Just over six months after it began courting contemporary luxury fashion brands, Stitch Fix is expanding upon its high-end category by investing more in Stitch Fix Premium.
In the past quarter, the company added brands like Calvin Klein, Diane von Furstenberg, Tahari and Tommy Hilfiger to the Premium category, adding to the initial test group of more than 100 brands that went live on the site in August of 2017. That first group included Alice + Olivia, Helmut Lang and John Varvatos. The goal is to bring in more Stitch Fix clients who shop within the $200 to $600 price range per item, whereas most Stitch Fix inventory falls between $50 and $150.
Now public, the onus is on Stitch Fix to prove that it can continue growing its styling service model to new customers. To do so, Stitch Fix has made moves into previously untapped territories, including contemporary fashion, men’s clothing, accessories, and most recently, basics like bras and underwear. In its second quarter earnings for 2018, the company’s revenue grew 25 percent to $296 million over the same period last year.
But convincing brands in the contemporary space to partner with a new type of distribution model is a greater task than including undergarments in Stitch Fix deliveries. Luckily for Stitch Fix, it’s reaching out to premium fashion brands at a time when they’re feeling especially vulnerable: department store foot traffic is falling, the online marketplace is sprawled and Amazon is hardly a friendly retail partner to brands.
That vulnerability, however, hasn’t meant that brands are flocking to alternative distribution models. The Stitch Fix team has had to work through a lot of back and forth with these brands, a lot of which has centered on education.
“It was a journey that took multiple conversations,” said Stitch Fix chief merchandising officer Lisa Bougie of the company’s pitches to premium brands. “The first [discussion] were grounded in education; there was little understanding with regard to how we do what we do and the benefits that would bring to a brand partner.”
Those benefits include little to no discounting, exposure to new customers and, most importantly, access to an unprecedented amount of data. Stitch Fix built its business around vast data collection and comprehension, and its success depends on how well it can predict what its customers will ultimately want to buy — and decipher why they didn’t choose to buy. Stitch Fix’s team will even work with brand teams to help them decide how to digest and act upon the data they’re receiving.
Not only does the retailer share data with its brand partners so they can take things like complaints about fit into consideration, but the data also informs what pieces of a brand’s collection the company buys to sell to its customers. That’s something other wholesale partners decide based mostly on intuition.
“You can tell when a retailer just didn’t ‘get’ your brand, and actually bought the wrong pieces, so together, it doesn’t feel cohesive,” said one brand manager. “That then results in poor sales. That’s not an issue here.”
According to Bougie, each premium brand has a dedicated buyer that works with brands to decide what pieces should be sold through Stitch Fix, based on the data. If initial tests go well, brands like Paige Denim have decided to design exclusive pieces for Stitch Fix.
But sheer data doesn’t always speak directly to how these brands operate. Brands in the contemporary space care about positioning, and having items appear in a Stitch Fix box alongside lower-market brands is a turn-off that Bougie has had to work through.
“There are a lot of worries about brand adjacency for these brands, and it took multiple conversations to help them appreciate that winning is about getting the right product in the right clients’ hands, and that’s a key differentiator for us in a marketplace that is fraught with the inefficacy of distribution,” she said. “If you think about a department store, and the old-school notion of what brands are next to which, it’s not important in our model. These customers are only looking at every item they get with the question of ‘Is this right for me.’ And that only comes down to our ability to match clients with the right products.”