The Art and Science of the New Retail Landscape
YPO member Katrina Lake’s shopping platform is more personal than a personal shopper.
It is no big reveal that a vast majority of our time is spent staring at screens — working, reading, communicating, shopping — our devices have become a bridge between our virtual lives and our “real lives.” In actuality, the gap between what happens online and what happens IRL (in real life) is closing faster and faster as technology becomes more and more personalized. In the field of retail, few have done this better than the online personal styling company Stitch Fix — a brilliant amelioration of the shopping experience.
The first fashion retailer to blend expert styling and data science, Stitch Fix delivers a truly personalized shopping experience to clients from the comfort of their homes (or offices or subways or boats or planes). Founded in 2011 by CEO Katrina Lake, the fashion startup’s simplicity belies its brilliance: users fill out a Stitch Fix Style Profile — a detailed questionnaire about their style, fit and pricing preferences — then a stylist picks out five clothing items and accessories, ships them to the address provided and the recipient buys what they want; returns the rest for free.
In 2017, Lake took Stitch Fix public — the only woman to lead a tech IPO that year — and one of the youngest female founders ever to lead a company into the public markets. Valued at more than USD3 billion and boasting 2.7 million active customers, Lake says her retail disruptor is less about tech innovation and more about human personalization.
“We’re not trying to guess what people want based on clicks or what they put in their cart, we’re actually listening to what people tell us,” says Lake. “People can tell their stylists, ‘I want a dress,’ or, they can give us direct feedback, for example: ‘I liked this shirt, but it was too small … I wanted to buy this bag, but it was too expensive.’ That’s high signal, usable data.”
“I think people have gotten so focused on getting any information they possibly can instead of focusing on the actual quality of the data. Tracking what you’re looking at, analyzing your tweets … that’s not the conversation we’re having; we’re using technology to accelerate getting to know and truly understand our clients so when they share with us, we can give them an ever-better experience.”
For Lake, the challenges around data are all about figuring out what insights are important to a particular product category, then using customer feedback to better understand client concerns.
“For us, specific pieces of data are more important than others,” she explains. “For example, a man’s button-down shirt is going to have very different concerns than a woman’s dress, so we’re constantly drilling down to figure out which attributes really matter to people the most.”
Stitch Fix’s most recent innovation is Style Shuffle — an app that allows users to vote on items using a “thumbs up” or “thumbs down.” Again, a deceptively simple solution for finding out what her customers like and dislike and using that to inform apparel strategy.
“The core of our business is personalization, so we’re always iterating to figure out more ways to help people express their style and desires,” says Lake. “The more we get to know our products and the more we get to know our clients, the better matches we can create.”
The end of the (retail) world is not nigh
While the term “retail apocalypse” doesn’t seem to be going away any time soon, experts like Lead Retail Analyst Charlie O’Shea claim, “A day of reckoning is coming.” Perhaps that reckoning is nigh. According to the National Retail Federation, May 2018 retail sales increased 5.6 percent over last year with online and other non-store sales up 9.1 percent year-over-year and clothing and accessory stores up 8.2 percent year-over-year.
“Everyone talks about the retail apocalypse as if people aren’t ever going to buy clothes again but that’s crazy,” Lake says. “There is no apocalypse happening in apparel. What we’re seeing has to do with the United States being over-developed in terms of retail space, which needs a bit of correction; the reality is that apparel retail is thriving, growing and expanding.”
And while Stitch Fix remains strictly e-commerce, Lake envisions brick and mortar as an egalitarian partner, with each entity offering very different, but equally beneficial experiences.
“Apple stores are places where you get incredible customer service,” she explains. “Nike stores give you the opportunity to experience the brand. There are all kinds of reasons for stores to exist that don’t have to do with an actual transaction. On my end, what I see is people gravitating toward experiences that are first and foremost convenient, while also being enjoyable and interesting.”
The new retail trifecta
While an article in “Women’s Wear Daily” in April 2018 claimed, “Retail is no longer art, but rather a science,” the sentiment seems fairly hyperbolic. Retail has always been something of a science — a combination of understanding products and trends and having the wherewithal to get it into the hands of the right people.
As Lake puts it: “The science has always dictated whether you have a healthy retail business or not. I think there’s a misconception that the apparel world is filled archetypes from ‘Devil Wears Prada,’ where everyone stands around exclaiming, ‘This is the color! This is the silhouette!’ The reality is that you can be a savant about what’s happening, but if you can’t manage your inventory, you’re going to be out of business.”
Perhaps the new retail reality then is a combination of art plus science plus technology equals a trifecta of tools to help buyers do their job better than ever.
“What’s different today is that buyers are able to focus on trends, on all the things people are going to be excited about, while being armed with data which enables them to give better customer experience than ever before.”
And if this article hasn’t yet convinced you that Lake is of the most influential young people working today, perhaps you’ll take “Fortune’s” word for it — Lake just graced the coveted “Fortune” 40 Under 40 list and from the sounds of it, she’ll be making this list (and many more) for years to come.