Vuori

It’s a good time to be a direct-to-consumer brand.

With brick-and-mortar retailers around the world forced to close their doors for weeks — and those being allowed to reopen faced with a list of restrictions — brands with a proven expertise communicating with, and selling directly to, consumers have stepped in to fill the void. Just ask Amazon, which has proven to be one of the biggest winners during the coronavirus pandemic.

Shoppers who have found themselves with more time on their hands as they work and play from home are also open to trying new labels they’ve discovered as a result of the ramped-up marketing efforts of these d-to-c experts.

Overall, online sales are up 39 percent since February, according to marketing platform Klaviyo, with 46 percent of consumers buying from new brands. And from March 15 to May 13, apparel sales increased 29 percent as compared to the pre-coronavirus period of Jan. 1 to March 1, the company said. These online trends are the polar opposite of those in the few brick-and-mortar retailers allowed to stay open, with both Walmart and Target pointing to steep declines in apparel sales in their stores as one of the reasons their profits suffered in the first quarter.

Other research firms have also seen an uptick.

In a recent survey by S&P Retail, organizations that derived 50 percent or more of their sales from online services appear to be faring better during the crisis than those that focus on in-store sales.

“The change to the retail industry was swift and while the popularity of e-commerce has continued to grow, COVID-19 made it a necessity,” said Allison Auclair, vice president of commerce product management at Oracle NetSuite. “With our customers, we’ve seen online order volumes more than double compared to the same period last year. The number of unique shoppers has nearly doubled, indicating that retailers are both retaining existing customers and finding opportunities to reach new ones. Our data for apparel and men’s wear retailers show that in March online orders were down 22 percent year-over-year, but April showed a rebound with orders up 50 percent year-over-year. As the demand for online shopping continues to surge and consumer expectations shift, it’s going to be even more important for retailers to have complete visibility into their business so they are able to adapt quickly.”

In the men’s wear arena, like every other apparel sector, shoppers are embracing brands that specialize in essential basics and activewear — perfect stay-at-home apparel — but they’re also buying tailored clothing so they can look good when the restrictions are finally lifted — or at least their top half can on those corporate Zoom calls executives are making these days.

Rhone significantly increased its communication with its community following the outbreak of the pandemic, according to Nate Checketts, cofounder and chief executive officer.

“First we focused on keeping our team safe and then we focused on how we could provide value to our customers at this time,” he said.

So instead of detailing that its own small number of retail stores were closed along with those of its wholesale partners, or offering steep corona-related discounts on product, Rhone took a different tack. It ramped up content on its blog, offering an essay by C.S. Lewis that was written in 1948 on living in the age of the atomic bomb, as well as recipes, tips on how to cope with anxiety, and more than 30 days of at-home workouts.

“We asked, ‘What’s the COVID[-19] e-mail you want to get right now,?” Checketts said.

Rhone was also the leader in creating Brands x Better, a consortium of labels that banded together to donate 2 percent of sales, or 10 percent of proceeds, to a charity or nonprofit related to the COVID-19 crisis. Initially, 24 brands signed on, including Knot Standard, Boll & Branch, Cotopaxi, Greats and Faherty, but within the first month, 120 companies had agreed to participate and the group has raised more than $3.1 million in donations so far, Checketts said.

The initiative was so well received that its initial end date of May 1 was extended, Checketts said. “We were so blown away by the impact, that we said, let’s just keep going. Some brands weren’t able to extend, but we added more and actually had to close down the application process.”

Whether as a result of Brands x Better or its own efforts, Rhone has performed well during the pandemic, selling mainly its loungewear and technical activewear directly to consumers. However, Checketts admitted that one of the company’s newest pushes, the Commuter collection of dress pants and shirts, which had been a big growth area before the pandemic, has experienced slower sales as consumers stopped commuting.

In addition, the brand has seen a major increase in the cost of air freight to ship its product to the U.S., and is expecting a heightened promotional climate once stores reopen and retailers work to sell off what has become aging inventory. But on a brighter note, Rhone has not seen a disruption in its supply chain since most of its factories in Asia are fully operational.

“It’s a really difficult time but we’re going to come out of this, we’re not giving up,” he said. “And we’ve discovered just how much we care about our customers, employees and suppliers, and that just doesn’t happen when you’re not in crisis.”

