NEW YORK, United States – Many entrepreneurs launch businesses with the intention of “filling a white space in the market,” meaning exploiting a product category where competitors are few.
But white space exists for a reason. While consumers may complain about the lack of options in certain apparel categories – in particular, plus-size, maternity and special-occasion attire – these markets come with real challenges for those trying to tap them. “A white space is a double-edged sword,” says Shira Sue Carmi, founder of Launch Collective, a New York-based firm that advises emerging fashion brands. “There’s probably some sort of opportunity, but at the same time there’s a reason [why it’s a white space]. Either people have tried and failed in the past, or the market size for that white space is not large enough in order to sustain a business.”
Many of the entrepreneurs who start labels in these categories lack traditional fashion design experience. Instead, they’re looking to solve a problem they have faced themselves. But the challenges, from customer retention to pricing, are often too great to overcome, no matter how powerful the idea or competitor-free the landscape. “If the white space has been there for too long, that means shoppers have found alternatives,” notes Carmi. What’s more, “If there’s a pre-conceived notion that makes a category less appealing, you also have to build a brand that rises above that bad connotation. You have to create demand, a sense of want and need, which fashion, no matter what the category, is all about.”
Here’s how three fashion brands in three uniquely challenging product categories have managed to break through.
How Hatch Designer Ariane Goldman Built a Maternity Line That Women Actually Wear Before and After Pregnancy
When Ariane Goldman was pregnant with her first child in 2012, she found her wardrobe choices limiting. Her options were to either buy cheap, throwaway items or pieces in larger sizes from mainstream designers. “No brand was speaking to me,” she says. “I wanted to feel better about myself, chic and elevated when my body was changing.”
Goldman was already an entrepreneur with experience in successfully meeting a specific set of consumer needs. Her bridesmaids line, Two Birds, kicked off the trend for convertible bridesmaid dresses, or one-size-fits-all styles that could be wrapped or twisted into different silhouettes. Before the launch of Two Birds, Goldman spent eight years working at American Express, and entered the fashion world with little knowledge of the sector. But she applied what she learned from Two Birds and embarked on Hatch, a collection of clothes cut in such a way so they could be worn before, during and after pregnancy without alterations. “We’re providing a solution by not drawing lines at the beginning and end,” Goldman says. “This clothing doesn’t lock her into a specific event.”
Hatch’s business is 90 percent direct-to-consumer. Goldman says she has turned down several department store requests to carry the line. Two wholesale partners – Shopbop and Net-a-Porter – feature the collection’s easy dungarees, tops and flouncy dresses on both pregnant and non-pregnant models in order to exhibit the versatility of the garments. (In fact, 30 percent of Goldman’s clients are not pregnant.) Goldman sees these wholesale partnerships as marketing, and has also embarked on collaborations with swimwear line Marysia, denim brand Current Elliott and athletic wear retailer Bandier. The business, which is on track to reach $8 million in sales in 2016, has been profitable since launch, with 40 to 50 percent year-over-year growth and a gross margin averaging 70 percent.
While it’s often difficult to convince pregnant women to invest in maternity clothes they will wear for only a short period, Goldman has managed to crack this conundrum by making clothes that appeal beyond a specific demographic, but also by keeping her price point within a reasonable range. Most of her cashmere sweaters and dresses, for instance, are priced well below $300. “I don’t really have competitors,” Goldman says. “Most maternity wear is disposable, really designed for a temporary consumer. Then there are the luxury players. My real competitors are contemporary brands. Hatch is really, really well priced, made in New York and feels even better than it looks online.” For local consumers, Goldman has opened the doors of her New York City studio for shopping appointments, with hopes of developing a broader brick-and-mortar presence in the future.
How Universal Standard Made Elevated Basics Work for Plus-Size Consumers
Much like the maternity wear market, the market for plus-size clothing has long suffered from a dearth of fashionable product. The demand is real. A study published in September found that the average American woman wears between a size 16 and 18. What’s more, US sales of women’s plus-size apparel were $20.4 billion in the 12 months ending in April 2016, up nearly 17 percent from $17.5 billion in 2014. And while plus-size fast fashion has developed nicely in the past decade, underscored by the success of ventures like Eloquii and Asos Curve, there are few options between the ultra-affordable and the ultra high-end, such as Marina Rinaldi. That’s in part because of the perception that many plus-size consumers are unwilling to invest in larger clothing items because they see their size as a temporary circumstance. In 2015, British women who wear a UK size 18 or up spent 17.1 percent less on clothing than women who wear under a size 18, according to research firm Verdict Retail. But whether that’s because there are less mid-priced options available, or because they prefer not to, is less easy to determine.
Fewer brands means less aesthetic variance. This was the impetus for Universal Standard, a collection of elevated basics sized from 10 to 28 launched by fashion journalist Alexandra Waldman and business partner Polina Veksler in September 2015. “As a fashion journalist, I was always in the position to look but not touch,” Waldman says. “Like all women of my size who are actually interested in fashion, I used to alter things and be very creative and original.”
Veksler, who was working in private equity when she met Waldman, says that building a brand on an offering of larger-sized smart button-ups, minimalist cashmere sweaters and sharp pencil skirts was a no-brainer. “Brands like , Vince, Helmut Lang and Rag Bone all stop making clothing at a size 10 or 12,” Veksler says. “We wanted to create the same type of clothing, with the same quality and aesthetic.”
