Online shopping service Stitch Fix’s recent announcement that it would be cutting all full-time stylists and opting for a more casual approach to staffing these roles has raised questions about the viability of the business model, which was first popularised by the likes of Trunk Club in the early 2010s. A Stitch Fix spokesperson confirmed the change to the media and said the reasoning behind the unstitching of its current employment structure for stylists was to ensure flexibility and continu
inue meeting the needs of the company and its customers. The company’s tumultuous journey over the last few years points to a need for cost-cutting as a measure to save the once-profitable bespoke styling and shopping business. Created for convenience, the company thrived during the global pandemic as people turned to online shopping. As the world leaves that era in the rearview mirror, many businesses are facing the same dilemma on how to adapt to an ever-changing consumer landscape. Styling services adapt to costs Stitch Fix’s predecessor, Trunk Club, paved the way for the rise of personalised subscription clothing businesses. After launching in 2009, it was acquired by Nordstrom for US$350 million in 2014, before shutting down in 2022. Closer to home, the Melbourne-based business StyleLab once operated on a similar principle, but it was forced to reinvent itself as a designer dress rental business through the online marketplace The Volte. Strict lockdowns in Australia during the height of the pandemic made it difficult for the start-up to continue its subscription-based styling service. Australian-based technology platform Mys Tyler, dubbed the personal stylist in your pocket, could offer a solution to the issue that more traditional styling services such as StyleLab and Stitch Fix face through its use of artificial intelligence (AI) to connect users with like-bodied creators for fashion inspiration. Similarly, Sensse, a Canadian multi-brand luxury fashion retailer, has incorporated an AI-based personal styling chatbot to add a bespoke service to its customer-value proposition. What and who is Stitch Fix? Founded by Katrina Lake in 2011, Stitch Fix is a personal style service catering to all genders and tailors its recommendations to consumers’ needs, tastes and lifestyles. The business partners with thousands of major brands, such as Free People, Kate Spade, Toms and exclusive labels created based on customer feedback. These include Pixley and Rye. Customers pay a US$20 fee, or “fix”, for each order, which is deducted from the price of the clothes they keep. A 25 per cent discount is offered to customers who purchase all of the pieces in their personalised order. The business was led by Lake from its founding up until Elizabeth Spaulding was named CEO in 2021. However, a mere 17 months later, the company announced in January 2023 that it was cutting about 20 per cent of its salaried employees, following a similar reduction of 15 per cent in June 2022, and that Spaulding was stepping down. Lake, who remains an executive chairperson, became interim CEO until Matt Baer was announced as Stitch Fix’s new CEO in June 2023, after previously serving as the chief digital officer at Macy’s and the vice president of Walmart’s e-commerce business before that. This marks a sharp contrast from 2017 when Lake became the youngest woman to take a company public at 34, until Whitney Wolfe Herd, the founder of Bumble, went public with the business in 2021 at 31. A few years later, Forbes estimated Lake was worth US$1.1 billion, making her one of only 19 self-made US female billionaires at the time, now it is estimated with the current struggles of the company Lake is worth around a more modest US$150 million. According to its most recent annual report, Stitch Fix had about 2,620 stylists, of which approximately a quarter were employed full-time. The leadership role of style leader was also cut in the most recent round of purse-string-tightening, but those affected are receiving severance, healthcare and career transition support, according to the company. Stitch Fix has a current total debt of US$140 million as of October 2023, stated by Companies Market Cap. According to the latest financial reports, the total debt is the sum of all current and non-current debts.