fashion

January 21 2021

Stitch Fix – Is it a fashion or tech company?

Stitch fix – A Retail transformation story.

Recently, I completed a program on retail transformation from one of India’s Premier B-school (IIM-B), and during the course, we undertook several case studies like Threadless and big basket, Webvan, and stitch fix.

Stitch fix is one of my favorites as I relate myself to the fashion & beauty world.

I am writing this article to help my readers and retail fraternity members to take learnings from the real-life case of Stitch fix and learn as to how Katrina lake (founder of stitch fix) transformed her business model.

What is the stitch fix model?

The Basic idea with which stitch fix started was of providing a Personal styling fashion experience and provide customers a personalized fashion outfit, all at a subscription fee model.

Stitch fix selects and mails clothes, shoes, and accessories to its clients based on an extensive style survey (i.e. data).

The better the “stylist” selects the clothing, the more money Stitch Fix makes.

Basically, it is like Netflix of the fashion world.

(Similar to how Netflix suggests programs on your viewing behavior or patterns).

Since its business model is based on predicting the styling that will suit their customer’s preferences hence it became obsessed with Data analytics and understanding their customer’s fashion sense and preferences.

Challenge is “Getting the style and outfit right for the subscriber every time”.

Learn how Rent a Runway is on its way to becoming the Netflix of fashion, click here.

Data is oil – Stitch fix “tinder for clothing”

As part of their Style Shuffle—a “Swipe right” type of “Tinder for clothing”— Stitch fix has found a way to reach beyond the feedback they’d get from customers through buying alone.

By letting customers swipe through different styles in their entire collection, they amass tonnes of data that helps them better understand the customer, as well as age and demographic trends shaping the fashion industry.

More the customer spends time swiping the garments, is leaving a digital cookie which is then analyzed towards his or her liking for the fashion garment.

The model is very addictive as Tinder since you are shown garments that a professional stylist has shortlisted for you.

Data points on their customer’s preferences make stitch fix’s proposition more profitable.

Stitch Fix makes money on clothing sold more so than subscription fees.

The more clothing from one box that fits or flatters, the more profits they will make.

Why Stitch fix is successful?

Stitch fix changed the paradigm

Stitch fix is not fashion but a “tech company which deals in fashion”.

Instead of fighting head-on with physical fashion retailers and eCommerce companies, stitch fix has created a blue ocean strategy for them by finding their niche in data analytics.

They share the data points with the designers who in turn ensure that their garments are made in line with their customer’s preferences and likings.

“Feedback” is the main crux that stitch fix has provided to designers who never knew about their designs and creations sales movement.

Now with stitch fix, they feel engaged with the customers.

With enormous data points, Stitch Fix is able to see not just products people buy, but products they want to buy.

That’s why I give them the credit for changing the paradigm completely.

Whereas traditional fashion brands are either competing on prices or eCommerce companies on the fastest deliveries, Stitch fix has found their niche is providing personalized fashion experiences to their subscribers.

Their commitment towards their “why” (purpose) is so strong that the founders chose to start the company in the Silicon Valley (being a tech hub) rather than moving to New York City (fashion capital).

They had clarity on the core strengths of their business right from the start.

Learn 10 growth hacks for eCommerce business, click here.

Algorithms & Data analytics coupled with Human stylists – Recipe for success.

They aim to bring personal styling to the masses, using data and machine learning to deliver personalization at a mass scale.

Watch the video on why stitch fix clothes have better sizes and fits.

From filing a lengthy questionnaire when customers sign up – evaluating factors like lifestyle, body type, and most-wanted items ;

Stitch Fix’s ‘Style Shuffle’ feature on its app and website allows it to amass huge amounts of data.

Building robust communication channels with subscribers

On receiving the box containing five clothing and accessory items, the customer gets a sense of belongingness as they’ve provided their preferences and selected by the stylists, just for you.

Customers provide feedback after each shipment since they know that their feedback will help stitch fix deliver more garments that they want to buy and not what stitch fix wants to sell to them.

It’s two-way communication.

Want to learn the basics of category management in 5 mins, click here.

Combing the art of discovery and convenience

The fun of discovering the most sought-after garments, that are personalized and customized as per your body type/fit is beyond capturing in the form of words.

Getting your fashion quotient boosted through personal stylists gives a confidence-boosting to the subscribers which remain loyal to the brand since their self-esteem & social needs are getting fulfilled at the convenience of their homes.

In an interview, Katrina Lake, founder once said,

“Our business model is simple: We send you clothing and accessories we think you’ll like; you keep the items you want and send the others back.

We leverage data science to deliver personalization at scale, transcending traditional brick-and-mortar and e-commerce retail experiences.

Customers enjoy having an expert stylist do the shopping for them and appreciate the convenience and simplicity of the service”

I believe this statement from the founder summarizes the brand’s purpose.

References; HBR case study – case study reprint 2018 (IIM-B) , CMO network, Guy Raz book-how I built this.

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.

Ritesh can also be followed on Instagram as @mohanritesh & on Youtube as @riteshmohan

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July 1 2018

Do fashion retailers need to participate in “Omni channel retailing” rat-race?

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Recently, I was asked this question by one of my Linkedin connection, who was responding to my article on Omnichannel retailing.

His question prompted me to think about Phygital evolution more holistically and I realized that though every retail or digital consultants/ forums have been shouting from the rooftops for seamless multichannel integration which is the key to successful retailing.

