Lovesac, the high-end couch company, has long relied on celebrities to show off its built-in speakers and VIP lounge vibe. Shawn Nelson, founder and chief executive officer of the fast-growing company, is making sure average families know the brand works for them, too. He tells D2C Insider about Lovesac's latest marketing push.
D2C Insider: You just threw a party to celebrate Lovesac's 25th birthday, full of influencers, with Travis Barker and Machine Gun Kelly. That kicked off some new marketing. Why make such a fuss about an anniversary?
Shawn Nelson: We've never done an event that big. When a brand like this has been around for 25 years, that punches more powerfully than a typical brand. It says, 'We make products that can be around 25 years. We make products that last for the rest of your life." That's our whole business model. We give a lifetime warranty, and customers want to know we'll be around when they need us.
D2C Insider: Lovesac has become a big public company, with last year's sales topping $652 million. What's your backstory?
Nelson: I didn't suddenly recognize a unique niche in the marketplace that could be exploited. I wasn't one of those people. I started this 25 years ago in my parents' basement as a funny thing to do. It became a side hustle and just kept unfolding. Along the way, we invented what I think is the best couch design, and it's probably the best-selling couch in the world. It's all wrapped around this idea that you could have this thing for the rest of your life. It's very different from other companies.
D2C Insider: How so?
Nelson: Not to pick on Apple, but it's built to sell you a new device every year or two. And it's certainly successful. The whole world is on this treadmill of newness and novelty. But we overtly push this message that we want you to own this thing for the rest of your life, and we'll continue to innovate. And we're profitable doing that. Name one other D2C company that is.
D2C Insider: There are plenty of smaller, bootstrapping D2C companies that make money, no?
Nelson: Yep. But you probably can't name one that is approaching a billion in sales that's also profitable -- and that's going to be here in another 25 years. We were bootstrapping before bootstrapping was invented. Every day, people walk out of our stores after spending $5,000, $10,000 and even $15,000. They give us a lot of money, and these relationships are precious.
D2C Insider: You've got a strong digital presence, which you've always balanced against physical locations. How do you describe your omnichannel balance at this point?
Nelson: The D2C pivot for us wasn't just smoke and mirrors. We eliminated all the inventory from our showrooms. We have made overt tactical shifts to cement omnichannel efficacy. For instance, we've aligned our payroll and incentives. We don't care where you buy. No one is on commission. We just want you in the Lovesac family.
D2C Insider: What's the brand's appeal?
Nelson: We make things -- and will invent more things -- that are complicated. Our products look like a couch, but it's not just a couch. That's why physical locations are important. In many categories, things are commodities. For us, it's about making sure consumers understand our couches. They have to see it.
Sectionals are weird. What you can do with them is quite remarkable. People think, "I can rearrange them," but it's not simple. You can make our 'sactionals' deeper if you're tall. Stealth Tech, the built-in sound system, is invisible and requires a demonstration. People think the sound will be muffled, but it's not. So showrooms are critical to telling the story around our complex and patented product designs.
D2C Insider: How many do you have?
Nelson: We are at about 210 of our showrooms and 22 in Best Buy stores. Those are proper, permanent little Lovesac stores staffed with our people. And we operate pop-ups in Costco. We do zero wholesale. That's important because it means we are connected to every person who's ever bought our product. We're building these long-term relationships.
We'll open 30 locations this year, and we've been opening 40 or 50 a year for the past two or three years. We will continue to grow even through this possible recession, or whatever it is.
D2C Insider: During the pandemic, everyone was home, craving new couches. Now people are concerned about money and looking for value. How might that affect sales?
Nelson: Lovesac is a value product. One of the benefits of being a 25-year-old brand is that we were born in the briar patch of 2001. We lived through 2008, 2009 and 2010. We weren't at the scale we are today, and those weren't our best years, but we grew nicely. Our growth during the pandemic, roughly between 50% and 60%, was crazy town. That's bonkers. We'll take it, and we’re thankful for the market share. So the landscape, in general, is tough now, but we see ourselves as a value brand.
D2C Insider: Who is your target market?
Nelson:We do sell to rock stars and celebrities and people with decorators. But most of our customers are soccer moms with babies, kids, pets, dogs and real life. They're buying our couch because, even though they've maybe had to break out two credit cards, they believe in its value. It will grow with them. It will expand with them. It's machine washable. It looks great. It's got fantastic reviews.
D2C Insider: How often does the average American household replace a couch?
Nelson: About every seven years. And contrary to what many people think, that's not driven by people moving or the housing market. People buy a new couch when they've worn out the old one. The couch category dynamics are separate from the broader furniture market. That's why our business is resilient. It's also a difficult category to enter, so we don't have a lot of competition like the mattress business. We'd like people to buy couches less frequently.
D2C Insider: That's not what people expect a CEO to say.
Nelson: We want to be like companies like Rent the Runway or the RealReal, contributing to a more circular economy. My sectional is 15 years old, and while I've replaced parts of it, it still looks, feels and smells new. My dog chewed a corner, and I replaced that piece. We sell two products, but it's a multilayered business with a multilayered strategy. And going forward, services will be a big one. Someday, you will pay us to swap out your whole cover set every year or so or retire parts. Maybe we'll resell it for you to people who want a more sustainable life.