Indochino finds its perfect fit
From leather bags, suitcases and purses to sneakers, beach towels and stationery, millennial consumers are embracing personalisation with gusto. And now Indochino, one of the world’s leading customisation retailers, has recently entered the Australian market.
“Five years ago, custom, bespoke and made-to-measure were just on the cusp of becoming mainstream and we really led that charge and we were really able to get some great partners behind it and raise capital of over $100 million to really create a global brand,” CEO Drew Green told Inside Retail Weekly during a recent trip to Australia.
“We’re one of the fastest growing apparel brands in the world now and we’re the fastest growing retailer in Canada. We’re a nine-figure revenue company. From 2015 to 2019, our average growth rate was 44 per cent. It’s a high-growth business and a lot of it has to do with retail expansion in the US and Canada. A bit is also the growth we’ve experienced online.”
Now, Australian customers can shop from a specific localised Indochino site in local currency, although the plan is for showrooms to eventually open.
“Right now, we want to learn about the customers in Australia and when we have that data, that will inform the plan – how quickly we roll out, where we’ll launch [showrooms] in what parts of Sydney and Melbourne, etc. There is no definitive plan, there’s no flagship announcement coming up, but part of the reason I’m here is to look at different locations,” Green explained.
“Right now, Australia is probably 1.5 to 2 per cent of our business. That’s all organic. Up until June, we hadn’t marketed within the country.”
The Vancouver-based menswear brand launched in 2007 and was one of the first customisation businesses in the world. It first began as an online business, then in 2014, it opened physical showrooms, which now play a significant role in the business. In fact, the 49th showroom just opened in New Jersey and this time next year, that figure will reach 75 in North America, said Green.
Indochino customers can either create a suit, shirt or chinos online or book a one-hour appointment with a style guide in one of the showrooms. Customers can design their own suit based on hundreds of different customisations, such as the colour, buttons, lining, fabric pocket flaps and peak lapels.
At the moment, it takes two weeks for Indochino’s suits to be made and delivered from its factories in Dalian, China, but by the end of the year, customers will be able to choose a one-week delivery option, said Green. Last year, the brand shipped to around 110 countries around the world.
“Supply chain is such a complex business. If you walked into the store down the road, there’s inventory, it’s all been ordered in advance and it’s at the back, very simple,” he said.
“We’re not simple. We don’t have inventory, our showrooms are appointment-based. It’s an awesome experience, but once the order is placed, it’s complex and doing it at mass and scale is really hard and, frankly, expensive. It’s taken us well over a decade to become as good as we are, and we’ve invested quite a bit so we can be a generational and iconic brand.”
The future of custom
According to Green, the current suiting landscape around the world is particularly exciting, as a lot of new brands are entering the market.
“I’m a big fan of Suitsupply. We’re on the same type of level with them in terms of global opportunities. There are local brands like Institchu that we’ve been watching for years – and I know they’ve been watching us. I think it’s an exciting time because it is all changing,” he said.
“Our number one customer are millennials, 20- to 35-year-olds. Google personalises their searches and Netflix is personalised based on what they watch. They’re used to living in a personalised, custom world, and we’re the perfect fit for that. We’ve got opportunities and advantages over some of the legacy [suiting] brands that we zone in on, and it’s one of the reasons we’re so successful.
Meanwhile, Green believes that custom has finally hit the mainstream and in five to 10 years’ time, consumers will be wearing more made-to-measure items, such as T-shirts and jeans.
“One of the biggest challenges for apparel overall is fit. I’m 6’3’’ and I can hardly walk into a store and find something that fits. It’s not just about tall people, it’s different measurements. If something fits well, it’s a better garment,” he said.
In fact, by the end of September, Indochino will be expanding its product category to include outerwear such as trenchcoats, overcoats and hoodies, all made-to-measure.
“We think the overcoat category could be bigger than our hero category, suiting. We’ve been working on it for over a year in terms of the scale of launch, so we’re super excited about it. That will be available in Australia, too. There will be wool, cashmere, trenchcoats will have hoodie combinations and there will be lots of different fun stuff,” he said, adding the outerwear range will be a major focus for the brand in the future.
The limits of online
These days, a lot of pureplay businesses are now coming to the conclusion that a physical presence is often necessary to attract more customers and increase conversion. However, it’s a realisation that hit Indochino five years ago when it first began opening showrooms, said Green.
“I think the biggest challenge for an online-only business in terms of scale is customer acquisition. It’s almost like every online-only business reaches a point where they can’t operate or continue to grow because the cost per customer is too high and they can’t get it down,” he explained.
“That wasn’t different for us – we had a really high customer acquisition cost in 2014, and we realised that there was a whole set of customers who wouldn’t buy our product online. They wanted to see it, feel the fabric and get advice, so for us, the showroom was about introducing the experience into the mix and helping us really get the brand out there.”
Since the launch of the showrooms, brand awareness in North America has tripled and while it’s currently quite low in Australia, through both online and eventually showrooms, that will grow, predicts Green.
“In North America, 85 per cent of all retail still happens in Australia. I think it’s 88 per cent in Australia. If you’re online-only, you’re not serving the whole market. For us, we understood that retail needed to be a big part of our strategy.
“And when you launch retail in a differentiated way, the metrics are different – the customer spends more, they’re more loyal to the brand, they come back more often and their lifetime value is higher.”
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