E-commerce has always offered convenience, but now it may be the safest way to shop,” said Greats cofounder Ryan Babenzien.

The New York City-based sneaker brand launched its Royale Court High sneaker during the lockdowns in April, which was the brand’s best sales month this year.

“In April, we did things that we never do,” he said. “We [ran] a 25 percent sale and people realize this is a better deal than normal. We also partnered on a Brands x Better coalition to donate $15 from every order to City Harvest and we’re doing that through May, which is on pace to be similar to April.”

But while business may be up, Babenzien remains cautious about the future.

“There are so many areas that are being affected. Retail is closed, people are afraid and have less money to spend. We’ve reset our forecast, we’re not taking in as much, and not opening more wholesale,” Babenzien said. “We want to see what the beginning of the recovery looks like before we take any big bets, but the adjustments have been made to accommodate for a smaller economy. Three months ago, you wanted something and wanted it now, but now we’ve learned patience as a society. There’s nothing in fashion you need immediately, including sneakers.”

Bonobos, one of the first direct-to-consumer men’s apparel brands, also switched gears to adapt to the change in demand. Ceo Micky Onvural said after the company was forced to close its Guideshops retail stores, it increased e-commerce engagement on its digital Guide Chat, and pivoted retail employees to serve as brand ambassadors on Instagram.

Onvural said that one-third of the company’s business comes from its own stores as well as from Nordstrom, its major wholesale partner, but two-thirds still comes through e-commerce.

“We’re truly an omnichannel business,” Onvural said. She did not reveal sales for the year-to-date, or for March and April, but said, “I like to think that we’re better positioned than most. The first few weeks were extremely challenging. Chapter two was reestablishing the business and this is now climbing back into a new normal for our business.”

Part of that new normal is a shift in what is being purchased. “In earlier parts of this year, our tailored business was on fire. With no one going out, it’s taking a major hit,” she said. ”I think COVID-19 is accelerating something that’s been happening already, which is the casualization of the workplace.”

Vuori, too, is managing to navigate effectively during the pandemic.

Joe Kudla, founder and ceo of the California-based men’s brand, was among the first to close its five retail stores in mid-March and immediately pivoted back to its direct-to-consumer roots.

“We entered the lockdown with fear,” he admitted, but made the decision to move forward with its marketing plan rather than cut it to save money.

“We held to our budget and it turned out to be a blessing,” he said. “After one week of an e-commerce downturn, the cost of ads was cut in half and we started seeing a big response.”

Really big, according to Kudla, who said total sales through the end of April are actually up more than 400 percent over last year.

The only thing that changed was the marketing message, he said. So instead of focusing on the outdoors, the brand quickly developed new creative highlighting comfort and versatility and the product applicable to how they’re living today.

“You want to look good but be comfortable,” Kudla said, “and that’s really resonating with the customer. Sweatpants are our fastest-growing category in men’s, up over 800 percent over last year,” he added. “So we’re definitely making up for the lost revenue of our closed stores and looking at more upside than we originally had in our most-favorable plan.”

He said Vuori has not gone promotional and even kept its wholesale partners from including the brand in their discounting binge. And fulfilling supply has not been a problem. “We were able to get spring/summer inventories in our warehouses right before the lockdown, and while we saw some delays in pre-production of our fall samples, there are no delays in our factories.”

So while Kudla is itching for the economy to be restarted, he said Vuori’s “very intentional” strategy shift, which included social media posts that offer digital workouts, fitness tips, recipes as well as a series of conversations with filmmakers, surfers and other interesting individuals, have also engaged customers, he said. “It’s been very successful and we may shift our marketing strategy to this on a go-forward basis.”

Daniel Shapiro, founder and ceo of Fourlaps, a men’s activewear brand, had the good luck of creating a co-branded collection with Peloton last fall that has continued into this year. Peloton, the at-home fitness company, has benefited immensely from the pandemic, notching more than 19,000 subscriptions a week on average as of May 11, according to a Cowen and Company report.

Fourlaps

A look from Fourlaps. 

“We have an ongoing collaboration with Peloton, and their business is quite strong,” Shapiro said. “They’ve been fantastic partners.”

