Over the last year, Stitch Fix has increasingly used data and AI to create personalized shopping experiences. Its newest bet on AI, a tool called StyleFile, aims to improve its service as the company works to recover from an extended rough patch.
StyleFile is a personalized style profile assigned to each Stitch Fix customer based on their preferences and shopping behavior. When customers join, they take a survey to define their style, resulting in multi-faceted profiles that can include styles like “Edgy” or “Boho.” This profile then guides the styles they see when shopping independently on the platform and ensures that the items curated for them in their “Fix” orders match their tastes.
The direction follows that of other companies already investing in AI and personalized profiles. Spotify, Netflix, Amazon, Farfetch and Asos, among other retailers and leading companies, currently use complex algorithms and AI to personalize recommendations based on real-time behavior, creating a fluid shopping experience that adapts to changing tastes.
On September 26, the company reported fourth-quarter net revenue of $319.6 million, a year-over-year decline of 12.4%, or 18.3% when adjusted for the extra week in 2023. The company’s gross margin increased by 50 basis points to 44.6%. However, it faced a net loss of $35.7 million, with a diluted loss per share of $0.29. Despite the dip, CEO Matt Baer maintained that the company is executing its transformation strategy with discipline.
StyleFile is one of several Stitch Fix tools aimed at building trust with customers. “It’s a tool that helps clients articulate their personal style preferences while also demonstrating that we ‘get’ them,” said Tony Bacos, chief product and technology officer. Developed using billions of style insights submitted by customers — for example, their dress preferences and favorite colors — as well as analyses of client feedback on previous Fixes, StyleFile is said to use a proprietary AI model to create multi-layered, individual style StyleFiles.
A key challenge in developing StyleFile was defining “style types,” said Bacos. “No one is simply one style type, so we developed an algorithm that analyzes and combines clients’ likes and dislikes to reflect a nuanced, multi-dimensional style personality for each individual.” The team worked with trend experts, stylists and data scientists to establish hundreds of unique style personality combinations, allowing Stitch Fix to create detailed personality profiles for both men and women customers.
However, the approach raises the question of whether an algorithm, no matter how sophisticated, can capture the nuances of an individual’s evolving fashion tastes.
Incorporating the new initiative into its core business model, Stitch Fix’s data science and product teams are now working with the merchandising team to refine product assortments and inventory to best cater to customers’ style profiles.
StyleFile will also integrate with Freestyle, which is Stitch Fix’s personalized online shop. Clients can search for items according to their StyleFile or explore styles within other style types, like Edgy or Boho. Early feedback has been positive, with a 5% uplift in conversions among those who used the feature, Bacos said.
Recognizing that style preferences evolve, Stitch Fix plans to adapt StyleFile accordingly. Profiles are currently generated once, during onboarding. Existing clients can also generate a StyleFile by taking the StyleFile quiz.
Likewise, the broader Stitch Fix experience continues to adapt based on ongoing inputs from Style Shuffle, client-stylist interactions, and updates to clients’ preferences in style, fit and budget. Style Shuffle is a Stitch Fix feature where customers rate different outfits and styles with a “thumbs up” or “thumbs down.”
This update is one of many changes enacted by CEO Matt Baer since joining Stitch Fix in June 2023. StyleFile is currently available for existing and new clients across women’s and men’s.
Baer believes that once clients see their style profiles and recognize that Stitch Fix understands their fashion preferences, they’ll be more motivated to shop.
But human stylists still play a crucial role, and Stitch Fix has some work to do to gain back the trust of its stylists after letting go of full-time positions in January.
“AI, in combination with the human empathy and creativity of our stylists, is what makes Stitch Fix so special,” said Bacos. Soon, clients’ StyleFiles will be integrated into the backend styling experience, allowing for more precise recommendations aligned with each client’s style.
