The retail industry has changed significantly over the course of the past year or so. Driven in large part by an obvious and persistent forcing function, consumer behaviour continues to shift, yielding an approach to the shopping journey that is more channel agnostic than ever before. It’s resulted in a swift and dramatic reshaping of the retail environment, one that’s requiring retailers to rethink their offerings and strategies in order to effectively respond to these changes. Efforts to do so have thus far triggered the acceleration of a range of digital initiatives across the country and, in many cases, alterations to operations that are being informed by thorough reassessments of the landscapes on which they operate. Though much of this action has been reactive on the part of retailers, there are some within the industry whose constant innovation and creativity have bred an agility that has enabled success during these difficult times, positioning themselves for further growth.
One of these innovators is Sleep Country Canada – the country’s leading specialty sleep retailer – which recently announced impressive fourth quarter 2020 results that helped to cap the most successful year in its more than quarter century of business. Reporting a year-over-year increase in fourth quarter net income of 89.4 percent (+$12.6 million vs LY) and a 33.4 percent increase in revenue for the same quarter from $186.5 million in 2019 to $248.9 million in 2020, the company continues its expansion amid an omnichannel transformation and the development of strategic partnerships that began before the onset of the pandemic. According to Stewart Schaefer, Chief Business Development Officer for Sleep Country and President of Dormez-vous, the timing of the retailer’s initiatives has been fortuitously beneficial. But he adds that their outcomes have nonetheless been borne of the company’s penchant to consistently adapt and evolve in order to meet the demands of the consumer.
“Prior to the impacts of the pandemic hitting the industry, there were a lot of things that we had already set in motion,” he explains. “A little more than a few years ago when everyone started to really take notice of the ‘bed-in-a-box’ concept and the entire industry was concerned that e-commerce was going to be the end of brick-and-mortar retail, we were proactive enough to begin conversations about providing our own ‘bed-in-a-box’ solution and building out our digital capabilities and omnichannel environment. We never experienced any decrease in activity at our physical stores. We’ve been lucky enough over the years to continue to see that compounded growth. However, we also recognized that consumer preferences were evolving and that the ways they like to engage with their favourite brands were changing and expanding. We knew that we had to create a Sleep Country experience that allowed Canadians to shop with us in whichever way they want.”
Building an Experience
To help create the desired experience for its customers, Schaefer’s Sleep Country team initiated dialogue with one of its online competitors, Endy, back in 2017. Identifying the savvy and success of Endy’s online business, as well as the potential mutual benefits that could be realized through a partnership between the two leading mattress providers, a deal to acquire Endy was closed in December 2018, adding Canada’s largest online mattress brand and one of the country’s fastest ever-ever growing retail brands to Sleep Country’s portfolio. And, less than a year later, in November 2019, the company officially launched the fully transactional SleepCountry.ca website (dormezvous.com in the province of Quebec), marking a true foray into the digital space. The expansion of offering and service was cause for excitement internally at the company, representing a massive leap forward toward its digital and operational goals. But soon after, as Schaefer points out, impacts of the pandemic took hold.
“Following the formation of our partnership with Endy and the launch of our website, our numbers for the final quarter of 2019 were very good,” he says. “For the months of January and February 2020, our sales were incredible, both brick-and-mortar and online. We quickly saw the critical importance of the relationship between the physical store and the website. We had become channel agnostic in our approach and didn’t mind where the transaction was happening, as long as we were providing a seamless experience for the customer. And then, when COVID hit, sentiment in the country and around the world quickly changed. Everything just stopped for about ten days. It was concerning. I was starting to wonder if all of the hard work that our team had put in would be in vain. But then, our e-commerce activity started to accelerate as customers began visiting and engaging with us online in numbers.”
E-commerce Acceleration and Marketing Shift
He explains that it was a relief at first to see the company’s online performance start to make up for a shortfall in in-store sales that were impacted significantly by initial lockdowns. However, what Schaefer and his team experienced soon after was an explosion in e-commerce growth. Driven by the country’s new reality amid government-imposed social restrictions and safety protocols, consumers across the country cocooned themselves and their families at home, making purchases that suited their immediate needs. As a result, sales within the accessory segment of Sleep Country Canada’s offering, which it launched a little more than five years ago, increased exponentially. Items like folding cots, sheets, pillows, comforters, and weighted blankets flew off the digital shelves.
These types of purchases not only highlighted the immediate needs of the Canadian consumer, but underscored the significant challenges that people across the country were facing to keep themselves and their families safe and secure. In response to the severity of the situation, just before the first wave of lockdowns took effect, Sleep Country Canada shifted its advertising toward a softer approach. The company stopped advertising mattresses, momentarily retiring its 26-year-old corporate mantra “Why buy a mattress anywhere else?” and replacing it with the message “Sleep well. Stay well”. It was part of an entire new campaign that was launched by the specialty sleep retailer, and one that Schaefer believes has been, at least in part, instrumental in reenforcing the strong connection between the Sleep Country Canada brand and its loyal consumers across the country.
