Apparel brand American Giant’s first product, a $79 zip-up sweatshirt, was released in 2013. For Slate, Farhad Manjoo reviewed the sweatshirt under the headline “This Is the Greatest Hoodie Ever Made.” He followed up with a second article six months later, saying he’d found one problem with the apparel company: it couldn’t keep up with demand. The hoodies consistently sold out, even though the company paid for very little marketing.
“The apparel category is a business built on the back of big distribution and big marketing budgets,” said founder Bayard Winthrop. “The marketplace looked like soulless brands, and customers have more information and power than ever before to find one they identify with.”
American Giant combines high quality products (from sweatshirts, it expanded to offer T-shirts, sweatpants and joggers) at decent prices (T-shirts are $19-$34, sweatpants $59). Its entire supply chain is based in the U.S. Costs are kept low by a popular modern business model, enabled by e-commerce: direct to consumer.
But it’s not just the slashing of the middlemen that defines American Giant’s brand: it’s part of a larger class of American-born retailers that are at the intersection of shifting consumer behavior. Shoppers are gravitating towards brands that sell good quality clothing, have a strong sense of identity (as much as any commercial company can), and follow a cleaner, transparent business model. Retailers like Everlane and Reformation have also followed these steps in different categories: luxury basics and women’s fashion, respectively.
“For new brands to succeed, they can’t just put out good product. They have to behave a certain way,” said Jodi Sweetbaum, president and managing director of the agency Lloyd & Co. “When they’re built on a behavior as much as they are a product, that’s real authenticity. If the ethos is grounded in something that’s meaningful, the product has meaning.”
Sweetbaum believes that this new breed of brand — American Giant, Reformation, Everlane and Warby Parker — walk the walk when it comes to the new retail clichés. Authenticity, innovation and transparency all sound tired when big companies spout them as their tenets. But this young, nimble class of retail can back it up.
The makeup of modern retail
Each of these companies, while different, follow similar rules: Sell quality products at mid-tier prices, follow a transparent business model that is less harmful to the environment, and sell it with strong branding and minimal paid marketing — all of which inspires customers to rally behind it. Analysts we spoke to for this story all shared the same sentiment: for any newly founded retailer hoping to catch on with consumers, this formula is the one to follow.
“There’s heart and grit in brands like American Giant and Everlane, and consumers have voted with their dollars,” said Christian Navarro, group account director at Cutwater, an agency that’s worked with American Giant, which, like Everlane and Reformation, declined to disclose revenue.
To create that connection, product must come first. American Giant, with its U.S.-made products, largely uses its customer reviews and fawning press as marketing. The items also take a long time to make: a recently released T-shirt took a year to design and manufacture, and Winthrop said a soon-to-be released pair of women’s yoga pants had been underway for a year and a half.
Everlane, which sells high-end basics like T-shirts, sweaters, pants, shoes without the markups, regularly teases its new product releases on its Snapchat account, which provides a clear window into the company’s operations. When finally released, items sell out quickly. When Yael Aflalo founded her clothing brand, The Reformation, in 2009, she made sure the supply chain was eco-friendly with a minimal carbon footprint.
“My vision was to create a brand where fashion and sustainability can coexist,” said Aflalo. “This seemed like a great idea to me, but so hard for other industry insiders to process. A ton of people laughed at me, but I knew I wanted to create a company with people who actually believed in our mission, and who’d be able to tell our story in a real and relevant way.”
Passionate underdogs make for infectious narratives, and brands like these all the more rare for having customers who become enthusiastic evangelists.
“[These brands] prove that a woman isn’t just following a prescription for fashion; she has a heart and soul and knows what’s going on in the fashion marketplace,” said Malinda Sanna, founder and CEO of Spark, a consumer insights consultancy firm. “They carry bragging rights and a story.”
Why transparency works
Retail is a messy business. Ninety-seven percent of products are manufactured overseas, and Americans are estimated to discard 82 pounds of textile waste per year. American-manufactured companies like American Giant and Reformation, and transparent models like Everlane, aren’t perfectly sustainable or environmentally friendly, but they’re making progress, and customers feel good being associated with that.
“Brands have been nervous about exposing themselves as working toward sustainability because if they’re not totally there, they think it makes them look bad,” said Brooke Blashill, svp and director at Boutique@Ogilvy, the agency’s fashion and luxury arm. “But customers now are willing to go on a journey with a brand, provide feedback and see what changes.”
Everlane uses, again, its Snapchat account for a running “Transparency Tuesday” series where they answer customers’ questions about the supply chain, manufacturing process, and anything else they want to know. They’ve taken followers inside factories, and tested out different pricing models with consumers to see what cost per item people were most willing to pay.
Sweetbaum called what these companies do in order to clean up their supply chains “innovation you can actually point to.”
“When you look at Everlane or the other brands, integrity goes a long way,” she said. “You feel like you’re investing in something, not just clothing that can go away that’s easily disposable.”
What other brands can do
“It’s essential for large established brands, like Gap, to bring authenticity to their companies to avoid losing a new wave of consumers who really care about where their money goes,” said Inii Kim, co-founder and creative director of King & Partners. “People today care much more about transparency — like where products came from and who made them — than they do a multi-million dollar promotional campaign.”
For existing retailers to adapt this model, it would require a “huge shift,” said Sweetbaum, but she added that any step they take to reform, like H&M’s line of environmentally-friendly made clothing, helps.
It’s a big undertaking, but it may be critical going forward as customers search for brands they can rally behind.
“What these brands are building is really intense loyalty,” said Kim. “It’s not one dimensional, which would be on product only. It’s built on emotional and rational connection.”