Thank you for joining us on our mission in 2017 and we look forward to serving you even more in 2018.  We’ve assembled our predictions of 2018; what it will take to win, lose or just survive.  As well as a special note from our editor.

2018 Will Be The Most Competitive, Volatile And Complex Year In This History Of This Industry

2018 Predictions that will shape the industry;

  • Big Brands will have to incorporate a brand portfolio acquisition market approach
    • Serta, Simmons, Sealy, Tempur, Mattress Firm, Steinhoff, Rooms To Go, Mattress One, City Mattress – will purchase existing established brands to diversify product offerings without the expense of building new brands
    • Big brands will purchase majority shares of multiple brands and offset manufacturing costs as acquisition deals
    • Big brands will focus on manufacturing and distribution as brands fight on the front line for consumers
    • Big brands will leverage their legacy trust with consumers on popular direct to consumer brands as value proposition; i.e. mattress x back by Tempur 10-year warranty
    • Big brands will leverage their portfolio of brand with finance companies like Affirm, Klarna, and Zibby to compete at greater rates to earn the business of a portfolio company
    • Big brands will leverage their portfolio of brand with logistics companies such as FedEX and UPS to compete at greater rates to earn the business of a portfolio company
    • Big brands that own a portfolio of brands can segment each price point/value category.  This means rather than one mattress having to appeal to all consumers – each brand can dominate self-segmented markets.

 

  • Casper eats crow and restarts affiliate marketing
    • Additionally, the purchase of Sleepopolis and potential influence over Mattress Clarity and Slumber Sage backfires as consumers become irritated at this tactic

 

  • Casper’s success is underwhelming in Target retail stores
    • Ultimately phased down or even out completely

Casper

 

  • Brand / product self-segmentation
    • As one mattress doesn’t fit all consumers brands will self-segment into lifestyle affinity markets to offer the best solution for definable marketings
      • i.e. mattress x will become the mattress for crossfitters
      • i.e. mattress x will become the mattress for people who sleep hot
    • Product line step up and step down variations
      • i.e. mattress x will have three variations at three different price points for crossfitters
      • i.e. mattress x will have three variations at three different price points for people who sleep hot
    • Product line extensions to support their self-segmented marketing
      • i.e. fitness recovery pillows
      • i.e. continuous cooling pillows

 

  • Accountability as the Federal Trade Commission monitors and regulates fair marketing practices
    • Affiliates ‘pay for play’ business models
    • Testing Claims made by manufacturers

 

  • The rise of real influencer marketing
    • Comprehensively integrated marketing initiatives
    • Product placement will be deemed ineffective

 

  • Further adoption of improved logistics and delivery
    • Development of post-purchase communication
      • Advanced chatbot/email follow-up sequences
      • Focus on referring a friend programs

 

  • Product segmentation based these key attributes
    • Price point
    • Value offers; extra pillows, extended trial periods, warranty terms
    • Focus on products with cooling technology

 

  • External price factors
    • Raw materials increase; foam
    • Shipping rates; FedEx and UPS rates are on the rise
    • Tariffs on imported components

 

  • Amazon’s impact
    • High-velocity promotion of Chinese mattresses at below market cost values will greatly slow brand name mattress sales on that channel
    • Amazon will continue to promote price over value or quality
    • Amazon will launch one to two in-house mattress lines
    • Amazon will consume up to 30% of the online mattress sales

 

  • Tempurpedic’s 2018 outlook
    • Push their price points to record highs in order to maximize profit per sale
      • Accept they will not gain more market share, thus, will profit off small segment market
    • Radically change their digital marketing strategy as 2017 proved a brand name isn’t enough to convert sales
    • Must find more retail locations to create more in real life product trials
      • Must align with locations that have a sales force to promote/sell their high-end offerings

 

  • Development of additional finance terms
    • Consumers appreciate low payments but do not like 12 months of payments
      • 50% down at the point of purchase, 25% month two, 25% month three

 

  • Difficulting in Global expansions
    • Global expansion of top U.S. brands will have difficulting garnishing market share internationally due to locally established brands
      • Especially in Canada and the UK

 

  • A new ‘market standard’ of hybrid marketing that leverages traditional marketing and digital channels
    • Traditional marketing will underperform without the strategic development of online, offline and interactive experiential marketing campaigns
    • Development of ‘multi-step’ offline marketing campaigns

 

  • ‘Add to cart’ actions no longer indicate purchase intent
    • Consumers add to cart to simply view pricing, or merely ‘bookmark’ a wishlist
    • Add to cart KPI’s will remain important but not indicative of sales projections
    • Business will be built or perish post add to cart and at point of conversion
      • Companies who master this section of the funnel will be the top velocity selling brands

 