This is spot on but I would like to present a case study of one fast fashion brand that could be the exception to above rule. This brand is highly successful and is questioning the status quo of buying & selling processes that are normally followed by retailers.

Ladies and Gentlemen, Let me introduce you to Primark (hi-street fashion retailer) who does not have an e-commerce arm nor e-commerce website.

Whether Primark is right not to sell online, there’s no denying its success. This is one high street retailer that is prospering during rough economic circumstances.

The stats tell the story:

In 2017 the retail business generated a revenue of approximately 7.1 billion pounds.
As of 2018, it ranked is the second largest clothing retailer in the UK, following Marks and Spencer, with a market share of approximately seven percent.
The company now has 345 retail stores located in eleven countries across Europe and the rest of the world, including the UK, the Republic of Ireland (trading as ‘Penney’s’), Portugal, Spain, Germany, the Netherlands, Belgium, Austria, and France. Italy and the U.S.

Source: statista.com

These figures mean that Primark doesn’t necessarily need to be in a hurry to open up an e-commerce site, as it still has room for growth offline.

Why is Primark not keen to move towards “Omnichannel” platform?

Primark believes in the fact that “if it ain’t broke, don’t fix it”.

In no way does a transactional site fit in with how Primark is growing. Its strategy is store based.

Associated British Foods, Primark’s parent company, outlined the outlook for its business divisions which reiterated its commitment to the high street and plans to grow space by 10% in the coming year.

Understanding their customer’s shopping behavior & preferences:

The shopping tactic for Primark customer is to get in, grab a basket full of low-priced garments, and get out again with as little hassle as possible.

It’s not experience based, its product based which means that a multi-platform business isn’t a necessity as it is for many of its higher priced high street rivals.

It would take an awful lot of £1 pairs of pants to offset the cost associated with setting up and running a transactional site.

Using Power of PR rather than advertising:

It relies on strong PR, word of mouth and its stores to do the talking. Any big budget marketing campaigns would only serve to eat into the margins and nudge the prices up.

Having worked with another fast fashion brand Forever 21 in the past, I completely understand the business model i.e. to strike a balance between fast fashions at the lowest possible price. The same is true and relevant in case of Primark. Any changes in variables could prove a disaster for fast fashion value retailers.

In Primark’s case, it’s a bold move not to jump into online because everyone else is doing it but to stand firm with a strategy which is working for the business.

I would love to share my retail wisdom acquired by handling fashion brands with any of my connections or regional retailers who need bespoke solutions to their current issues at hand. You may reach me on riteshmohan@yahoo.com

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in Middle East region. He specializes in Retail management, Product development and Brand management, Retail Operations, Sales Management and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.

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June 12 2018

Is your brand ready for Omni-channel retailing? Learn from Brand Zara- leading the Phygital evolution in fashion.

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Do you know what is the biggest challenge in today’s digital era for businesses? Here it is, we have access to gigabytes of information at our fingertips yet we fail to see or identify or decode this information/data into useful insights for our businesses.

Zara, the Spanish fashion retailer has been fast to decode the importance of Phygital experience in their stores.

Zara is attempting to elevate the customer experience with a technology-enhanced concept store in London’s Westfield Stratford shopping center. The store focuses on a service where shoppers can try on the clothes they like in store, pay for them online and have the clothes delivered to their homes.

Inditex SA, the Spanish company that owns Zara brand, calls it an example of the technologies it will implement around the world.

Key features of Zara’s Phygital experience are:

Use of robotic arm to retrieve online orders and deliver to customers in-store (Buy online pick up in store):

The new flagship store uses an optical barcode reader system which scans the QR or PIN codes that customers receive when they place an order online. Behind the scenes at the automated online collection pick-up point, a robotic arm then collects trays and organizes the packages optimally based on their sizes, smoothly delivering orders for customers to collect in seconds. Customers can collect online orders made in store on the same day if placed before 2 pm, or the next day if placed after 2 pm.

2. Use of Interactive Mirrors based on AI and AR technology:

In addition, the new store also features interactive mirrors equipped with RFID technology which is able to detect what garment a customer is holding and offer more information on the item as well as multiple choices of what a complete outfit may look like. In store employees will work with iPads and be able to advise customers on product selections or accept payments on the spot.

3. Use of RFID in merchandise inventory planning:

Every garment is fitted with a radio-frequency identification tag. The technology lets Zara check a store’s inventory in two hours, a process that used to take about three days.

4. Digital payment options:

Customers can choose to pay using their mobile phones via the Zara app or the Inditex’s Group app, InWallet.

5. Self-service checkouts:

Shoppers can buy clothes without talking to anyone. Self-service checkouts on floors let customers pay with their mobile phones or credit cards.

Retailers will need to connect decades-old fundamentals & processes with the newest front-end user interfaces. The Spanish brand Zara is one of the few fast fashion brands who has embraced technology and leading its brand’s evolution into the digital world.

Food for thought for Middle Eastern retailers:

Are we getting ready to embrace the fast-changing consumer’s shopping trends? Are we fast enough to embrace the change in our retail environment?

I shall conclude my article with these two thought-provoking questions to my readers and retail fraternity members to share their opinions by leaving a comment below and let the world learn from their wisdom.

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in Middle East region. He specializes in Retail management, Product development and Brand management, Retail Operations, Sales Management and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.

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