Luke Grana’s direct-to-consumer clothing brand, Grana, draws a lot of similarities to fellow digitally native clothing brand Everlane, which launched three years before his company. But in a crowded market for direct-to-consumer apparel startups, differentiation is key. What separates the younger brand from its predecessor is where it was founded.
“We’ve carved out this presence in Asia,” said Grana. “A lot of our sales come from Hong Kong and China.”
Based in Hong Kong and selling clothing made from sustainable fabrics like Peruvian Pima cotton, Japanese denim and Irish linen, Grana is working to become profitable and scale when competition is fierce and marketing budgets are tight.
Grana joined the Glossy Podcast to discuss how to do so without weighing his company down with too much profitability, why he based his company in Hong Kong and what the pillars of direct-to-consumer apparel are today.
On launching his brand in Hong Kong
Grana, who’s from Australia, got the inspiration to start his brand when he discovered the Peruvian Pima cotton that would make up his first T-shirts. He spent most of 2013 researching competition, fabric composition and locations. He landed on Hong Kong as the right place for his company’s headquarters.
“Most stores have broken up their inventory in so many different locations. You don’t want so many different mini-warehouses,” said Grana. “Hong Kong is a free tax port, it’s a world-sourcing city, it’s the world’s largest air cargo hub. It’s all in one place.”
Early direct-to-consumer crash-and-burn stories from the likes of Bonobos and Nasty Gal have soured the outlook VCs have on the DTC apparel boom. Grana has raised a modest $16 million (from investors including Chinese e-commerce giant Alibaba) and doesn’t plan to raise any more.
“We’re optimizing for profitability. We have capital, and now we’re figuring out how to scale organically and scale online, and really looking at optimizing inventory, increasing inventory turn and replenishment. The goal is to make Grana a long-term, sustainable business, rather than to grow by raising a lot of money,” he said. “Years ago, there was more capital available to DTC brands. For VC firms today, everyone’s talking about sustainability and profitability, then raising a larger round later.”
On the new pillars of retail
Grana has some physical retail stores, and it sells online in China through third-party retail partner Tmall. Startup brands have come to terms with the idea that the traditional tenets of retail haven’t gone completely extinct — but the makeup of successful brands has still changed.
“What makes a brand great today is strong product and product market fit, first. We have a system called Grana Labs, where we test innovative products in small quantities. Then, [we look at] consistency on the website and on social media to make sure the tone is right. Then, [we incorporate] a hyperlocal marketing strategy. What’s right for the customer in England may not be right for the one in Hong Kong.”