Mattress company Nectar is betting a $1500 mattress will be a hit with sleepless consumers

Key Points
  • Nectar, which opened its business less than 2 years ago, is bringing a $1500 specialty mattress to market
  • The rapidly growing industry is being disrupted by online startups
  • 'People value their sleep,' co-founder Craig Schmeizer told CNBC in an interview, predicting that some brick and mortar mattress companies might get put out of business
Source: Nectar

People tend to value their rest, but can there be a dollar price on exactly how much?

Online mattress retailer Nectar definitely thinks so, and is hoping a $1500 hybrid and handcrafted mattress — called the DreamCloud — will do the trick. In a frenetic world where consumers are distracted by work and technology, and sleep deprived because of it, rest is becoming an increasingly precious commodity.

That's just one reason why Nectar co-founder Craig Schmeizer believes the DreamCloud will resonate with the booming market for mattresses, in spite of a price tag that may give the average consumer sticker shock.

"People spend a third of their lives sleeping on mattresses. People value their sleep," Schmeizer told CNBC in a recent interview.

Nectar is part of an increasingly crowded market worth $15 billion, and dominated by a combination of established players and startups alike, including names like Casper, Tempur Sealy, Serta Simmons and Mattress Firm.

"There are now 200 competitors," in the mattress space, said Jerry Epperson, managing director and head of consumer spending at investment banking and advisory firm Mann, Armistead & Epperson. He added "less than 3 percent of mattresses were imported, but now that figure is 13 percent."

Brick and mortar in danger?

A Sleep Number representative lays on a new Sleep Number bed at the International CES in Las Vegas.
Getty Images

Even with all the competition, the mattress sector is expected to see staggering growth — expanding to over $43 billion by 2024, according to Transparency Market Research. That explosive growth is attributed in part to the fact that consumers, on average, replace their mattress every 7 to 8 years, according to data from the Better Sleep Council (BSC).

The rapid expansion of the sector has created opportunities for companies like Nectar, given that at least 27 percent of consumers are open to buying mattresses online, the BSC noted.

Needless to say, business is booming. In less than a year after it first opened its doors, Nectar moved more than 50,000 beds, and generated more than $35 million in revenue, the company told CNBC in an interview last year.

"Our business is fastest growing, it is on track to be the lead mattress. We expect to produce about $300 million in revenue. We are only two years old but we have over 100,000 customers," Schmeizer told CNBC.

Schmeizer also issued a bold prediction: He believes that traditional brick and mortar mattress shops will eventually be forced to shutter, as online retailers exert a similar pull on the industry as Amazon has on retail.

"It is very hard to be profitable when you have to pay lease costs and staffs cost, when consumers can find online channels that are able to offer a better price because those companies do not have those expenses," he told CNBC.

"Market demand for mattresses is growing year over year because companies are able to offer better value than before," said Schmeizer.

Correction: Craig Schmeizer is the co-founder of Nectar.