Talk of waking up a somnolent sector. With names like Sleepyhead, WakeFit, Sleepsia, Repose, Flo, and The Sleep Company, a whole bunch of start-ups have entered the mattress industry, and are shaking it up.

No longer is the purchase of a mattress a routine one or a one-time affair – but consumers are weighing options, and making it a lifestyle decision. Lumpy beds are a thing of the past.

According to research firm Redseer, the mattress industry in India this year is valued at around $2.5 billion (approximately ₹20,000 crore) and growing at a CAGR of 10 per cent. Industry estimates indicate that around 7-9 million units of mattresses are sold in the country every year with the replacement cycle kicking in every decade. While the vast majority of opportunity is in the unorganised segment, the organised end of the market, estimated at 37.5 per cent of the overall market, is increasing its share every year.

It is this opportunity that a number of nimble mattress manufacturers are trying to tap. The pandemic too played a part as people confined at home realised that they spend more than a third of their lives on their mattresses. Aided by the growing number of nuclear families, greater purchasing power and willingness to buy online meant a newer set of opportunities.

While there are established players like Kurlon, Duroflex and Sheela Foam, there are very few strong, pan-India, national brands. Also, given the mattress bulk, transporting them over long distances from a centralised manufacturing location is not economically viable, which is also why brands are particularly strong largely around their manufacturing bases but most have no national footprint.

A number of agile start-ups smelt this opportunity and have entered the market with product and marketing innovations. Entry barriers currently are low though players are trying to distinguish themselves in terms of technology and brand positioning.

Innovation and pricing

From cotton stuffed ones to PU Foam, rubberised coir, spring, gel, latex, innerspring, hybrid, pillow top, polyfoam, air to memory foam varieties, mattresses come in all shapes and sizes. Prices can vary from a few thousand to a few lakhs of rupees.

The bulk of the action is happening in the economy (less than ₹8,000) to mid-category (₹8,000 to ₹30,000) while premium (between ₹30,000 to ₹75,000) and luxury are where the margins are.

Talking about the potential of the segment, Anshul Jain, Managing Director, Lighthouse Funds, who is looking to invest in start-ups, says, “The organised mattress market in India is only ₹10,000 – 20,000 crore. There is a massive untapped potential. Even in the organised market, only 15 per cent is online, and with the increase in digital adoption, this number is seeing exponential growth.”

Mattress start-ups saw more than a three-fold increase in funding from $65 million in 2014 to $223 million in 2020, according to a report by Inc42.

The increase in the number of players is due to low entry barriers. “So, a lot of companies have entered, however, scaling and growing the business remains a challenge,” says Harshil Salot, Co-Founder, The Sleep Company.

With more and more start-ups entering the industry – product innovation has taken the front seat. “The involvement of start-ups in bringing innovations including compressing, roll-backing, inner spring beds, latex alternative foam, individually pocketed spring technology, has helped increase mattress sales,” according to S Balachander, CEO, Repose Mattress Company.

Also, start-ups have emphasised creating niche products with orthopaedic benefits, keeping the body cool during tropical nights and for restless sleepers. From soft to medium to hard, there is a variety of mattresses available for every need.

“The pandemic created a turning point for this industry, enabling brands to scale their efforts and create products that can cater to the needs of diverse customers. This industry holds immense possibilities and room for more innovation that can truly revolutionise the way Indians sleep,” says Ankit Garg, CEO and Co-Founder, Wakefit.co

Abhishek Gupta, Engagement Manager, Redseer, says, “Investors are seeing a lot more headroom for growth in this sector. Moreover, it is a category that is potentially not a high-burn category, and the margins are fairly high.” While the majority of the players are cagey about revealing their margins, industry sources indicate that they range between 40-70 per cent.

Omni-channel strengths

While earlier, the neighbourhood store was the source for mattresses, the pandemic saw a shift to online. This has led to a surge of start-ups selling their products online because of easy customer acquisition, buy and return policies, and quick delivery. Even the traditional players who used to sell through their brick-and-mortar networks are now touting their omni-channel strengths.

“A significant number of customers are migrating to online purchasing channels for their sleep solutions needs which has resulted in tremendous growth for online players,” says Garg of Wakefit , while Salot of Sleep Company feels that the reasons consumers opt for purchasing products online are due to the availability of better pricing, easy return policies, and customer reviews.

Also, an improved level of brand awareness has helped gain traction. “Today’s consumers are more aware of the health benefits of using quality mattresses,” says Balachander S. Customers have higher expectations in service, choice, and delivery experience.

A decade ago, purchasing a mattress without the retail experience would have been unimaginable, but today brands are offering innovative services - like a 100-night free trial. This makes consumers confident about buying mattresses online, says Mathew Joseph, CEO and co-founder, of Sleepyhead.

Since most of the online players just have experience centres and operations are online, it helps them in reducing costs. Says Redseer’s Gupta, “The market conditions for mattress companies in the upcoming years are positive because growth-wise it is still a metro and tier one city phenomenon and the players haven’t yet expanded to tier 2 and 3 cities.”

However, stores are still essential, and companies are working to expand in smaller cities. “Making the mattress more affordable for the masses has led to the opening of more stores in tier 2 cities,” according to Dhruvin Patel, Technical Sales Manager, Asia Pacific, Elektroteks Ltd.

Outlook

The addition of new players has also brought the mattress rates down, as the industry is price sensitive. Apart from making products more affordable, more players in the mix is making the mattress market more organised. According to a report by Modor Intelligence, the mattress market in India is largely unorganised, accounting for 65 per cent of the market share in 2017. The Indian Sleep Products Federation (ISPF) says, the organised sector in India alone has more than 300 manufacturers.

The change in the prices has also helped break the one-time investment on mattresses. Patel believes that today’s customers are willing to replace their mattresses in five to six years instead of the earlier 10-15 years cycle. “Mattresses are no longer looked at as a luxury or lifestyle choice. Instead, it is seen as an investment in a healthier lifestyle,” says Salot.

For now, given the growing market opportunity, ample funding, greater awareness amongst consumers, and low entry barriers, start-ups in the sector believe that they will be able to wake up a sleepy sector.

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