“It didn’t make sense for us to be advertising the sale of mattresses during such a difficult time,” he admits. “When we introduced ‘Sleep well. Stay well.’, it was meant as a message to the Canadian community – a small way by which we could lend our support and to let our customers know that we’re with them. We aren’t clever enough to have created this campaign to drive our business. The intention behind it was completely sincere, providing suggestions like ‘Call someone you love tonight’. But influencers on social media picked up on it and our campaign went viral, seeming to take on a life of its own, helping to solidify Sleep Country’s reputation as a good corporate citizen.”
In addition, Sleep Country Canada also donated $1.5 million in sleep products to non-profit organizations across the country, benefitting frontline healthcare workers as well as vulnerable communities impacted by COVID-19. And when brick-and-mortar stores reopened, it invested millions more in the creation of a safe in-store environment for its 282 stores across the country. It wasn’t long until the company began to experience a return of its mattress sales, both in-store and online. Defying the challenges that have been faced by the industry, Sleep Country Canada’s performance steadily escalated throughout 2020. Supported by its newly created digital experience and omnichannel ecosystem, the company’s most recent successes are reflected in its remarkable fourth quarter numbers, which include a growth in mattresses and accessories revenues of 34.6 percent and 29.3 percent respectively and a third consecutive quarter of triple-digit e-commerce revenue growth, representing 20.1 percent of the company’s total revenue.
Enhanced Digital Service
Another example of Sleep Country’s good corporate citizenship, which also represented an adept adjustment made by the company, is the fact that it did not furlough any of its employees during these difficult times. Instead, it realigned its in-store workforce, forming its ‘Dreamline’ which provides direct access, either by phone, email or chat, with Sleep Country sales associates who are available to offer expert sleep advice and help to inform customer purchasing decisions. Started as a response to the pandemic, Schaefer says that the ‘Dreamline’ has quickly become a mainstay component of the company’s consumer engagement strategy. It’s reflective of the creative culture that’s always provided the underpinning for Sleep Country Canada’s success. And, according to Schaefer, it’s also a testament to the organization’s people who were willing to accept and dedicate toward a new way of doing things.
“The creation of an omnichannel experience for customers is no longer a choice of whether or not to build it,” he says confidently. “It’s representative of the evolution of retail and of an offering that has become imperative to provide for the consumer. It has everything to do with the ease, convenience and satisfaction of the shopping experience that you’ve created for them. Our associates have been incredible throughout this journey, supporting the initiative, ensuring that the same exceptional Sleep Country Canada experience is consistent across all of our channels. They’ve always been key to our success, providing the magic behind our customer engagement. But they’ve been unbelievably positive in accepting their evolved responsibilities and helping to drive this transformation.”
The Power of Digital
In addition to complementing in-store sales, the digitization of the business has also informed Sleep Country Canada’s marketing, enabling it to supplement its traditional media with online and social content. For a company that’s always prided itself on its unique storytelling through creative marketing and advertisements, digital channels are providing the perfect mode of communication to start conversations with its customers, while strengthening and expanding awareness of the Sleep Country Canada brand. As is evidenced through the hugely successful partnership with Endy, the development of an omnichannel ecosystem has also allowed the company to continue thinking strategically. Prior to its acquisition of Endy, in support of its digital growth and to further enhance its online offering, the company also teamed up with Simba – Europe’s leading mattress-in-a-box purveyor – in May 2018. And, in March 2019, it entered into a partnership with Walmart, becoming the exclusive provider of Mattresses on the Walmart.ca marketplace. Most recently, in October 2020, Sleep Country became the exclusive Canadian retailer of Purple – the leading mattress-in-a-box creator in the U.S.
The digitization of Sleep Country’s business can’t be described as anything short of a revolution, a critical step that’s allowing the iconic Canadian specialty sleep retailer to venture into a new frontier, adding to the already impressive legacy that its built. It’s changed the very landscape that the company operates on, bringing competitors together and opening a multitude of possibilities for the brand that would not have otherwise been possible. And, combined with its perennially strong brick-and-mortar performance at locations across the country, those possibilities and opportunities to continue growing the brand, according to Schaefer, are presenting Sleep Country Canada with a very exciting future.
“Things are so fluid within the company at the moment and happening so quickly that it’s difficult to look any further than 18 months down the road in terms of what we need to do transactionally to execute on our current plans and growth. We’re focused on continuing to develop our marketplace relationships and exploring strategic partnerships to find that next, best, relevant brand. We’ll continue building out a best-in-class, seamless omnichannel experience and developing that digital relationship with our customers. And we’re also going to build on our real estate portfolio. There’s still room for us to grow in terms of physical locations. And, given our current circumstances, I believe that there are tremendous opportunities for brick-and-mortar retailers ahead. Going forward, it’s going to be about continuing to build on the layers we’ve already laid. And, with respect to the power of digitization – the online environment changes the barriers to entry into other parts of the world. As we continue to work with and develop these relevant brands for Canadians, there is some potential for us to possibly extend Sleep Country beyond Canada, providing us with a glimpse of where we might be able to take the brand.”