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MPW Next Gen 2020: Surviving and Thriving

October 15, 2020 00:00 AM UTC
- Updated June 07, 2021 09:49 AM UTC

Businesses are grappling with shifts to their core operations, managing teams through constant change, and responding to customer needs. We sit down with four leaders to discuss how they’re managing.

Transcript
I'm very excited to be joined by some of the start up executives who are determining what we're wearing on zoom and how we're designing our backgrounds for it. Please join me in welcoming and please ladies, raise your hand as I introduce you Nicole Gibbons, founder and Ceo of Claire, the Director consumer paint company. Mm agreed. Founder and Ceo of Good American, the apparel company that Emma co founded with Khloe Kardashian, Elizabeth Spalding, president of stitch fix, The Director Consumer, the public direct consumer retail and stylist company and Christina Istanbul, founder of Farm Gold Flowers, the director of super flower company. Ladies, thank you so much for joining us. I'm going to dive right in, but first a reminder that we would love to take your questions so please do put them in the chest. Um, Elizabeth, I'd like to start with you because the pandemic has been pretty brutal on the retail industry and stitch fix hasn't been immune. Now your overall sales and customer numbers have gone up this year, but the company swung to a loss. You had to shut down some fulfillment centers. In the early weeks of the pandemic, you have laid off workers to move stylish jobs, lower price cities and as such fix said last month, overall demand for apparel is undoubtedly not what it was pre covid. So what are you doing to reposition stitch fix for an era where so many of us are just wearing the same set of yoga pants every day? And what else do you need to do to keep gaining new customers and increasing sales? Yes. Well, first of all, Maria, thank you for having me and I love the topic of surviving, surviving and thriving. And I think we feel very much like that theme has been, um, at the cornerstone of the last several months. And so to your point at the very beginning of covid, you know, for us, first and foremost, it was about keeping our employees say figuring out how to operate in this new environment. Um, as you mentioned, we had a number of our distribution centers closed, we gave um all of our warehouse employees four weeks off of paid leave. And so that undoubtedly created a big backlog of our demand. And frankly, you know, some of our biggest issues were around that supply side of operating our business. And what we're very fortunate for is I'll be at that created this Disruption to your point. You know, our Q3 of our fiscal calendar was challenged just as the rest of retail was, but we believe like a lot of apparel was down 90% in those couple of months and We found ourselves only down about 9% in that time period and we would have actually been positive had it not been for those supply chain disruptions. So we've learned tremendously about, you know, how to operate in this new normal. And we feel really lucky. I mean, our model, um in many ways feels like it was made for this moment. You know, one big area is the ability to toggle our inventory um, to a point, and I I'm sure this was part of the dialogue with zoom is, you know, people are wearing different things and we already we're seeing that casualization of workwear, pre covid, and so we were very lucky to be able to, um, you know, sort of shut off received some things that we didn't think irrelevant and lean very hard into things like casual workwear and that's leisure. And then, you know, fortunately we were, we were very fortunate on not having retail stores that we had to manage through those closures. And so we really were able to start to go on offense and invest in innovation and meet the consumer in this moment where, you know, we already had, you know, a 10 year head start of helping people buy clothes sight unseen. Um it's kind of extraordinary, but Citrix has sold over $6 billion worth of apparel sight unseen. And so this world where we're seeking personalized shopping from home has been an area that we feel like we're seeing consumers really lean into. Um we shared in our most recent earnings um a few weeks ago that we actually saw our first fixed clients, Sinus in july and august up actually 50% which is the highest growth that we've seen since going public. And we really feel like people are leaning into our model and one of the big areas that were most excited about is our shopping experience. So historically, as many of you likely know, um the cornerstone of stitch fix has been just a tremendous convenience of signing up and having a stylist curator fixed for you and really do the work. But a lot of our consumers really do love to shop and they want to browse, they want to try new things. And so the combination of being able to rotate into the inventory that we think is relevant right now has been one area of excitement for us, but the other has been really innovating on the customer experience and bringing forward personalized shopping that removes the endless role, which we believe is the biggest pain point of e commerce and makes it just a tremendous personalized browsing experience. Um so those are some of the areas we're very excited about. I mean if anything, we believe that this is really our moment with tremendous amount of apparel shifting online. Um shopping may have gone down, but we think the tail went online very much outweighs the headwind and are just really excited to see consumers very much leaning into our personalized model. Great, thank you. Um I want to pick up on something that Elizabeth brought up the inventory control because you had two big new product launches over the summer. Two very different launches. There was swimwear um at a time when unfortunately not a lot of us are able to travel for vacation or go to the beach and then there are the always fits jeans that move as our bodies change, our weight fluctuates. They've been called quarantine jeans and they do seem very made for this moment. So can you talk about the development process process for both of these and how the pandemic affected the launch, the timing and then the reception of these two different product? Yeah, absolutely, thank you. It's really great to be here and being such a great company. So I'm excited to talk about all of this. Of course, you know, we never planned for a pandemic. None of us did, and I think ultimately what we've seen is that, you know, the pandemic has essentially just accelerated behavior. Everything that we knew was happening, it just happened a lot quicker. And so we're essentially living for the way I see it is that we're living in 2025 now. And so if you weren't shopping online before, you certainly are