How The Sleep Company is disrupting the way people sleep and sit in India

Adgully’s AG Talk brings unfiltered insights and thoughts of CEOs, MDs and CMOs, who have been leading the marketing landscape, and in fact, also laying the ground rules to keep up with the transformative times.

The Sleep Company, founded in 2019 by the husband-wife duo Priyanka Salot and Harshil Salot, is one of India’s leading comfort-tech brands. The company has embarked on its brand-building journey over the last 12 months, with nearly one-third of its expenditure now allocated to brand building. Having launched its 100th store in India, the company is further looking to solidify its market position by enhancing its omnichannel presence. In order to support this, the company has set its advertising and marketing budget at Rs 80-85 crore for FY25. While 75-80% expenditure will be on digital platforms, traditional media spending will be around 20-25%.

In just four and a half years since its inception, the company has touched a significant milestone of achieving Rs 500 crore ARR (Annual Recurring Revenue). It is India’s fastest D2C brand to open 100 COCO (Company-owned, Company-operated) stores in just two years since venturing into offline retail. The company had opened its first store in Bengaluru in June 2022.

The Sleep Company is well-positioned to reach the Rs 1,000-crore revenue mark in the next 2-3 years. This smart goal is leadership’s strategic vision and will be driven by a comprehensive growth strategy, with expansion plans across India.

In this exclusive Ag Talk interaction with Adgully, Priyanka Salot, Co-Founder, The Sleep Company, speaks about the tremendous growth achieved by the company in just four and a half years of its launch, the strong focus on technology and R&D, expanding presence in Tier 1 and Tier 2 cities, the criteria for associating with celebrity endorsers, and much more.

Congratulations on the grand launch of your 100th store in Bandra. Could you tell us more about this milestone? What special promotions or events are planned for the store launch?

It’s a big, big milestone. Just to give you a little bit of background about The Sleep Company: we started as a digital-first brand in October 2019, just four and a half years ago.

When we began, our focus was on our patented smart grid technology, which is truly disrupting the way people sleep and sit in India. Within two and a half years of our journey, based on feedback from our consumers, we decided to open our first experience center on June 10, 2022, in Bangalore. From zero to 100 stores in two years, we have been opening a store every five days, marking a phenomenal journey for the brand.

Our vision from day one has been to improve the way India sleeps and sits. Our experience centers focus heavily on educating consumers about sleep and the superior benefits of our smart grid technology. We ensure that consumers can buy products that genuinely help them sleep or sit better. Moving forward, we will continue to double down on what has worked for us: great, innovative products. We will keep launching new products designed to enhance sleep quality. For instance, we now offer a smart recliner bed. This remote-controlled bed allows you to sleep in zero gravity, providing deeper sleep, or recline at 90 degrees while watching TV – an amazing feature.

Innovation remains key. We anticipate growing from 100 to 200 stores even faster than our initial expansion. We aim to ensure that more and more consumers have access to our experience centers. Our plan is to build a strong, sustainable business and become the market leader.

When we say ‘Sleep Company’, automatically, from the consumer’s point of view cushions and mattresses come to mind. How does the company incorporate technology? Could you give us a sneak peek into the R&D of your products?

Before we launched in October 2019, we actually worked on R&D for two years. Historically, if you look at the mattress industry, it started with cotton. Cotton moved to coir, which is a byproduct of coconut trees. Then it evolved to foam. Foam includes memory foam and polyurethane foam. We invented a completely new material, called the smart grid, which is made of a hyper-elastic polymer. We have a very strong in-house team dedicated to continuing innovation.

For example, we have Asia’s first smart grid mattress, the world’s first smart grid chair, and the world’s first smart grid recliner sofa. For us, innovation is crucial, but our primary focus is on products that can significantly improve sleep quality and seating comfort for our consumers.

Since India is a price-sensitive market, what are your plans to expand further in the country? Also, could you talk about your strategies for engaging with Tier 1 and Tier 2 cities?

Today, we are present in 30 cities, and more than 35% of our business comes from beyond the top 20 cities, which includes Tier 1 and Tier 2 cities. Our intent as we grow from 100 to 200 stores is to expand from 30 to 50 cities, focusing more on Tier 1 and Tier 2 locations. At the same time, we aim to increase our presence in metro cities, ensuring that our experience centers are within a ten-minute driving distance. We will focus on both Tier 1, Tier 2, and building density in metro areas.

You have associated with celebrities like Anil Kapoor and Jim Sarbh. What are The Sleep Company’s criteria for associating with any celebrity?

For us, there are two or three very important criteria. First, our brand ambassadors must also be our actual customers. They have to be using The Sleep Company products. Anil Kapoor has been using our products for the last four years, ever since he joined the brand. He is not just a brand ambassador; he is a partner for us. This is very important to us.

Second, we need to find strong synergies between what our brand stands for and what the celebrity represents. We are a brand that stands for innovation, honestly delivers products to our consumers, and educates them. This alignment is crucial.

What measures are you taking to ensure sustainable growth in your revenue streams?

We started with a D2C model, integrating digital marketplaces with our website and prioritizing customer satisfaction. Soon, we expanded to an omnichannel approach, blending physical and digital channels. Enhancing our D2C presence, we began on-ground expansions, culminating in our 100th COCO store launch. Initially a comfort-tech mattress brand, we have grown beyond our patented SmartGRID mattresses into pillows, smart beds, smart chairs, and more. This growth stems from our profound understanding of diverse consumer needs across various product categories, leading us to establish a 'House of Brands'. This strategy allows us to introduce specialized products or categories under separate brands as they mature within our portfolio. An example is ErgoSmart by The Sleep Company, which specifically caters to ergonomic smart chairs. By continually refining our omnichannel presence and product portfolio through strategic brand diversification, we aim to sustainably enhance revenue streams while maintaining a competitive edge in the marketplace.

