The fashion industry is in the doldrums, with store closings and bankruptcy filings from department stores and specialty retailers. But there’s one hip fashion that the industry is banking on: data.
Consider online personal stylist clothing box service, Stitch Fix. The San Francisco-based company, founded only in 2011, filed an S1 filing on Thursday to become a public company after its fiscal 2017 revenue jumped 34% to nearly $1 billion from a year earlier. That's more than 10 times fiscal 2014 revenue of $73.2 million. While most startups are still deep in red ink, Stitch Fix has posted operating income in each of the past three years. The number of its “active clients” has also jumped nearly 10 times to 2.19 million as of July 29, with a repeat rate of 86%. Four years ago, its active customer count was 261,000.
Online traffic in the general subscription box space declined 3% in September from a year earlier, according to Hitwise data. That includes a 20% drop at meal-kit company Blue Apron. But Stitch Fix’s traffic more than doubled during the same period, outpacing even the 45% increase in the overall apparel subscription space, Hitwise said.
The Hitwise data showed that Stitch Fix was the third most visited online subscription site in September, generating 3.12 million visits in September, up from 1.4 million in sixth place in January.
Its secret sauce? The “over 85 meaningful data points” its customers willingly provide the service, including basic information such as their style, size, fit or price preference, as well as offbeat details such as which parts of their bodies they would like to “flaunt or cover up,” their social media account links, or for guys specifically, their “fit challenges” such as a shirt collar being too loose. Once the data is crunched, a team of some 3,400 mostly part-time stylists add human-touch input to come up with fashion choices aimed at pleasing individual clients and enticing them to buy, and not return, their choices.
“Brick-and-mortar retail has changed and the era of salespersons who know each customer on a personal level has passed,” said Stitch Fix in the S1 filing. “Today’s consumers view the traditional retail experience as impersonal, time-consuming and inconvenient…. Many brick-and-mortar retailers have failed to adapt.….We are reinventing the shopping experience by delivering one-to-one personalization to our clients through the combination of data science and human judgment.”
Indeed, the world of fashion and broadly, retail, is no longer just about art or intuition. While reading the trends right is key, getting data about customers from many different points is increasingly important if retailers hope to attract, please and keep customers.
“Data science" was mentioned some 64 times in Stitch Fix’s S1 filing and “algorithms” came up 76 times. The company also made note of its team of over 75 data scientists, many of them with Ph.D degrees.