  • Brands will launch retail pop up locations
    • Due to oversaturation of supply (brands) and a steady growth of demand (consumers), online channels will become more expensive to reach the same target user
    • Brands will develop local strategic partnerships in places that produce high volume foot traffic for ‘real life product testing’

 

  • National advertising will evolve
    • As competition nationally increases, brands will pivot strategies and deploy a local geographic market approach

 

  • Big box retailers will partner with brands to drive foot traffic (but not to sell products)

 

  • Online giants such as Wayfair, Amazon, Overstock will consume more market share than in 2017
    • With a clear focus on self-branded products at reduced costs just to provide value to membership style benefit to consumers (think Costco)

Who Will Win, Lose or Even Just Survive;

2018 Predictions on market winners, losers, and those clinging just to survive

Successful brands

  • Acquisition of a portfolio of existing brands is key for not only market share but also for survival
    • Today, successful online brands that haven’t taken venture capital could be acquired for under market valuations in exchange for manufacturing capacity and leverage of big brand Klout
    • Big brands shouldn’t strategies solely to compete in the weeds to acquire end consumers.  Big brands should be the critical piece of the supply change that supports the brands manufacturing
    • Big brands will either have to decide to support ‘owned’ brands or cannibalize their consumer market
    • Brands that leverage merchant and lending rates
      • Companies like Affirm, Klarna, and Zibby win today because they acquire the customer regardless of which brand the consumer elects to purchase from.  A portfolio approach will put some of the negotiation leverage back in the brand’s control
    • Venture Capital and Hedge Funds
      • VC’s and Hedge Funds could easily enter the market by acquiring a large velocity of tier two and tier three brands (brands that have an existing presence in the market but haven’t received funding)
      • Quick closing on acquisitions will leverage the best purchase price in favor of the VC funds as many smaller companies are feeling the economic pressures of rising customer acquisitions costs, returns, and oversaturation of similar products
      • National media attention as this industry is evolving in an unprecedented rate
      • VC’s who missed the initial investment of brands like Casper or Leesa could create an equally as valued portfolio of brands that could be built of sold

Unsuccessful brands

  • Brands that follow the traditional four-season marketing approach of yesteryear will perish
  • Brands that continue to deploy what worked in the past without drastic evolution in marketing approaches
  • Brands that talk at consumers and not listen to consumers in their marketing
  • Brands that fail to clearly distinguish their proprietary individual value proposition
  • Brands that rely too heavily on affiliate programs
  • Brands that continue to market conservatively
  • Brands that focus too heavily on the product build and technical specifications
  • Brands that focus heavily on what the competition is doing, rather than focusing on individual unique marketing
  • Brands that fail to recognize that the market is not controlled by ‘mattress people’
  • Brands that forget a mattress is a commodity first

Brands that will merely cling to survival and ultimately perish

  • Existing brands that drastically change their established branding, i.e. colors, messaging, looks, logos, language.  Effective brand recognition campaigns are at 10x premiums so deviating from what’s already resonating will be costly and could lead to market share loss.  This misstep will result in extreme costs that just might not be able to overcome.  Case study, Coke changes the already working formula to ‘fix’ something that wasn’t ‘broken.’  
  • Brands that rely on Amazon as their primary marketing/sales channel
  • Brands that leverage ‘all in one’ marketing agencies, rather than, engaging with top performing channel service companies.  Case study, review McDonald’s 2017 partner marketing shift. 
  • Brands that only focus on online market growth without a strong offline product placement strategy
  • Brands that don’t genuinely have a ‘core value’ proposition.  Leesa is a great example of a company rooted in social good and actually act upon it
  • Brands that don’t have the ability to test and try with a nimble deployment process
  • Brands that don’t have the ability to shift assets to reflect consumer trends

From the Honest Reviews Editor –

This is the most crucial forecast looking at the next 12 to 18 months regarding survival, growth, and the ability to thrive in a volatile market.

The company that acquires the most (by volume) established brands today will be the company positioned for dominance for the next ten years.  The large corporations should look to assemble a portfolio approach of brands.

 

To secure long-term stability between Tempur Sealy, Serta Simmons, and Steinhoff – the company that manufactures the most units will secure long-term power.  This will be the aggregate total of units across brands.

 

Collaborating affinity one-off projects.  Brands will look to establish relationship other other successful brands to target and sell to specific niche markets.  Soon, established quality brands partnering with affinity companies will become the requirement for sales as the market becomes over saturated.  To be clear, there is not a shortage of demand or consumers.

In fact, it is my belief that 200+ companies could compete and thrive at different levels of success.  The issue resides in the recency of purchase.  Regardless of the ability to market, brand and deliver a great product – consumers experience from initial catalyst search followed by the immediate flooding of mattress related ads 24/7 following them across multiple devices – is actually going to turn more consumers off, rather than, drive more commerce to the industry.