The Budget Session of Parliament is estimated to begin on July 22, lasting till August 9, 2024, with a focus on the economic growth of the nation. What are your expectations from the upcoming budget?

I think India is a booming economy. If you look globally, India is doing far better than most developed nations in terms of GDP growth. The Budget will likely focus heavily on economic growth, which is great for us, many other startups, and the industry as a whole. Today, the consumer is evolving.

Consumers have started investing in products that they feel are good for them. When the country is doing well and the economy is growing, people have more spending power and more discretionary spending happens.

We are confident that the mattress industry will continue to grow. As the industry grows and as we are currently the fastest-growing brand in this industry, we expect that The Sleep Company will continue to reach more and more customers.

What specific strategies are you implementing to achieve your ad sales targets?

We have implemented a multifaceted approach to our marketing strategy. Firstly, we focus heavily on performance marketing, leveraging digital platforms such as YouTube, Meta (Facebook, Instagram, etc.), and regional media including print advertisements to optimize reach and engagement. We tailor our media mix for each market, ensuring our messaging resonates effectively. Additionally, we invest significantly in influencer partnerships across bottom, top, and mid-funnel strategies. Furthermore, our expansion into tier 2 and tier 3 cities involves targeted advertising campaigns that highlight accessibility and comfort, mirroring the successful strategies used in metro areas. Currently, approximately 80-85% of our expenditures are on digital platforms, with 20-25% allocated to traditional media. Moreover, we are expanding our presence with over 150 experience centers across 50 cities by the end of 2024, enhancing customer accessibility and engagement.

Could you provide an overview of your marketing budget for this year?

We spend approximately Rs 90-100 crore on marketing. Our objective is always to educate our consumers on the importance of sleep and inform them about how smart grid technology is far superior. That’s what we’ve been doing, and that’s what we will continue to do.

How much of the budget is allocated for the upcoming festive season?

I think, Diwali and the pre-Diwali season are significant for this category because many consumers renovate their houses or move into new ones.

We see a lot of consumers engaging with the digital ecosystem and visiting our experience centers more frequently during this period. As a result, this quarter, which is the second quarter of the year, typically sees a disproportionate amount of spending.

We usually allocate around 30-35% of our yearly budget during this quarter.

What are your company’s plans for digital marketing and social media presence, and how significant is influencer marketing in your overall strategy, including the criteria you use to select influencers to collaborate with your brand?

We don’t think of ourselves as either a digital or an offline brand. We consider ourselves a true omni brand. And when I say true omni brand, what do I mean by that? I’ll use a term called ROPO, which we use internally a lot: Research Online, Purchase Offline. This, I believe, is the essence of a true omni brand.

We don’t separate our business into online or offline categories. It’s an omni business because consumers find us online, discover us online, and learn about our company online. Then, they visit one of our experience centers closest to their home to experience our products before making a purchase.

Influencer marketing plays a crucial role in our overall strategy. We categorize influencer marketing into two parts: bottom funnel and top to mid funnel. We work with influencers in two key ways. First, we create long-form videos with them, leveraging their assistance throughout the process. Second, we use these influencer videos for performance marketing, utilizing their recognizable faces to build trust. Additionally, we are significantly expanding our efforts with regional celebrity partnerships as well. In addition to influencer collaborations, we enhance our marketing strategy by leveraging Instagram ad pop-ups. Moreover, influencer testimonials play a pivotal role in our strategy. When influencers share their sleep experiences with our products, it adds significant value by reinforcing trust and highlighting the benefits our customers can expect.
Brand value and credibility are pivotal in our customer engagement strategy. We prioritize influencers whose audience aligns with our target demographics, have established credibility and trust, demonstrate high engagement rates, and share our brand values.

What trends are you observing in the mattress industry that indicate growth opportunities?

Over the past decade, the mattress industry in India has undergone substantial evolution. Initially focused on durability and basic comfort, traditional innerspring models have given way to a diverse range of options such as memory foam, latex, hybrids, and smart mattresses. These advancements, driven by developments in materials science and sleep research, now cater to specific consumer needs like pressure relief, motion isolation, and temperature regulation. The integration of smart technology has further transformed the sector, offering mattresses that can monitor sleep patterns and adjust firmness, aligning with growing consumer preferences for personalized and health-oriented sleep solutions. As consumer awareness about health and quality sleep increases, there's a corresponding rise in investment in high-quality mattresses. Projections indicate robust growth for the India Mattress Market, with estimates suggesting it will reach USD 2.13 billion by 2024 and continue expanding at a CAGR of 8.54% from 2024 to 2029.

What are your marketing strategies for the year ahead?

We have built the brand with a strong focus on brand design. For us, the intent is to continue driving awareness about our sleep company and its technology while expanding our distribution network from 100 to 200 locations.

Going forward, you’ll see many campaigns centered around the themes of sleeping peacefully and sleeping deeper, such as the “Sleep Deep Challenge” and “Sleep Peacefully”. These campaigns will highlight how our sleep company helps you sleep better.

For our seating business, we focus on providing long-lasting comfort and long hours of sitting comfort. You will see many campaigns and continuous efforts from The Sleep Company in both the sleeping and sitting segments.

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