Resident co-founder Eric Hutchinson: ‘Uncertainty is the most difficult thing to manage to’
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When people go shopping for mattresses, according to Resident co-founder Eric Hutchinson, they often know more or less what kind they’re after.
“The person who wants a memory foam mattress opts into that category very quickly,” Hutchinson said on the Modern Retail Podcast. “They say: ‘I am looking for a memory foam mattress,’ so they’re doing the comparative shopping versus other memory foam brands.”
In other words, people don’t go mattress shopping as much as they go “memory foam” or “traditional” mattress shopping, right out of the gate. “Once we understood that, the notion that we would have a portfolio of brands was pretty clear to us.”
That’s why Resident, a DTC holding company formed last year, has four mattress brands to its name, giving it the ability to meet consumers even after they’ve written off certain mattress categories. The company is “right at the point of break even profitability,” Hutchinson said, and it’s expanding to other parts of the home furnishing shopper’s list.
“The idea is to have products that resonate with the consumer across the entire furnishing life cycle of a home,” Hutchinson said.
Obviously, the coronavirus pandemic poses problems for any consumer business’s plans. “Uncertainty is the most difficult thing to manage to,” Hutchinson said. But he added that although retail revenue plummeted “almost overnight,” the DTC side of the business is strong.
“Right now consumers are online, so we pivoted our business and really have been able to make up the ground that we lost to the retail,” Hutchinson said. He talked about the “aspirational” vibe of new DTC companies’ brick-and-mortar stores, surveying customers and what digitally-native really means in his book.
Here are a few highlights from the conversation, which have been lightly edited for clarity.
Retail has plummeted
“What we’ve seen on the retail side, not unexpectedly, is a fairly rapid reduction. It was almost overnight when the full shutdown happened. On the DTC side of the business I’d say we’re solid. In many ways, business is up. I think it really speaks to this future of the consumer, this notion that the brands of tomorrow need to think of the consumers as a channel and engage consumers when and where they want. Right now consumers are online, so we pivoted our business and really have been able to make up the ground that we lost to the retail.”
“They’ll just tell you.”
“We send out about 500 surveys a day and we ask ‘what else are you buying online; what else would you like to buy from us?’ And they’ll just tell you. And from there we use that as an anchor for the R&D. Once we understand that a category product the consumer’s looking for is an adjacency, we go and start doing the research and understand just like we did with the mattress — what are the aspects of that product that they care about? — and bring to market a product that resonates with them. All of the adjacent products, the foundation, whether it be a more traditional platform bed, an adjustable bed, mattress protector, sheets, pillows, they’d much rather buy all of that when they’re making the mattress purchase versus buying the mattress from us and buying those products from someone else.”
More brands under one roof means more data to base them on
“Let’s talk about what we mean we say digitally-native or e-commerce. These are companies that are born online, but our view is that what’s really happening is that the face of consumers is changing. The future of a consumer brand is not online versus offline, but it is omnichannel. As you look at this notion of a family of brands, it’s really around understanding what the consumer is looking for and that purchase journey. Not just that first purchase, but what do they want next? So I think there’s a real opportunity for brands to get together either under one roof or in partnership to really serve the consumer. You can use the shared data, because ultimately the consumer is the one making the decision, and what we want to do is make it as easy for them as possible.”
The new retail experience
“If you look at the new age of retail, it’s aspirational again. You go into an Allbirds store, an Everlane store, and it’s a great retail experience. You can see that going to the next phase where it’s not just around a singular brand, it’s around a family of brands that speak to a like consumer. I think there’s a lot of interesting things on the horizon around ‘how do you make retail more aspirational and how do you also make the footprint more efficient from an economic standpoint?’ The consumer journey, it’s very clear now, is not just about online versus offline, it’s about creating a holistic brand experience that engages that consumer online but also creates an aspirational offline experience for consumers that want to have that as well.”