now, and sadly, I didn't have a crystal ball, I certainly couldn't pull back and what we're going to be two of our kind of, you know, a brand new category launch and then a fabric that we've essentially been developing the last two years we've always fit and so like everyone, you know, we really just had to pivot think on our feet. And one of the greatest things about good american is that since in section we really had this two way street with our customers where we constantly speak to them, we have an incredible community that gives us a lot of information when it comes to what categories we should be working in and how we can really make things better. And so we went straight out to our community and said, what do you want from us? And I think we swim. That was pretty unique because again, it has been something we're working on for a long time. And when you're coming into the market with a product and a size range as with everything that did, americans were entirely inclusive. So everything goes from, you know, double XL to a five x or double zero through two. A plus size 32 were always about innovation in products. And when you're doing that, you know, there's always a customer for it. And so when you look at swim, it was really filling a hole in the market. So we change nothing. Yes, of course, we understood that the habits of our customer has changed. But if you're really feeling the pain point and doing something that's unique in the market, the idea is to be steadfast in your beliefs. So I believe that there was still a customer that was there for that. And actually of course I was completely right because we had the single biggest day in the company's history um at the launch of swim, we've always fixed, I'd like to say, I'm glad people calling them quarantine jeans, but that never came from us that I wish I'd come up with that misty marketing and I could take full credit for it. So that's ultimately what our customers began calling it. Because the whole genesis of always sits is about, you know, the fact that as women, we do change sizes and I think the pandemic has shown up all that, but just in a regular month, for women's weight fluctuates and it can fluctuate, you know, £5.6 pounds, £7. It really depends on your size. And we've done an enormous amount of research that really shows that women, on average will change size is 32 times in their lifetime, whereas for a man, it's something like 24 25. So we knew that there was a real need for a garment that works with a woman's body in the natural weight fluctuation and of course, is in order comfortable. And to Elizabeth's point, we already knew in fashion, that we were seeing this huge casualization in fashion and always came at the right time. Again, I'd love to take full credit and say that we planned it. But it really was about fabric innovation and that's what we do constantly. And it just so happened to line up with the time that really worked for our customer. Um everybody knows that the fashion, the apparel industry has been hit really, really hard. All industries have, but I think that having that two way street that we've always had without customers has really benefited us in this time more than others, because we can directly communicate and say, well what do you want? You know, if it's not software for example, which was one of our biggest categories free pandemic, then, you know, then it sweats. And we've been very, very nimble and very quick to pivot what we have to do. And I think that's the great thing about being, you know, a directed consumer company that really embraces the feedback from its community. We've just been able to pivot where it's good at listening as we are innovating and we really really have to live and die by that in this, in this period. Wonderful Christina. I want to ask you about more of a personal challenge that you faced during this crisis. You had to pivot your company, but you also had to overcome Covid yourself. Um, how did how did getting the coronavirus affect your ability to lead? And how has it changed? How you think about managing your workers and protecting your workers? Yeah, I think that's a great question. So, you know, as you mentioned, I did have covid for about six weeks. Um, it was not one of those cases where you have no symptoms. I had a lot of symptoms. Um, and before that, um, you know, we have to shut down 90% of our operation within 12 hours and furlough almost 200 people. And you know, my my thought process is very much how do I keep my company in business? How do I get a return of as many jobs as possible, as quickly as I can. And, you know, it was always in my head that I needed to ensure I kept my team safe. But I was more focused on how do I keep their jobs more than, than safety. And then while opening another distribution center in Miami, I contracted the virus. And um, it hit me really hard and like I said, I had it for six weeks. And what I learned from that was, you know, while I need need to make sure we stay in business, you know, everybody's safety is the first school and um the C. D. C. And the government guidelines just aren't enough. They aren't, you know, unfortunate enough that If I'm out of work for six weeks, which I was and I was still working during that time, but you know, for our, you know, 200 wage level team members that work at our company, if they were out of work for six weeks and only paid for two, which is the guidelines for what you do as a company. How are they going to pay their rent? Um And so it really impacted, you know, our protocols and processes for covid. You know, we have people out with Covid right now, I mean with six different distribution centers, it's impossible not to. Um, but our processes now are different. Um, We pay, we want to make sure that, you know, if a team member sick, the only thing they need to think about is getting better, not about how they're going to pay their rent or utilities or have food for their families. So we make sure that we pay them for the full amount of time they're out. It's like aesthetic lasted six weeks for me can last a very long time. Um and then we also test our entire team every other week, and that is a huge expense for our company. Um, but it's something that we've decided is very important for us to make sure that we can catch things early, help prevent an outbreak so as few people as possible, we'll have to deal with it. Um, and so that's something that we do as well. Um and along with the cleaning social distancing. Uh mass things like that that are standard. We go an extra mile that way. Wonderful. Um and again a reminder that if you have any questions please to put them in the chat, but I want to go to Nicole now and ask, you know, As a paint company. It seems like Claire is in a pretty fortunate spot for consumer retail company. Um you told me that your