Retailer Raymour & Flanigan will now carry Purple mattresses in all of its showrooms and online.

LEHI, Utah – Digital bedding brand Purple Innovation plans to lean on a three-pronged approach for building its wholesale retail network that includes improving margins for retailers, better timing of promotions and a more collaborative product development.

Rob DeMartini, CEO, outlined the strategy during the company’s first quarter earnings call, saying the company sees its whole business as a “larger component of our brick-and-mortar retail strategy.”

At the end of the first quarter, the company had a retail network that includes 3,100 stores, 600 of those were opened since the start of the new year.

“While we plan to selectively open additional doors going forward, our priority is improving productivity for our existing doors to grow market share and enhance the profitability of this channel for us and our partners,” DeMartini said, adding that the priority is to improve productivity for existing partners, grow market share and improve profitability.

At the top of DeMartini’s to-do list in enhancing partnerships is to make the brand “attractive to our wholesale partners to sell, not just attractive to stock in order to drive foot traffic,” he said.

The initiative is to improve incentives and make margins work for retailers. “We believe we can do this without negatively impacting wholesale margins, as we increase operating efficiencies across the company,” DeMartini said.

He also acknowledged that the company had been mistakes in its wholesale rollout by not being in sync with retailers’ timelines for promotions.

“We need to respect our partners’ timelines,” he said. “As a company rooted in DTC, we’ve had a habit of running promotions and delivering product on our own timelines without regard to how our wholesale partners operate.”

The third approach is to collaborate with retail partners on product development through the company’s newly appointed chief innovation officer.

In the first quarter ended March 31, the company reported a net loss of $13.6 million, a swing from net income of $20.9 million in the same quarter last year. Net sales for the quarter dropped 23.2% to $143.2 million compared with $186.4 million in the prior-year period. Wholesale revenue decreased 6.3% and direct-to-consumer sales dropped 31.5%.

“True omnichannel brands work with their wholesale partners to develop mutually-accretive product that simultaneously drives traffic and margins,” DeMartini said, adding that going forward the company will develop the synergistic approaches to wholesale products.

Purple said it remains committed to its omnichannel business with its e-commerce site, its Purple showrooms and its wholesale business.

The company started the year with 28 Purple showrooms and opened six in the first quarter for a total of 34 currently open. DeMartini said the company plans to open another 22 by the end of this year but admits that the wholesale segment is the larger component of the company’s brick-and-mortar retail strategy.

“The stores we’ve opened over the past two years are performing in line with our target unit economics of $2 million in annual sales with about an 18-month payback on roughly $700,000 initial capital investment,” he said. “We’re very excited about this emerging growth vehicle for the company, and we see a clear path to a store footprint of 200 overtime.”

Regarding the first quarter results, DeMartini said the company is in the early stages of  rebuilding the framework for strong, consistent operational results.”

“Like much of the industry we’re facing new post-pandemic headwinds that have developed in recent months, including a shift in consumer behavior from online to in-store and an overall declining focus on home goods, as consumers shift their spending back towards experiences and travel, he said. “We see these trends as a rationalization of a category that was strengthened by quarantine and work-from-home dynamics over the last two years. Outside of those industry headwinds, we have our own internal challenges and we’re still working through it.”

I’m Sheila Long O’Mara, executive editor at Furniture Today. Throughout my 25-year career in the home furnishings industry, I have been an editor with a number of industry publications and spent a brief stint with a public relations agency where I worked with some of the industry’s leading bedding brands. I rejoined Furniture Today in December 2020 with a focus on bedding and sleep products. It’s a homecoming for me, as I was a writer and editor with Furniture Today from 1994 until 2002. I’m happy to be back and look forward to telling the important stories impacting bedding retailers and manufacturers.

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