As a result of the Peloton partnership, along with Fourlaps’ collection of active-inspired, comfortable clothes, the company has managed to persevere. “Running and being outdoors is one thing people can still do and they’re looking for things to work out in and for their overall comfort,” he said. “People are feeling a sense of the unknown and our products make them feel more comfortable.”

He said that with the exception of some minor delays in production due to factory closures, and a major uptick in the cost of air freight, the brand has managed to keep its merchandise flowing. And it is continuing to bring its message directly to customers by speaking to them about topical issues. That includes an initiative tied to mental illness where Fourlaps is donating 20 percent of the proceeds from its bestselling Bolt short to the National Alliance on Mental Illness of New York during the month of May, and an ongoing push toward sustainability with a goal to use only recycled materials in its collection by 2024.

Shapiro believes issues such as mental health and sustainability, that are being brought to the forefront during the pandemic, will be long-lasting, which bodes well for Fourlaps. “We have a heavy d-to-c presence and a great partnership with Peloton, so we’re cautiously optimistic,” he said.

Keith Nowak, cofounder of the activewear brand Ten Thousand, has also experienced strong sales during the pandemic. Sales for April were up 140 percent year-over-year and 20 percent over March. “What we thought would be a bumpy road has continued into May as well,” he said. “We’re up 20 percent over April.” Nowak attributes the uptick to the loyalty of its customers.

“In mid-March, we made moves to try and insulate ourselves,” he said. “We dialed back our marketing to enhance our profitability and realized that if our funding or consumer demand dried we, we could still operate with just repeat business.”

What these customers are responding to are the stretchy, comfortable clothes that are the hallmark of the brand. Nowak said its shorts and other essentials targeted to at-home workouts are outperforming its gym-skewed pieces for obvious reasons.

Ten Thousand's session shorts.

Ten Thousand has seen its shorts sell well in the past few weeks.  Courtesy Photo

And the brand has not been impacted by any supply chain disruptions. “Before this started, we were focused on diversifying our supply chain out of China to Vietnam and Colombia and that’s worked out well,” he said.

Looking ahead, Nowak said Ten Thousand is in the process of raising more capital from its existing investors and is still hoping to do a full Series A round later this year or early in 2021. The brand so far has raised $5 million from angel investors including Brian Spaly, cofounder of Bonobos and Trunk Club; Dave Gilboa, cofounder of Warby Parker; Philip Krim, cofounder of Casper, and a variety of small private investment firms.

But even without that any further funding, Nowak is optimistic. “We’ll be stronger when we come out of this and be more nimble and efficient as a company. Business will get back to normal — people have relatively short memories — and health and wellness will continue to be important which should accelerate our growth even further.”

Landon Nash, founder and ceo of Tact & Stone, a new men’s essentials brand centered around sustainability, actually launched its business three days before the lockdown. Since then, it has changed its messaging to focus more on the essential nature of the collection rather than sustainability, which he said is “nice to have, not need to have at this point” for most people.

Its top-selling items include a hemp T-shirt that is blended with cotton, as well as the brand’s structured sweatshirt and hoodie. Most of the line is produced in Portugal, and there were some minor disruptions, but the company has enough supply of its core product, he said.

Overall, while the business is still tiny, Nash is pleased with how it has performed in the past few weeks. “We’re pretty happy with where we are,” he said.

But he admitted that it’s hard to acquire new customers since people tend to buy from brands they know in uncertain times. “And we were in the process of raising our first round of capital, but those conversations are on hold for now,” he said. “The blessing is that we’re really lean and if we had just raised money and hired a big team, we’d be in trouble.”

However the pandemic “offers perspective on what’s important and gives us the opportunity to build a different company, so I’m cautiously optimistic.”

Steven Borrelli, founder of Cuts, a men’s basics brand, is expecting a growth rate of between 200 and 300 percent over last year since the lockdown.

“March was a little down. It took a 20 percent dip in the last two weeks, but in April, we were able to come back,” Borrelli said. “We’re expecting another good run of sales in May.” And he’s also hoping for an uptick when the brand launches polo shirts on June 10.

Borrelli raised capital for Cuts through a Kickstarter campaign in 2016, and launched the brand in 2017. “We didn’t lose a wholesale or retail program, or have any excess inventory,” he said. “We’ve been able to adjust to the demand. Listening to customers during this period has been so important to us. Being digitally native helps for the success of brands.”

