Purple Innovation Sets Itself Up for Rosy Future

Boxed bed pioneer launches new branding campaign as it seeks to grow e-commerce, wholesale and licensing channels

Celebrating its fifth anniversary this month, Lehi, Utah-based mattress and accessories producer Purple Innovation Inc. is rolling out a major new brand messaging campaign designed to position the fast-growing company for the next chapter in its young life. 

Launched by brothers Tony and Terry Pearce with a Kickstarter campaign in September 2015, Purple quickly emerged as a leader in the boxed bed segment thanks to its proprietary Hyper-Elastic Polymer technology. Originally developed in 1996 by the Pearces as cushioning for wheelchairs, Hyper-Elastic Polymer was licensed to makers of medical beds, shoe insoles and 30 other cushioning products before finding its way into residential mattresses. 

The breakthrough into the sleep products market came in 2013, when the Pearces created a patent-pending machine called Mattress Max that can make sheets of Hyper-Elastic Polymer large enough to cover a king-size mattress at an affordable price. In early 2016, Purple began to ship its first mattresses featuring the patented Hyper-Elastic Polymer, now marketed for sleep as the Purple Grid.

Formulated into a wafflelike surface, the Purple Grid forms the top comfort layer in the company’s three mattress models. The proprietary gel surface is designed to instantly adapt to and cradle the body’s pressure points, flexing under the body weight and responding only to the locations that require pressure relief. As a result, there’s no motion transfer, according to the company. In addition, the surface is “temperature neutral” because the design incorporates multiple air channels that prevent heat from being trapped. The Purple Grid has the added benefit of maintaining its shape for long-lasting durability, the company says.

Rapid growth

Powered by its proprietary technologies — and a steady stream of engaging digital ads that have generated nearly 2 billion views during the past four years — Purple grew its annual net revenues to $428.4 million in fiscal 2019. That represents a 49.9% increase over fiscal 2018 for the publicly owned company, which, in its first full year of business in 2016, recorded $50 million in sales.

This year also was off to a strong start, with sales up 46.3% in the first quarter, when the ultimate curveball arrived: the novel coronavirus pandemic, followed by a massive slowdown of the U.S. economy. 

Purple reacted quickly by scaling back mattress production, furloughing factory employees, and postponing both investments in capacity and retail showroom expansion. In addition, the company put a freeze on its planned expansion of its wholesale channel and pivoted the majority of its time and resources to e-commerce to capitalize on the accelerated shift toward online shopping.

The result? “Our recent actions contributed to a strong start to the second quarter, highlighted by a triple-digit percentage increase in direct-to-consumer sales and significant cash generation for the month of April,” says Chief Executive Officer Joe Megibow. Direct-to-consumer orders continued their climb in May, rising to $71 million, up 125% compared with the same month last year. 

“We are experiencing robust demand for our entire product portfolio, especially in our direct-to-consumer channel, as we have shifted resources toward capturing the recent acceleration in online spending,” Megibow says. “Encouragingly, we have also seen a return of wholesale orders as more partner doors have reopened and traffic and order quantities have improved.”

In normal conditions, when brick-and-mortar stores have no restrictions on business operations, Purple’s direct-to-consumer sales account for about 18% of its total business, Megibow says. 

In order to fulfill current demand and position Purple for further growth, the company announced in late July that it is adding a 520,000-square-foot production facility in Blacksville, Georgia, just south of Atlanta. The leased facility will employ about 360 workers and will include production capabilities for Hyper-Elastic Polymer. The plant is expected to begin operating by the end of the year.

Purple currently produces all of its sleep products at two facilities in Utah: a 93,000-square-foot plant in Alpine and a 574,000-square-foot production facility in nearby Grantsville.

Positioning for future

While the outbreak of COVID-19 in March disrupted some of Purple’s plans — particularly those for wholesale channel growth — Purple now is poised to resume many of the projects it had in the works. At the top of the list is a brand repositioning designed to move Purple into a new era as a leading source for premium sleep products.

A prime example of this new direction is the “Evolution of Sleep” ad Purple released online in the spring. Unlike the company’s previous ads, which had an infotainment-type format with a generous dose of humor, the new ad highlights the brand’s leading-edge technology and the unique feeling of comfort and support a Purple mattress delivers.

