Contemporary luxury brands are hooking up with Stitch Fix, a new type of wholesale seller, in an effort to minimize the effects of department store slowdown — and get some customer data in the process thanks to Stitch Fix’s vast database.
On Tuesday, contemporary luxury brands like Alice + Olivia, Theory, Helmut Lang and John Varvatos are launching a selection of clothing, shoes and accessories to sell through Stitch Fix, raising the price per item to between $100 and $600 and adding more brand-name recognition to the company’s arsenal. Until now, brands sold through Stitch Fix were more moderately priced, running between $20 and $150 per item. A few premium brands like Joie, Kate Spade and Rebecca Minkoff, went live earlier this summer.
More expensive brands will grab the attention of wealthier customers who are in position to make more regular purchases from Stitch Fix. The online styling service works by charging members a monthly fee of $20, and uses a combination of data algorithms and human stylists to send members clothing they think they’d like. Customers then pay for what they want and send the rest back. As the company prepares for a forthcoming IPO, its valuation is between $3 and $4 billion, according to Reuters.
Lisa Bougie, gm of Stitch Fix Women, said that the launch is part of Stitch Fix’s ongoing expansion to be more relevant to more customers. In the past, Stitch Fix has expanded to include athletic and occasion wear, as well as men’s and plus-size apparel.
The company is also hoping to offer an attractive proposition to higher end brands: data sharing.
“We’re excited to support and ultimately grow these contemporary brands in a way that wouldn’t be possible without us,” said Bougie. “We have the ability to get the right product in the right hands, while doing that at full price with shared transparent data.”
Sidling up to Stitch Fix as a strategy is telling about the current position of contemporary luxury brands, which sit in the formidable middle territory between high-end and fast fashion. Department stores, the traditional wholesale sellers to these brands, are facing falling foot traffic and are pitching their brand partners into damaging promotional cycles, while Amazon has show in the past that it’s hardly to be trusted. Online e-commerce marketplaces that have seen the most success, like Net-a-Porter and Farfetch, lean towards the higher end of luxury fashion.
Cutting out wholesale sellers all together seems like a modern revamp for struggling wholesale brands. But while direct-to-consumer fashion brands like Everlane and M.Gemi are on the rise, it’s difficult for previously wholesale brands to make the switch to that model. Most recently, the mid-tier luxury brand Thakoon had to put business on pause earlier this year after attempting to become direct-to-consumer brand.
“When you take out the middleman and go against the grain, you’re holding all responsibility, so you have to sophisticated technology and big data to make decisions,” said Elizabeth Stafford, the managing director of strategy at the agency Sullivan. “That’s a huge challenge for smaller brands.”
As a wholesale seller, Stitch Fix differs from traditional sellers like department stores in a few key ways. It learns why customers keep or don’t keep the items they try on and reports that data back to brands; it doesn’t run discounts (except to price-match); and its buyers collaborate with brand designers to figure out what selection of product makes sense as well as figure out how to design exclusive items for the platform.
“Our partners have come to appreciate and benefit from the fact that we share all of our data transparently with the brands, in terms of how clients are responding to our products,” said Bougie. “The goal is to let them know how to better service Stitch Fix clients, but also help inform better product-making decisions for the brand as a whole.”
This customer data drives product selection as well. Bougie said that, for example, when working with Andrew Rosen, CEO of Theory, on fleshing out the brand’s launch, they decided Theory’s purpose for Stitch Fix customers was to fulfill a need for minimalist, clean aesthetic office and elevated casual wear. From there, Stitch Fix buyers worked with Theory to choose the best selection as well as design new items that are exclusive to Stitch Fix’s customers. About 50 percent of the premium designs on Stitch Fix are exclusive. Typically, department stores’ buyers don’t choose what items to carry from a brand’s line based on hard data, but rather on the basis of trend-chasing and mass appeal.
“Stitch Fix is raising awareness on how useful data can be in retail,” said Tina Moffett, an e-commerce analyst at Forrester. “Creating their own designs based on what they see happening in their inventory, identifying the gaps they see, that’s a huge advantage over a department store, which has no idea why someone might try on and not buy.”