For Dennis Schmoltzi, Emma – The Sleep Company was a gateway into the retail industry.
He co-founded the online bedding retailer in Frankfurt in 2013 with Manuel Mueller, and has since then expanded the bed-in-a-box service Emma Mattress to 21 countries spanning five continents.
To drive the retailer, Schmoltzi drew on seven years’ experience as a consultant at McKinsey & Company, especially his understanding of how to build a business and to remain agile.
“I was consulting banks, so definitely I did not pick up much insight into the mattress industry,” he said.
“But I came to understand how important firm culture and organisation is for the execution and hence for the growth and the success of the company.
“I spent 50 per cent of my time on organisation design and people topics.”
Since starting Emma – The Sleep Company, Schmoltzi said he and his team are “constantly questioning and reinventing” the business.
As the retailer continues to grow, Schmoltzi oversees the hiring process. Emma is currently hiring at a rate of 20 people each month, and Schmoltzi estimates that this equates to 150 monthly interviews.
Schmoltzi attributed Emma’s rising sales to its brand partnerships and expansion ambitions. The company achieved its second financial year of profitability in 2019 with €150 million (£131.5 million) in sales, up 86 per cent year-on-year.
With the vision of improving people’s sleep across the world, Schmoltzi and his team thought globally. Emma Mattress is currently in the process of entering its 22nd market, with Schmoltzi admitting there will always be plans to expand.
“We open up in approximately five countries every year,” he said.
“My first focus when we started in Germany, was starting off by launching in the European countries.
“Last year was the first expansion beyond Europe – where we launched in the US, Canada, Mexico, Brazil, China, India, and Australia.”
Schmoltzi added that it was “reassuring” for Emma Mattress to be able to understand local markets and grow into them successfully. For that reason, he felt confident about launching in South Korea by the end of this year.
“We open up in approximately five countries every year”
It’s no secret that the Covid-19 pandemic has affected retailers, especially those with a bricks-and-mortar estate. Online-only retailers have remained relatively unscathed despite a few closing warehouses during the lockdown as extra precaution to protect workers from the risk of transmission.
Nonetheless, ever since lockdowns took place globally, non-essential retail took a turn for the worst. Many reported zero revenue as consumers stayed home and turned to groceries as their main expenditure.
Schmoltzi argued that mattresses are essential and “purchases will happen eventually”.
“At the end of the day, if people don’t sleep well, they will buy new mattresses. It’s not like going to the movies and buying cinema tickets. It’s essential,” he said.
Regardless, he admits that Emma Mattress is unsure of how the pandemic is going to play out. Consequently, the company has played out scenarios in the case that revenue expectations are not met.
“One scenario could be that revenues might drop because people have other things on their mind than buying mattresses,” Schmoltzi explained.
“But what we’re seeing right now is that revenues are very stable and our growth remains intact. So, we’re not lowering our forecast.
“We reached €150 million (£131.5 million) in revenues last year. We’re expecting to reach over €200 million (£175.3 million) this year.”
Undoubtedly, the mattress market is competitive, particularly the mattress-in-a-box concept. And there’s a substantial number of big-name rivals such as Casper, Dreams, Bensons for Beds, and Eve Sleep.
“We are the most sold mattress in the UK,” Schmoltzi laughed.
“Having such tremendous growth in the country and gaining more market share, what does that relate to? Quality product.
“It’s very important that as a business you are able to build a product that really suits everyone and is durable.
“We invest a lot into research and development here at our head office in Frankfurt.”
“What we’re seeing right now is that revenues are very stable”
Schmoltzi added that Emma Mattress has been building its marketing strategy in a bid to understand the customer journey.
“You need to know how to use the different touch points, how to play omnichannel and then it’s all about combining those things, it’s execution,” he said.
Meanwhile, US-based mattress retailer Casper recently announced its exit from the European market – which resulted in laying off 7080 people. To Schmoltzi’s delight, this eased the competitive pressure on Emma Mattress.
“It is testament to the fact that the market is consolidating,” he told Retail Gazette.
“Why? Because we’ve seen a lot of competitors running in an unsustainable fashion with large cash outflows and large spendings, which are unsustainable.
“It was a matter of time until we saw this consolidation.”
Schmoltzi said Emma Mattress was preparing a new campaign for the UK market as part of its efforts to stay ahead of competitors. One initiative he is particularly proud of is entering a partnership with John Lewis in August last year. The partnership saw Emma Mattress’ products being sold on the John Lewis platform, which would allow customers to try before they buy in store and online.
According to Schmoltzi, the partnership bolstered how Emma Mattress could observe the different target groups that behave differently and have different needs.
“Some want to touch and feel the product before they buy it,” he said.
“Although we have the 100 nights trial option, customers would rather discover for themselves and have a better understanding whether this will suit them whether the comfort is what they’re expecting.”
Considering how the John Lewis partnership was well-received by customers, Schmoltzi said Emma Mattress was now open to discussions with more retail partners across Europe.
However, he expressed caution since bricks-and-mortar retail stores have been forced to close for weeks now, due to lockdowns brought on by the pandemic. This of course included John Lewis.
Schmoltzi denied the pandemic was having any profound impact on Emma Mattress’ trading, but conceded that the retailer was faced with the challenge of witnessing its retail partners struggle to recall all those lost bricks-and-mortar revenues through online sales.
“Emma Mattress is present in more than 1000 retail stores already, so we would always investigate an opportunity and discuss with a potential retail partner,” he said.
“I would never consider just staying the way we are. Is there something in the pipeline that I would be able to announce at the moment? Not for now. But we are always investigating what makes sense.
“We’re very happy with the partnership with John Lewis and maybe that’s it for the moment.”
Schmoltzi also told Retail Gazette that Emma Mattress was planning on launching a new product. And while details remained under wraps at the time of writing, he hinted that the objective was to “go well beyond mattresses”.
“That’s on our agenda, and something our R&D team is already working on,” he said.