revenue, your new customers, your repeat customers are all up more than 200% from the first to the second quarter. But um, but you're also a relatively small start up with a with a small team and I'm wondering what have been the challenges of this boom in demand and how have you addressed them? Yeah, I mean we are very lucky to be thriving in this environment and seeing some good growth, but it's not without challenges. You know, we had to, we made the tough decision to give up our office police. Um and we're all working remote. So that required a big transition. Um as a young start up, having to conserve our capital is really important because there's still so much uncertainty around covid and especially in the beginning, so we decided um and actually made a difficult decision to postpone a product expansion launch um in order to preserve more cash. Um, so, you know, there's definitely been some adjustments and then as it relates to the increased demand, just being able to quickly react from an inventory planning perspective so that we can keep up um and meet that demand. Um you know, as people are stuck inside and really want to improve their homes, pain is one of the easiest ways to transform your space. So a lot of folks are wanting to um you know to to buy pain and that's great. But we have to uh you know keep the paint stock in our warehouse and so it it was definitely a bit of a scramble at times, you know, just trying to keep up. But again, it's it's a good problem to have. I also want to ask about another one of the national crises that we're facing, the systemic reckoning over racism. Um You've been pretty outspoken and you used Claire's social media accounts after the killing of George Floyd to provide resources on how to be an ally, how to be actively anti racist, how to support other black owned businesses. I'd love to know what advice you would have for other executives about how to advocate for racial justice in an authentic and long term way beyond just making a statement. Yeah. In terms of advice, listen, I'm no expert, but I can speak from my own perspective. I just felt like, you know, there was a lot of generic, you know, we stand in solidarity with the black community statements and I felt like as a black female founder, I had um, an obligation to have a very different point of view. There are very few of us. Um, and even when you look at the bigger corporations, there, very few black ceos and um, so I really wanted to use the opportunity to educate and inspire people. Um, I felt like so many non black people wanted to help but felt helpless. So, um, I just sort of shared my point of view as not just a black ceo, but as a black person in America on here are some things that you can do to be an ally here, some things to be aware of if you want to create change here are some resources to help. Um you know, and I think in terms of advice, like I said, I'm not an expert, but I would just say be a little bit more thoughtful. I think a lot of companies felt pressured to respond quickly and that's why you saw a lot of the kind of same old statements and there wasn't a lot of context behind that, you know, because certainly you can stand in solidarity with the black community, but if there's no action plan behind that and no real way that you're going to help them still change within your own organization as well as within your community, there's no point. So just you know, take a take a beat um even if everyone else is sort of, um, you know, responding, I think just being really thoughtful and making sure that you have, um, a real plan of action because without that it's just more of a hollow kind of virtue signaling, you know, empty platitude and that doesn't really help. So, um, you know, really try to find ways that you can actually impact change even if it's on the smallest scale, like within your organization, increasing diversity or things like that. Um, and uh, yeah, so hopefully, um, hopefully we made some small impact with the content that we shared and I feel really lucky to have clear as a platform to do that. Emma, I wanna bring this conversation to you because I know you've said that you had a lot of founders and executives reach out and you had to perhaps give them some tough love. What what was your advice or is your advice about how to make a authentic and long term commitment to racial justice? Yeah, it's really interesting actually because you know, as a black female founder, you do become almost like this oracle of brightness and blackness and I, you know, I certainly don't think of myself like that. I'm also from England. So the perspective is very, very different I think from a company point of view. You know, I was so proud because I was one of the few companies that didn't have to or certainly fashion companies, they didn't have to run out and try to, you know, very quickly, you know, change their economy black models and try to balance things out from a perspective of now having a southern awakening. Good americans always had, you know, uh these values that the very core of what we do and it's nothing to do with marketing, you know, in our company. We have people of all ethnicities and from all backgrounds at every level of the company. And I think what I was hearing quite a lot was how do you do that and how do you mandate for it? And I believe that especially now companies that help is such a high standard. Previously found in good american. I worked in marketing and so for 10 years I've really been talking to band about how to be passive and I believe that that is really, really shifted in the last five or six years. People don't want passive grounds. We want our brands to behave as corporate citizens, good corporate citizens. And so to wear your heart on your sleeve to where your values on your sleeve is actually an enormous benefits. Your customers want to know where you stand and to not be shy to really think about it. As you know, I'm a person. What do I believe in and therefore what is reflective of the organization that we're trying to build and largely of our customer base. We were not active in any way in good american. We went out using our social channels, which are pretty meaningful, just how we felt and what we stood for. And I think it's been absolutely the benefit of us and the amount of customers that reached out and to your point, the amount of other CeoS and founders that reached out to me. And I was just very honest. You know, I just feel like you have to check yourself. You can't write a corporate statement, You can't start a, you know, uh, D and I committee in the office without the real intentions and the real basis and idea that you're actually going to make some meaningful change to put your money where your mouth is, how to your out of time. I'm sorry, but I think that's a great note that thank you so much.