shares (CSPR): +3.6%
Tempur Sealy shares (TPX): +28%
Purple shares (PRPL): +30%
Consumers are saying their sleep has taken a hit amidst COVID-19, so it’s conceivable the sales strength in bedding continues into year end.
Over half of the nation qualified their sleep as poor or fair in a March survey conducted by The Better Sleep Council. That was up from 43% in January, pre-national quarantine. The same survey showed 24% of Americans woke up feeling rested and refreshed in March, worse than the 30% rate seen in January.
“People are staying home feeling cozy and comfortable, and because they’re not spending money on traveling and other things I think they’re figuring out what parts of their life they can upgrade,” Krim says.
Cruise vacation or new mattress? Sign me up for the mattress.
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