The partners launched Universal Standard as a seasonless direct-to-consumer business without paid marketing or a major press push. The first, eight-style collection sold out in six days. (For that initial run, they produced 1,000 to 3,000 units per style.) “We found a space within a white space,” Waldman says. They bootstrapped the business until June 2016, when they raised $1 million in funding.
From the beginning, the founders of Universal Standard made two strategic decisions that contributed to the company’s success. The first was the decision to go direct-to-consumer, which allowed them to bring prices down – a major roadblock for upscale plus-size fashion brands – while also avoiding end-of-season sales, as perennial items can stay full-price indefinitely. “The challenge was to create something at a price point that the consumer could digest,” Waldman says. “There is a very complicated psychology involved.” But as “body acceptance” becomes less of a marketing term and more of a reality, Waldman believes the consumer is finding herself more comfortable spending more on her clothes. “When you’ve been raised on a certain price point, it’s hard to make that mental change,” she says. “If you buy something expensive, you’re committing to your size. But I think women are starting to feel a little more accepting.”
The second crucial decision Waldman and Veksler made was to think beyond the “plus-size” label and carry a wide range of sizes, starting at an American size 10. “We call ourselves a size-inclusive brand,” Waldman says. “We want this to be about clothing. [Plus-size] is not something we herald because it’s a moot point.”
Universal Standard’s approach has garnered fans across the globe, with “large pockets” of consumers in Australia and the United Kingdom. (Around 70 percent of its sales are in the United States, while 10 percent are in Canada.) The company drops one product a week on average, and has seen sales increase 100 percent every quarter. (In August, revenue jumped 300 percent from the month before, and the company is currently operating at a $1 million run rate.) Waldman, however, considers the past year a soft launch. The company only recently hired its first employee, and is just now thinking about paid marketing. “We’ve had about 100 articles written about us in the past year and they were completely unsolicited,” Waldman says. “There was nothing out there that was contemporary, modern and cool. It’s been a captive audience for so long that quality was not something [successful brands] worried about too much, but you had all these consumers and a lot less choice.”
How The Black Tux Transformed the Men’s Formalwear Business
The rise of casualisation accelerated the decline of Men’s Wearhouse, the American chain that for years was the go-to suit seller and renter for a significant portion of the population. In the first half of the 2016 fiscal year, profits at Men’s Wearhouse’s parent company, Tailored Brands, Inc., declined to $26.6 million, a 54.7 percent drop from $58.1 million during the first half of 2015. The company, which also owns brands like Joseph Abboud and Joseph A. Bank, said it will close 250 stores by the end of this year.
In past earnings calls, Tailored Brands chief executive Doug Ewert has called out a decline in the tuxedo rental market in particular as one of the big challenges facing its stable of businesses, citing a shift in “cultural attitudes toward traditional weddings.” After all, millennials are getting married later and choosing less typical venues, formats and attires. What’s more, men who attend white or black-tie events on a regular basis prefer to purchase a tuxedo – often custom-made – over renting one. Plus, the longstanding perception of rented tuxedos and other formal suits was that they were typically ill-fitting and unfashionable.
And yet, this did not deter Andrew Blackmon and Patrick Coyne from founding online tuxedo rental service The Black Tux in 2013. They came up with the idea after struggling to find good tuxedo rental options for their own weddings. “Our mission was to create a higher-quality, better experience,” Blackmon says. “There was clearly demand.”
But was it enough to create a scalable, viable business? For Blackmon and Coyne, who have raised $30 million in funding thus far, the goal was to create a rental service offering garments that were impressive in quality, modern in style and low in price. To keep costs down, they formed direct relationships with suppliers and cut the number of rentals to keep the product looking fresh. While most competitors will push a single tux to go through 50 rental cycles, The Black Tux aims to cut the number of cycles in half (at least).
Three years since they rented their first tux, the company now offers 12 styles of suiting and averages $2 million a month in sales, with annual revenue up 200 percent year-over-year.
While Blackmon and Coyne were convinced that The Black Tux was a scalable business from the beginning, they’ve been more surprised by the consumer’s penchant for high-fashion offerings. In turn, they plan to ramp up trendier looks with new collections pegged to high seasons in formalwear. A collaboration the New York-based label Ovadia and Sons, which included a double-breasted black tuxedo and a khaki suit, performed particularly well. “Guys want to rent more off-the-beaten path, radical styles,” Blackmon says.
The biggest hurdles, on the other hand, have had to do with fit and logistics. To keep the need for to a minimum, the company has continued to deepen its inventory, meaning that it can accommodate all manners of measurements in every style. “When we raise money, we raise it to invest in our inventory,” Blackmon says.
The Black Tux has also streamlined operations by automating certain processes and optimising others. The company has quietly begun offering free at-home try-ons – launching the full-fledged service in January – so that unsure customers can do a test run. In the first quarter of 2017, it will also stretch the delivery window. (In the past, orders were delivered no more than seven days before the event. Upon request, delivery windows will be extended to two weeks, intended to support busy grooms and wedding parties in particular.) More Bonobos-like showrooms that allow consumers to try on tuxes before renting online – of which they currently have two, one in Los Angeles and another in Chicago – are also planned.