For the new ad, Purple tapped Los Angeles-based creative studio ManvsMachine, known for its high-impact, computer-generated art. The resulting ad features dramatic visuals of the Purple grid floating in air coupled with a series of “no-stress tests” in which weighted, rolling forms show how the company’s mattresses instantly adjust to each body’s unique shape. The ads highlight Purple’s key benefits — pressure relief, cooling airflow and motion isolation — in a simple but compelling presentation that relies on visuals rather than lengthy narration.

“The star of these ads is our innovative technology, which sets us apart from all the other brands in this very crowded marketplace,” says Burke Morley, Purple’s vice president of brand and executive creative director. 

While Purple’s original ad campaign was successful in building awareness of the brand, “we now want consumers to associate Purple more closely with the unmatched sleep experience we can deliver,” Morley says. “It’s a more visceral approach that taps into the ‘crave-ability’ of crawling into a comfortable, cozy bed for a restful night of sleep.”

Morley joined Purple in 2019, after three years of directing advertising and creative for Sonic and two years as North America brand director for Nike. Purple’s new ad campaign was informed by that experience. “We want these ads to convey the lightness, breathability and comfort of our mattress so consumers get a sense for what makes the Purple mattress truly different,” he says. 

The new campaign is part of a larger brand repositioning that will be unveiled by Purple over the coming year. The initiative includes a major website refresh, as well as updated packaging and graphics, all built around a palette of purple tones visible in the sky during sunset and sunrise — the moments of time most associated with sleep. Grid shapes tied to the mattress’ surface design also will be featured prominently.

“We’re fine-tuning our brand identity to expand our appeal to the female audience, as well as strengthen our position in the mass premium segment,” Morley says. “We want to be perceived as the leader of quality sleep products with true comfort innovation rather than just another boxed bed company.”

A seasoned team

Since taking the helm at Purple, Megibow has added several other seasoned executives to the management team. Hires include John Legg, chief operating officer, who joined Purple in January 2019 with more than 20 years of experience in supply chain management in the wholesale, retail and e-commerce sectors; Tres White, chief retail officer, who co-founded upholstery producer Lovesac and joined Purple in April 2019; and Craig Phillips, chief financial officer, who joined the Purple team in October 2019 from FTI Consulting. Phillips has served as CFO for several privately held companies and spent more than 15 years in public accounting.

Megibow also is relatively new to Purple. Appointed CEO in October 2018, he formerly served as senior vice president and chief digital officer for American Eagle Outfitters. Before that, he held several senior roles with Expedia Inc., including vice president and general manager of Expedia.com, the $10 billion-plus online travel business.

“We’ve formed a handpicked team of highly skilled professionals with a ‘been there, done that’ level of experience,” Megibow says. “Each of these individuals is at the top of their game and has the skill set we need to move our high-potential business to the next level.”

Megibow adds that his team’s knowledge base extends to both the physical and digital realms — an asset that will prove particularly valuable as the company looks to expand both its brick-and-mortar and online presences.

“We’ve had to hit the pause button on our wholesale expansion because of the store closures necessitated by COVID-19,” Megibow says. “But once the pandemic is behind us, we expect to ramp up our efforts with brick-and-mortar retail partners.”

Purple took a big step forward in that effort in February, when it began a new partnership with Raymour & Flanigan, a leading furniture and mattress retailer in the U.S. Northeast. Raymour & Flanigan added Purple Hybrid and select Purple Hybrid Premier mattress models to all 135 of its stores. The full suite of products, which also includes Purple pillows, sheets and mattress protectors, also is available at RaymourFlanigan.com, and more products are expected to become available as the partnership continues.

“Raymour & Flanigan is a top-tier retailer, and we’re excited to partner with their brand,” Megibow says. “This partnership helps us offer customers in the Northeast a high-touch experience when shopping for a Purple mattress.” 

Creating more “touch” points

Raymour & Flanigan joins a growing list of leading retailers that Purple is partnering with from coast to coast. The company now sells its bedding in more than 1,800 storefronts, with a dealer roster that includes Furniture Row, Macy’s, Mattress Firm and Steinhafels. 

“Over the past two years, Purple has partnered with a growing number of mattress and furniture retailers to achieve our mission of bringing comfort products to customers however, whenever and wherever they want them,” Megibow says.