Put yourself in consumers shoes and imagine, if you typed in ‘new car’ into a Google search.  That shows interest, but not, purchase intent.  That user would be targeted by the top couple car manufacturers, sub-services such as CarMax, auto trader or Carfax.  The user would most likely see a few of these retargeting ads but not to the point where that same user is turned off of the purchase.

 

The entire industry is asking, “where are the customers?”  Retail says they are online.  Online says they are with a competitor.  But, after having many conversations with ‘in-market’ consumers the reality is they are just overwhelmed with the constant ‘asked to buy’ messaging. 

Even with companies promoting the trial period, the general conscious amongst consumers is simply the ask is far too great for the exchange in value.  The magic of commerce is the journey from the research phase to conversion.  Yet, the majority of companies today have forgotten the only true reality – the only person that matters in the transaction between the company and consumer – is the consumer. 

Consumers, as a general whole, do not care on any further level than a surface level what Time magazine said about your product.  Or Tech Crunch, Gizmodo or the Wall Street Journal.  Consumers understand that with digital most of these organizations offer sponsored content in the first place.  Companies today spend 95% of the time talking at consumers – not to them.

Yes, the price points vary and thus expectations and promises made also vary.  But, let’s be clear, the only real competition that an individual consumer has is between their existing old lumpy mattress.  A proactive mattress consumer might purchase a mattress every five to eight years.  If we take a look back at the mattress market five years ago it was a very different landscape.

So, where does social good, product awards, and marketing claim rank on the overall scale of importance to even the most proactive consumer?  Data shows, not as high as someone in the industry might think.

As more companies spend more time and money to message why they are ‘disrupting’ the industry, innovating with unique materials and placing logos all over their site for social proof – more consumers will simply elect not to purchase a mattress.  They will spend their money elsewhere on different consumer product goods.

But why? The $64,000 question. 

If we study commerce and the art of the sale, we know two things.  Consumers purchase based on emotion and to solve a problem.  In a global economy where you can reach potential consumers, literally, 24/7 on just about any device, manufacturers have forgotten the very basics.  Identify a problem.  Present it on a personal, individual level as a solution.

Tuft & Needle was on the right track with their initial approach.  “We charge what we need, not what we can.”  “Mattress stores are greedy, so we cut out the middleman.”  The reality is Tuft & Needle did not cut out the middleman.  Rather, they became the exact antithesis of their message.  Tuft & Needle does not, nor has ever, manufacturer their own mattress, pillow, or sheets.  They are the new middleman in today’s digital marketplace.  But, this doesn’t make them wrong or fraudulent.  This makes their marketing – genius.  They understood what consumers thought, and messaged that.  Tuft & Needle purchase their mattress from a traditional manufacturer just like a retail mattress store does.  The only difference is they identify a pain point of consumers who simply due to lack of interest and too much time between purchases don’t really take the time to learn or more importantly care about.

So, the notion that direct to consumer is this new evolving industry is as incorrect a statement as a ”bed in a box is a new innovation.”  Yes, it’s t the ue, majority of the US, UK and Canadian market do not know that mattresses can be roll packed and shipped directly to their door.  And, if there is any magic left in this industry is watching a consumer’s eyes light up when they realize a, “king size mattress fits in the little box.”

Thanks to Jeff Besos’ tyrannical foresight, strategy, and most importantly his ability to execution has lead to the biggest evolution in commerce’s history.  Amazon single handedly changed consumers perspectives of ordering large (by physical size and dollar amount) items only with zero fear of the return.

In this industry the idea of a sleep trial with free shipping and easy returns isn’t disruption – it’s a base required expectation.  For all of the time, energy and effort invested into building the perfect marketing story behind every product the reality is far too little time is spent on actually messaging how these products will actually improve lives.

Consumers today have easy accessibility at their fingertips the ability to learn about overall health and wellness.  Many mattress companies tout their products promote a healthier lifestyle.  But, very little actually educate and explain how their products will deliver on the sought after results.  The companies that can define their niche and create short, memorable value propositions are the ones that will earn a customers business and stop the ramped increase of ‘mattress renters’ (a mattress renter is a consumer who tries multiple bed in a box brands taking full advantage of the sleep trial period before with the full intent to return mattress).

Purple’s video approach.  Casper’s larger than life presence.  Nectars barrier to purchase removal.  Or, even Leesa’s commitment to social good are well defined.  These brands that are prepared for 2018’s volatile marketplace.

