The Urethane Blog

Krim Interview

Casper Co-Founder Predicts the Death of (Bad) Retail

Philip Krim, CEO of the online mattress seller, on how we’ll shop in the coming decades and why we’ll brag about early bedtimes

Philip Krim co-founded Casper Sleep, the online mattress retailer, in April 2014, helping prove that consumers would buy big-ticket items online, sight unseen.
Philip Krim co-founded Casper Sleep, the online mattress retailer, in April 2014, helping prove that consumers would buy big-ticket items online, sight unseen. Illustration: MARK WEAVER

Philip Krim has done his part to hasten the end of brick-and-mortar retail. Still, the chief executive of Casper Sleep believes that physical stores will endure 50 years from now—in a different form.

Krim co-founded the online mattress retailer, which launched with a single product, in April 2014 and helped prove that consumers would buy big-ticket items sight unseen. Since then, Casper has expanded to three mattress models, a dog bed and a line of bedding and bedroom furniture. Valued at $920 million in its last funding round in June 2017, Casper said it has raised $240 million total. It faces competition from a wave of rivals like Tuft & Needle and Tempur Sealy International , both of which sell a bed-in-a-box online.

Casper has also encountered the limits of e-commerce. “There’s still a lot of the population that will never buy a mattress without laying on it first,” Krim says. In February, the company opened its first permanent retail store in New York and in August announced plans to roll out 200 locations over three years. Its products are available in 21 branded stores in the U.S. and Canada and in 1,200 locations of Target, which has invested $75 million in the company, according to Casper. The Dreamery, Casper’s Manhattan venue where patrons pay $25 for 45-minute napping sessions, opened in July. The company operates a 5,000-square-foot sleep-research laboratory, Casper Labs, in San Francisco.

Krim, 35, recently sat down with The Future of Everything to discuss retail’s uphill battle for survival and the cultural and scientific shifts coming to the way we sleep.

Eight Hours Will Be the New 10,000 Steps

The way that people prioritize sleep will change a lot in the future. It’s very common that people talk about, “Oh, I’m eating healthy, so I’m cutting out fried foods.” Or, “I’m getting in shape so I’m exercising more, I’m taking longer walks and counting my steps.” It is less common today that people sit and talk about how they’re sleeping, how many hours they got, how they did certain things to help improve their sleep. We think long-term that that [will have] equal weighting. It’ll be more and more common to brag about getting a great night of sleep or going to bed by 10:00pm or not looking at your phone an hour before bedtime. You’re seeing executives talk about it, you’re seeing athletes talk about it, you’re seeing movie stars talk about it. That’s what starts to move the cultural shift around sleep. That’s something that will take, undoubtedly, years to play out.

Science Will Show Up in the Bedroom

One of the biggest areas where we’ve done testing is around the sleep microclimate. How do temperature and humidity correlate to sleep quality? We studied this, and there was a natural point in the night where people kick off the covers to let air circulate in the microclimate around the body. That led us to working with Merino wool and other wool fibers. Wool was the best [material] for pulling moisture out of the environment, pulling moisture out of your sleep surface, which helped cool down the mattress and sleep surface and regulate temperature and humidity.

There are more and more things competing for people’s time, but one of the things that I think people love to do today, and will love to do 50 years from now, is shop for things in a great experience. How we define a great experience will change. … There’s certainly not a death of retail, there’s just a death of bad retail. Bad retail is where the customer doesn’t enjoy spending their time doing it. Before Casper came along, you had to go to bad retail [to buy a mattress] and you had to deal with a commissioned salesperson, fluorescent lights, in an environment where you didn’t feel comfortable. You’re seeing other industries go through that evolution as well.

The Borders Between Online and Offline Will Dissolve

Retail is increasingly the world of the haves and the have nots. And I think the haves are the retailers who understand that consumers today are often online and offline at the same time. Our customers are shopping with us on average for 2½ weeks. They’re learning about Casper, they’re learning about competition and other options. Customers are coming back to the website and consuming information there multiple times. They’re coming to stores multiple times. Some people are opting to walk out of stores with their purchase. Some people are opting to have their purchase meet them at home later that day. Some want to make a purchase a month down the road. All of these different combinations of customer preferences is something that we want to solve.

Retailers Will Need to Rework More Than Just Stores

Older generational companies are generally very siloed. They have one person or team thinking about retail, they have one group thinking about e-commerce, and they have one group thinking about wholesale. The reality is consumers don’t bifurcate or segment their world like that. A lot of companies have really large retail businesses, and that might have a different margin structure than their e-commerce business. How do they trade investments or gross margins between the channels? If you don’t have the technology infrastructure, if you don’t have that kind of agility in your DNA, then I don’t think you can deliver what is becoming a very complex customer permutation. Breaking down those silos is something that’s very difficult, especially because this is not something where a lot of employees or executives have a lot of experience.

This interview has been condensed and edited.

Prophets is an interview series from The Future of Everything where noteworthy figures from business, culture and technology reveal what lies ahead.

https://www.wsj.com/articles/casper-co-founder-predicts-the-death-of-bad-retail-1542812371?mod=e2tw