Stitch Fix is under pressure to increase its men’s business as a public company

December 21, 2017

Right now, Stitch Fix’s brand awareness among men is “de minimis,” according to CEO Katrina Lake. Meanwhile, Stitch Fix data shows that around 40 percent of women are familiar with the brand. Now operating under the gaze of Wall Street investors, Stitch Fix is taking a crack at growing its menswear business, in order to essentially double its profitable customer base.

In September 2016, the company launched Stitch Fix Men, a category expansion that would cover the remaining half of the population not served by the data-driven online styling and e-commerce service for its first four years in business. While Lake acknowledged that in general, the menswear market is about two-thirds the size of the overall women’s market, she said that initial size in the category’s first year surpassed the speed at which its women’s market grew in its first year.

“Our existing infrastructure and data science platform for personalization allows us to extend quickly into new markets,” said Lake to investors on Tuesday during the company’s earnings call for the first quarter of fiscal 2018. “Where we are in the men’s business now, one year in, is so, so, far beyond where we were with women’s one year in.”

Lake attributes that quick growth to Stitch Fix’s existing data algorithms and infrastructure. Mike Smith, the chief operating officer at Stitch Fix, projects that in two years, the men’s category will be “at scale.” As the category matures, the company is looking to build both its men’s inventory by investing in exclusive product, sharing valuable customer data with its outside brand partners, and targeting men with a brand that’s based on personalization, not gender.

“The way men interact with a brand as it relates to product assortment and discovery, there’s not much difference [than women],” said Smith. “Men aren’t really posting their Fix ‘unboxing’ on Instagram the way women are, but we hear from them that discovering brands is fun, getting new styles is fun. Both the size and profitability of our existing women’s business allows us to be more broad with our assortment, in terms of price and aesthetic, which lets us grow faster.”

Right now, Stitch Fix’s men’s business is held back by itsinventory size. The category operates out of two fulfillment and distribution centers, as opposed to the women’s six. Smith declined to lay out a timeline for how quickly it could increaseits inventory to investors, but said that it planned to add one more distribution center in the next 12 months.The strategy, he said, is to lead with the inventory investment, and then let the customers follow.

“We’re building a brand based on feedback and data, and establishing an inventory that meets that demand,” said Smith.

What that looks like is a blend of exclusive product, which is a combination of product designed and made in-house by Stitch Fix as well as designed with a brand, and inventory supplied by brand partners. Stitch Fix has found that exclusive brands are growing faster in the men’s category: After launching with one exclusive brand for men in 2016, the number has grown to 10. Smith added that three of the top 10 best-selling men’s products are Stitch Fix exclusives.

He attributed Stitch Fix’s exclusive brand success to the important role fit plays in long-term brand loyalty for men. Stitch Fix’s customer database has shown that fit is the most important quality when it comes to customer satisfaction for men, and thanks to its data algorithms, Stitch Fix has developed a set of data point, which it calls a “tech pack,” to figure out how to design shirts for men of different sizes, like XXL or under 5’9. This tech pack is then shared with brand partners to take into consideration when designing either Stitch Fix exclusive products or their main lines, which improves overall inventory.

With its inventory process in place, Stitch Fix’s biggest challenge is raising more brand awareness and marketing to this customer. Overall, Stitch Fix’s growth has been sourced mostly from word of mouth — the company only started ramping up its paid marketing efforts in 2016. But as Smith said, men are less likely to spread the word about Stitch Fix, so the company has to figure where best to meet them.

That, so far, has been on Twitter and through TV advertising. Stitch Fix launched a TV ad campaign that’s focused on its menswear business and runs on channels that count at least half of its viewership as men.

“You have to talk to guys differently, but we’ve always thought that this wasn’t a men’s or women’s business, it’s just a better retail experience,” said Smith. “Our brand is personalization, and guys want that, too. They want things that will fit them and be higher quality, and that’s something they’re not finding in the current retail market.”