Why I’m Excited About the Retail Transformation

This week I signed leases on three new Saatva store locations, and we’re in the final stages of negotiating three more. After a successful yearlong pilot in New York—which exceeded our wildest expectations even during a pandemic—we are beginning a national brick-and-mortar showroom rollout, starting this summer in San Francisco, Los Angeles, and D.C. and continuing on to Austin, Chicago, and Boston before expanding to other cities across the country. Our plan is to open 50 to 65 physical locations, or “viewing rooms” as we call them, in the next three years.

I couldn’t be more excited about what we’re about to do, because I believe it puts us at the forefront of the new experience of retail. For a while now I’ve been talking and writing about the retail transformation—the shift from a traditional business model that relies on the “box,” or physical store, to drive sales, to today’s digital-first model. Every business today needs a strong e-commerce platform in order to be successful in retail. In this new world, the store plays a very different role from when I first started in the business more than 30 years ago.

Your store is a physical manifestation of your brand.

I think of Saatva’s viewing rooms as 3D billboards for our brand. That’s why you’ll find us on the most popular streets in major cities—Melrose Avenue in L.A., Post Street in San Francisco, 14th Street in D.C. It’s also why I insist on putting our web URL front and center on the marquee. If someone passing by just saw the name Saatva up on the sign, they might say “what a lovely store,” but they wouldn’t necessarily associate it with our online business. By putting Saatva.com out front, we are telling the consumer that we are a digital-first brand. We’re also inviting people to Google us, and we know that once someone gets to know us online, we win their business. 

You don’t need a store on every corner.

Before launching Saatva I ran a network of more than 200 retail stores around the country. Back then, in order to succeed we felt we needed to have a presence in every part of town— uptown, downtown, east side, west side. Not anymore. Today we can be much more strategic. For one thing, we are so data driven that we can determine where to place our viewing rooms with almost mathematical certainty about the business we will do in that location. We also know that in the digital-first world, when people can order just about anything they need online, they’re looking for an experience. And they’re willing to travel for it, especially when they’re shopping for a considered purchase like ours, where the average order is over $2,000. We don’t need hundreds of places where consumers can see and feel our products, we just need one in the right spot. 

Store sales don’t matter.

I don’t care whether someone places an order in our “box” using our equipment, or sits in one of our seating areas and uses their own mobile device, or goes home and buys one of our mattresses online—it’s the same experience. I’ll never look at sales in a particular viewing room to determine its success, another change from the old days. Instead I look at orders in the surrounding area to see whether the presence of a viewing room provides a lift to the digital marketing area. In New York, for example, we saw a 2% lift in the local DMA. That translates to $8M added to our annual revenue. 

You can do more with less.

Our viewing rooms are between 4,000 and 6,000 square feet. We don’t sell any merchandise out of the store or keep any inventory. That’s the new, efficient way to do retail. It lets us put all our money into the best locations and an in-store experience that is unlike anything else in the mattress space. With a goal of 50 to 65 viewing rooms, we’re keeping our physical footprint limited in scale relative to the overall size of our e-commerce business.  But our stores are a key part of the engine that will drive us to do $1 billion in revenue over the next five years. 

You protect your brand.

A lot of online players chose to go the wholesale route and let their products be sold by other people. While that may work for some companies, to me it’s a brand ruiner. Over time, it puts pressure on margin and impedes price inelasticity. Outside of our website, a Saatva viewing room is the only place a consumer can see or buy a Saatva product. We’ve spent 10 years curating our products and just as importantly, curating our unique infrastructure of 22 U.S. factories and 160 white-glove delivery partners. When you control all touchpoints—manufacturing, distribution, consumer interface, customer service, and the in-person experience—you’re in the best position to build a winning brand. That’s where we are. I invite you to come visit us in person and see for yourself.

- Ron Rudzin, Saatva Founder and CEO