Bed-in-a-box company Casper Sleep wouldn’t shake hands on an acquisition offer from Target, but it will be selling some exclusive products through the home of the red bulls-eye.
Target offered $1 billion to purchase the New York City startup, which is popular among urban millennials because it will ship foam mattresses, folded up in a box, directly to customers’ doors. To mitigate concerns about ordering a mattress online without trying it first, the company even offers a 100-day return policy. Its website also sells bedding, pillows, and a modified box spring.
Casper’s approach clearly hit the mark, generating $200 million in sales last year – only its second full year in business. The company was valued at $550 in 2015 and has been through additional rounds of funding since then, with Target lined up to lead the next round (to be announced in the coming weeks).
In exchange, Target will begin carrying Casper mattresses and bedding through its website, Target.com, and Casper accessories will be in more than 1,200 stores. Casper will be the only mattress brand available from Target.com. Casper also plans to introduce a Target-exclusive lounger chair.
This move is part of Target’s plan to introduce more than a dozen exclusive apparel and home brands over the next two years. The strategy has already drummed up success in the apparel department with children’s brands Cat & Jack and Pillowfort.
Introducing online and exclusive brand offerings is part of a larger push by Target and other brick-and-mortar stores to rejuvenate sales as younger shoppers default to digital-first brands. Target recently partnered with digital-first brands Bevel and Harry’s (personal grooming) and Who What Wear (clothing) in hopes of attracting younger shoppers to its stores.
If sales of Casper mattresses take off, it could be a win for Target, not only over digital markets but over traditional mattress companies, which aren’t used to facing this kind of competition.