Grana, the two-year-old direct-to-consumer brand based in Hong Kong, will bring its co-ed affordable luxury line to the United States this summer, positioning itself as a competitor to brands like Everlane and Uniqlo.
Although it has done no marketing in the U.S., it has shipped internationally since launching in 2014 and has seen an impressive 800 percent growth from America alone in the last 12 months, said company founder Luke Grana. “The U.S. is now our biggest online market,” he said, noting that “the sales and awareness have been entirely organic.”
That’s soon to change.
Rather than operate permanent retail locations, Grana relies on a pop-up model for its “fitting rooms,” showroom-like spaces in the vein of those run by companies like Bonobos and Indochino. Lasting for around three to six months, Grana has held 12 so far across Hong Kong, Singapore and Sydney.
“We go into a community and really try to integrate ourselves within it,” said Grana.
Now, it’s sending a 10-person team to New York, its first U.S. target, to suss out potential pop-up locations in Soho and kick-start local area marketing, including postering and mail-outs.
The fitting rooms — which serve merely as try-on and ordering spaces for customers — hold no inventory, allowing the company to limit its spending. This, in turn, helps the brand maintain its famously low markups for oft-pricey materials like Chinese silk, Japanese denim and Mongolian cashmere — its prices range from $7 -$189, for everything from socks to silk slip dresses.
An image from Grana’s latest lookbook
Setting up its headquarters in Hong Kong was also done for this reason. As a tax-free port, Grana can cheaply import fabrics there from suppliers all over the world and then send the resulting products out to their main markets (China, Australia, Singapore and the U.S.).
The city is also the world’s largest air cargo hub, making it the busiest hub for global shipping anywhere in the world. DHL, for example, has 12 planes flying between the U.S. and Hong Kong on any given day. “With that volume, we’re able to get really good shipping rates and shipping times (from one to two days), as well,” said Grana.
What’s more, Hong Kong is a world sourcing city, meaning that many of the garment and fabric mills the company works with have head offices located there. This allows Grana to be very reactive to the market, debuting new designs with lower lead times than normal — sometimes in as little as a few days.
The $16 million it has scored in funding certainly doesn’t hurt its bottom line, either. It received $6 million in seed funding from Bluebell Group, MindWorks Ventures and GoldenGate Ventures, and another $10 million at the end of 2016 from a Series A round led by Alibaba’s Hong Kong Entrepreneurs Fund.
A Grana “fitting room” in Hong Kong
“We look at the existing fashion industry and just think it’s quite stuck in its ways and inefficient,” said Grana, an Australian expat, of the inspiration for their business model. “Grana is much leaner, operationally,” he said, highlighting their one centralized location in Hong Kong and the fact that they launch all new products in small test-batches. “We only invest more money once we have proven results.”
One way the company look for proof is through its Grana Labs program, launched last July. The community of 3,000 active members, originally sourced from their e-mail database, provides feedback on all product. In exchange for its help, the company gives participants access to perks like free product, exclusive launches and store credit.
Today, anyone can sign up — a process which involves questions around demographic and location to further Grana’s insights on their consumer base, which the company describes as 25-35 years old, working in creative industries, with an average income of 50 thousand dollars.
Whether or not Grana’s success will continue offline in an increasingly crowded space remains to be seen, though they do have a price advantage over competitors like Everlane or Aritzia, whose products can retail into the $200-300 range. Their stricter product curation could also be a boon against the overwhelming assortment seen at chains like Uniqlo and H&M.
An image from Grana’s latest lookbook
Competing with those chains, however, is not part of Grana’s longterm strategy.
“We’re still very much a startup, so for us to go head-to-head with a Zara-sized company would be impossible, — we just don’t have that amount of product” said Grana. “What we’re trying to do instead is find products with a high market fit, meaning that we don’t want to do every product under the sun, we want to make products that the market will react very well to at our quality and price-point.”