Nothing at TechStyle Fashion Group is done on a whim.
The company operates a multibrand portfolio of subscription-based businesses that includes JustFab, ShoeDazzle, Fabletics and FabKids out of headquarters in El Segundo, Calif. Its operations total 2,000 people globally with five offices, three fulfillment centers, about $650 million of revenue and is profitable. There are also plans to launch two more brands in the next 18 months, which could help as the company plots hitting more than $1 billion in sales in two years’ time.
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“What’s different about us is we really are a data-driven fashion company,” Jack McCue, TechStyle Fashion Group president of global production said. “So, while we do have the subscription model, which we refer to as membership, we believe that the loyalty and engagement from that creates a very unique one-to-one relationship with our customer.”
That loyalty translates into members coming back to the company 20 times annually to make a purchase, with those transactions accounting for 80 percent of TechStyle’s monthly sales.
The subscription service has VIP members take a quiz. A curated selection of items is then queued up in a member’s boutique based off of the quiz responses and then they have until the 5th of every month to either make a selection to purchase or opt out of buying.
“The unique thing about the membership when it comes to creating the design, production and planning segment is that we can predict our inventory to about a 97 percent success rate,” McCue said.
The company’s tech-first approach and expanding portfolio of brands prompted its name change from JustFab to TechStyle earlier this year in a bid to create separate identities from its JustFab shoe brand and the corporation.
The company sees sell-through rates of about 66 to 70 percent in an eight-week period with a 4 percent return rate. Its systems are smart and help them merchandise their businesses’ inventory so that, for example, customers in warmer-weather areas see relevant merchandise pushed to the top of what gets played up in their individual boutiques.
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TechStyle’s three-year-old ath-leisure Fabletics brand, which counts Kate Hudson as a cofounder and creative director, is its fastest-growing line with about $275 million in sales expected this year and a play at bricks-and-mortar retail with 18 stores and counting.
Fabletics doesn’t require large retail footprints as TechStyle’s JustFab or ShoeDazzle would need to allow for space to keep shoe stock in the back of the house. Clothing can be folded and stored using less square footage, McCue pointed out. At the same time, the company gleans even more data at brick-and-mortar, tracking what VIP members try on and put back.
“We actually are using our retail stores as data entry centers for our VIPs,” McCue said.
The company, with the success of those stores, now plans to open about 100 more over the next two years. It will also push into casual shoes for Fabletics in fourth-quarter 2017.
Meantime, TechStyle’s JustFab brand, which started off in shoes, will see a continued increase in apparel until clothing eventually reaches a projected 50 to 60 percent of its overall sales in the next two years, McCue said.
“We utilize data in a way that I’ve never seen in a fashion company before, between designing into what a customer wants, planning how many times a customer buys [and] understanding the sizing of a customer,” McCue said. “So we really have that unique, one-to-one, data-rich relationship with our customers.”