Since autumn 2019, Purple also has opened five corporate-owned experiential showrooms in California, Utah and Washington. The stores, which are small-format or pop-up shops in high-traffic locations, are designed to give consumers in major metropolitan markets an easy way to try Purple products.

“Some consumers aren’t sure what to make of our purple ‘waffle’ mattress when they first see it,” Morley says. “Our dedicated stores give us a great opportunity to fully explain our innovative products and how they enhance sleep. Shoppers get a chance to try our mattresses and pillows in person in a friendly, low-key and highly interactive setting.”

In the next few years, Purple is likely to open more company-owned stores in select metro markets. In addition, the company will be looking for new retail partners in regions where the company does not yet have a presence.

“We could see adding another 1,000 to 1,500 stores to our current base,” Megibow says, noting that the company has signed contracts with a number of retailers that have not yet launched the line because of the pandemic. “The main factor holding us back on the wholesale side has been our capacity. Before we add many more stores, we want to make sure we can deliver all our products in a timely fashion.”

During the past two years, Megibow and his team have been working to align supply and demand. “When I joined the company, Purple as a rapidly growing startup had gotten ahead of its skis and couldn’t keep up with orders,” he says.

To correct backlogs of 60 days or more on shipments that existed when Megibow became CEO, the company invested in three new Mattress Max machines and made other “massive operational improvements” to increase productivity and reduce workforce attrition. As a result, Megibow says, the company’s capacity has doubled since 2018.

Before the end of this year, Purple plans to have an additional Mattress Max operating in Utah, and the new Georgia facility up and running.

“We are greatly expanding our capacity to keep up with demand,” Megibow says. “Next year, we will add another four to six machines, which will put us in a good position to expand the wholesale side of our business much further.”

In addition to growing the wholesale and direct-to-consumer sides of its business, Purple sees opportunity in licensing, both nationally and internationally. In July, for example, manufacturer ReST introduced a new ReST Smart Bed featuring the Purple Grid.

Beds plus accessories

Purple’s own line includes three core boxed bed models: The Purple Mattress, featuring a 2-inch Purple Grid coupled with dual-layered comfort foam for the original Purple feel; Purple Hybrid, which includes a layer of responsive support coils for enhanced adaptive support and airflow; and Purple Hybrid Premier, which offers a choice of a 3-inch or 4-inch Purple Grid for more plush pressure cradling, as well as a pocket coil layer. Prices start at $1,149 for a queen-size Purple Mattress and top out at $2,299 for a Purple Hybrid Premier.

In the past few years, Purple products have earned several awards and accolades, including an Innovation Award from the Business Intelligence Group, inclusion on GoodHousekeeping.com’s Best Mattresses to Buy Online list and the Men’s Health Sleep Award for its pillow.

In addition, J.D. Power’s 2019 Mattress Satisfaction Report ranked Purple highest in customer satisfaction for the boxed bed category. The report was based on responses from more than 1,800 customers who purchased a mattress in the previous 12 months, and measured customer satisfaction with seven factors, including comfort, price, support, durability and customer service.

“Purple is a great example of how a brand can emerge into a traditional industry and become best-in-class,” says Christina Cooley, J.D. Power’s Home Intelligence lead, about the selection. “By focusing on what their customers want most — comfort and support — at a price point that aligns well with the value of their product, Purple has been able to differentiate itself in a very competitive and changing marketplace.”

Purple’s quest to become a go-to source for sleep products has led it to diversify its line into a variety of bedding accessories. The most recent addition is the Purple Harmony Pillow. Retailing for $159, the pillow features Purple Grid Hex technology and a hypoallergenic Talalay latex core. Purple’s line also includes sheets, pet beds, weighted blankets and sleep masks.

“These lower-ticket items are a great way for new consumers to test our technology,” Morley says. “People instantly feel the difference and that experience gives them the confidence to make a larger mattress purchase.”

As Purple heads into its next chapter, there are two cornerstones on which it will continue to build, Megibow says. “First, we have a product that nobody else has,” he says. “And second, consumers love our product — and tell us that our Purple has made a meaningful difference in their lives. Our job now is to scale the heck out of our operation so that we can meet rising demand and satisfy even more customers.”