2017 Recap Findings

  • Casper valuation over $1 billion
  • Caper breaks the barrier between online, pop up retail, and mainstream retail at Target
  • Leesa raised over $23 million [Series B]
  • Purple scheduled to sell for $1.5 billion, reverse merger and going public
  • In-home sleep trials extend up to 365 Nights; 100 nights standard
  • Nectar offers a ‘Forever’ warranty
  • Mattress warranty duration extends to Forever
  • Product lines featuring step up and step down
  • Mattress Firm launches tulo, direct to consumer brand
  • Manufacturer Review Manipulation

Casper Valuation Of Over $1 Billion

Casper Sleep had a prosperous year leading the bed in a box space with capital funds successfully raised.  In early 2017 Casper’s valuation was $550 Million.  Just four months later they doubled their value and officially became one of the few rarified bedding companies valued at unicorn status.

January 23, 2017
A unicorn is a start-up company valued at over $1 billion. The term was coined in 2013 by venture capitalist Aileen Lee, choosing the mythical animal to represent the statistical rarity of such successful ventures.  After Casper’s last round of Venture Capital funding, they were valued around $550 Million. – Source Honest Mattress Reviews 

May 26, 2017
Target has finalized an investment in Casper Sleep, pumping $75 million into the fast-growing mattress startup in a funding round that will total $100 million or more, according to a source familiar with the deal.  The investment comes after Target and Casper could not come to terms on an outright acquisition after Target offered to buy the startup for $1 billion.  – Source Honest Mattress Reviews 

 

Casper

Source Crunchbase

Caper Breaks The Barrier Between Online, Pop Up Retail, And Mainstream Retail At Target

Casper Replaces Stereo Exchange After 30 Years On Broadway
Taking a stroll down historic Broadway Ave there are a few staple locations.  Stereo Exchange, for the past 30 years, has been one of those iconic businesses.  But, today, what once was the flagship speaker store will soon be a Casper retail store. – Source Honest Mattress Reviews

Casper Now Calls Target Home In 1,200 Stores Nationwide June 18th
Starting this June (2017), you can find your favorite Casper products at more than 1,000 Target stores nationwide. That’s right — Casper’s sheet set, pillow, mattress protector, and NEW exclusive-to-Target products will be on shelves. – Source Honest Mattress Reviews

Leesa Raised Over $23 Million [Series B]

July 24, 2017
Leesa Sleep, the leading direct-to-consumer online luxury mattress retailer, today announced the close of a Series B funding, raising $23 million in a round led by One Better Ventures, an investment company led by Seventh Generation CEO John Replogle. Notable investors include social impact entrepreneurs such as Blake Mycoskie, Founder of TOMS. – Source Honest Mattress Reviews

In-Home Sleep Trials Extend Up To 365 Nights; 100 Nights Standard

October 12, 2017
Nectar Sleep, the pioneers of the 365-night sleep trial and Forever Warranty have rolled out some new branding including a brand new logo.
“NECTAR provides you with a full year, 365 nights to enjoy NECTAR and decide if NECTAR is right for you. If you decide for any reason that NECTAR is not your ideal mattress, we’ll remove the mattress from your home and refund your payment. Our risk free trial is 3 times longer than any other we have seen. Fewer than 3% of NECTAR sleepers return their NECTAR. Our finance customers also enjoy the benefits of our 365 night trial. Some exclusions apply.” – Source Honest Mattress Reviews

Nectar Offers A ‘Forever’ Warranty

October 12, 2017
Nectar Sleep, the pioneers of the 365-night sleep trial and Forever Warranty have rolled out some new branding including a brand new logo.
“Forever is a long, long time… and that’s how long we guarantee the construction, materials, quality and durability of NECTAR for the original purchaser. If you own a NECTAR and sleep on a NECTAR we believe NECTAR should be the only mattress you ever need. We back up NECTAR’s quality in absolute terms, with no wishy washy legal speak, NECTAR will last longer than you do if you treat NECTAR right.” – Source Honest Mattress Reviews

Signing off 2017 in preparation for an exciting 2018

First, thank you very much to every single reader.  In just one year, together, we’ve built a community.  We accomplished our goal by unifying many voices to make an impact that’s been heard globally.  That only works because of every single one of you.  Every comment you made – good, bad or indifferent – is why we continue to build this platform.

2017 had many ups and downs.  But, it was a blessing.

What does 2018 look like?  It’s exciting!

We are already making plans and preparations to double our reach both online and offline.  We’re excited to solidify partnerships that ultimately benefit all consumers.  We’ve also worked very hard in the background to develop meaningful relationships with most of the global manufacturers to provide consumers not only an outlet to be heard – but an outlet that provides solutions.

We wish all companies, brands, and manufacturers the best of luck and success over the next year.  It’s clear, the market is large enough for everyone to succeed.  We look forward to continuing our objective of documenting this evolving market from the ground floor.

For those brands, we offended, we are sorry.  For those brands, we have a great relationship with, we’re thankful.  And for those whom we haven’t had the opportunity to meet – let’s connect.

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