The Lovesac concept originated in 1995, occurring to its then-18-year-old creator as he sat in the living room of his Utah home, watching The Price Is Right on TV. “Wouldn’t it be fun to have a really big beanbag chair?" he asked himself. It would indeed, he reasoned. So he made one.
The company Shawn D. Nelson established soon afterward with help from family and friends — and, alas, with a fair amount of credit card debt too — and of which today he is president, is hard on the fast track to growth. Fresh off its IPO last June, Lovesac’s sales grew by some 33 percent in fiscal 2018, exceeding $101 million. Now, atop that success and already three-quarters into fiscal 2019, the company is set to surpass 60 percent.
All this is even more impressive when one considers that the company sells basically two types of products: its trademark Lovesac beanbag chairs, and its patented Sactionals (modular couches and chairs). The products are not cheap: Lovesacs come in a variety of sizes and customized fabric coverings, at prices that range from about $350 to $1,300 per item; the Sactionals typically retail for between $2,000 and $10,000 each.
“We’re presenting a new way to think about furniture,” said Nelson. "It’s furniture that you could have the rest of your life. The brand incorporates what it calls a “designed for life” philosophy that emphasizes the sustainable aspects of its flexible and durable products. Lovesacs and Sactionals have machine-washable covers, and customers may opt to buy replacement covers, should they wish at any point to change the look or the color to fit a new decor. And the Sactionals can evolve with the lifestyle of the customer — expanding or shrinking in size through the addition, removal or changing of the layout of the modular pieces.
“The modular, sectional couch is a really fantastic product,” said Alex Fuhrman, a research analyst at Craig-Hallum Capital Group, in Minneapolis. "In some regards, it could sound a little too good to be true that you can just pull it apart and mix and match, size up, size down and change the shape of your couch." When people realize how simple the locking system is, therefore, it can help them decide to go ahead with the purchase, he says.
“You go there to touch and feel and sit on the product and prove to yourself that it is every bit as cool as the videos make it look”
The “seeing is believing” element is why brick-and-mortar is a critical part of Lovesac’s e-commerce business model, Nelson says. Since the opening of the concept's first store in 2001 at The Gateway mall, in Salt Lake City, the stores have evolved into tech-enabled, experiential showrooms outfitted with demo Lovesacs and Sactionals, as well as digital monitors running videos of how the Sactionals can be configured and customized. “You go there to touch and feel and sit on the product and prove to yourself that it is every bit as cool as the videos make it look,” said Nelson. The products are shipped directly to customers who order in-store or online.
Lovesac currently operates 77 showrooms measuring about 2,300 square feet, at top malls, in lifestyle centers and on street locations across 30 states. Thanks to the capital infusion from the IPO, growth plans include the rollout of about 20 showrooms annually over the near term. Besides the showrooms, Lovesac has a partnership with Costco for temporary shop-in-shops. Most of those run for about 10 days, and the company usually has about half a dozen of them running on any given week.
“The company has done a good job of adding a lot of innovations around accessories and outdoor furniture and different looks for the product,” said Fuhrman. Thus, he notes, even for those who may have purchased a couch several years back, this creates reasons to keep visiting the website and the showrooms for a look at what is new.
By Beth Mattson-Teig
Contributor, Shopping Centers Today