Interestingly, it’s not just basics and active brands that are seeing an increase in business. Even several direct-to-consumer companies focused on dress-up apparel are benefiting from the closure of brick-and-mortar retailers.

Indochino, a made-to-measure men’s brand, said when it was forced to close its 52 showrooms in North America in March, the company “made a decision to transfer our focus to online. That’s our roots and where we started our business. Retail was secondary,” said Drew Green, ceo of the Vancouver-based company.

Since the store closures, Indochino has launched Virtual Style Consultations where customers can book a 30-minute virtual appointment with a stylist, who can help them design a suit or sport coat.

“People feel good when they shop online,” Green said, “and it’s fun to build your own garment.”

He added that the e-commerce business has “exploded” over the last two months as people have been forced to work from home, and Indochino has benefited. “We’re re-creating our showroom experience online,” Green added, saying that in less than a week after the program launched, the company had booked close to 200 virtual appointments.

Green expects to continue the service even after the showrooms reopen. “We see Virtual Style Consultations becoming a third experience for us to grow and optimize in the months and years to come,” he said.

An Indochino showroom in King of Prussia, Pa.

An Indochino showroom in King of Prussia, Pa.  LILY HOPE WOKIN

Green added that he believes Indochino is “uniquely positioned to be even stronger coming out of this. I think customers will remain wary of going into stores and trying on what other people have had on. But we don’t have inventory like Tailored Brands, Macy’s or Suitsupply, so it shields us. And we’re seeing new and legacy brands moving to an appointment model and we’ve been doing it for five years.”

The only downside is that Indochino’s normally robust wedding business has withered away. “But maybe the spring weddings will become the fall weddings,” he said. “We’ll see.”

Knot Standard, which also utilizes a showroom model for its custom tailored clothing business, has relied on its online arm to spur sales during the pandemic.

“As things unfolded, we knew we would lose our 10 locations, so we leveraged our virtual appointments,” said John Ballay, cofounder and ceo. “We have 80 people on our sales team, so we transitioned them [to virtual selling.] It’s fairly natural as the doors were closing.”

He said the customer response has been better than expected. “We were pleasantly surprised the customers were willing to go through virtual appointments,” he said.

Top-selling items during the pandemic include the brand’s custom casual items such as button-down shirts, chinos and polos. Suits, while still selling, are not performing as strongly as a year ago, he said.

The Knot Standard Website.

The Knot Standard web site. 

At the same time, Knot Standard, which has received investments from Provence as well as Traub Associates since its founding in 2010, moved to support health-care workers during the height of the pandemic. Not only did it join the Brands x Better coalition, it also worked with its Chinese partner on making and distributing medical-grade masks, and created a Community Coalition where it teams with unrelated businesses such as restaurants and coffee shops around the country on a dual gift card program.

Colin Hunter, president of Alton Lane, another custom suit maker, said since its stores and wholesale accounts shut down, the brand has been doing all of its business online.

“We had to jump in and figure out how to engage remotely and virtually,” he said. He had around 8,000 swatches sent to him from the company’s mill partners that were distributed to customers directly and also digitized as a swatch library.

Alton Lane also launched custom sneakers six weeks ago and “we saw a large amount of business” in that new category, he said.

And although sales have dropped as customers were “thinking of protective suits, not custom suits,” Alton Lane is remains upbeat. Businesses will reopen, weddings will go on and the unemployed will need to buy suits so they can look their best on interviews, he believes.

“It’s a brutal climate for retail and nobody has a crystal ball on what will happen with traffic and spending, but we’re staying measured and positive in our approach,” Hunter said.

D-to-c suit brand XSuit also posted positive results in March and April despite COVID-19. Cofounder Max Perez said April was its best month this year followed by March, but it was the company’s shift in focus to mask production that propelled sales growth.

“Because of the diversity and background of the people we have in our company, you get very creative and different ways of thinking,” Perez said about his company, which has teams in Miami, where XSuit was founded, as well as New York City, Los Angeles, Hong Kong, and Shanghai, where Perez had been for the past few weeks.

XSuit is still developing advanced masks, but it’s also planning to offer a new utility suit at a more accessible price point, and will branch out into ath-leisure women’s wear.

“We’re definitely working hard to stay on top right now and keep releasing products,” he said.