Q&A: Indochino CEO Talks Expansion
Made-to-measure menswear retailer Indochino is on a roll. Founded in 2014, the Vancouver-based digitally-native company has made the leap to brick-and-mortar with finesse, opening handsomely furnished stores (‘showrooms’ in Indochino-speak) that reflect the brand’s aesthetic and bring its online customization experience to life.
“Our goal is to open over 100 showrooms in North America during the next decade and explore international expansion.” – Drew Green, CEO, Indochino
Indochino is headed up by Drew Green, who came on board as CEO in December 2015. Previously, Green founded and was chairman and CEO of shop.ca, Canada’s first multi-merchant marketplace, which is now owned by a holding company he leads as chairman and majority shareholder. Under Green, Indochino has made a major commitment to brick-and-mortar growth, while also expanding its online and fulfillment capabilities.
Most recently, the company reduced the time it takes to fulfill an order from four to three weeks, citing increased efficiencies across the manufacturing and delivery cycle. A new partnership with a shipping and logistics provider has further reduced delivery time.
Chain Store Age editor Marianne Wilson spoke with Green about Indochino and its plans for the future.
Why did Indochino decide to open physical showrooms?
Indochino was born out of the belief that custom clothing should be accessible to everyone. We started online and, while we were seeing huge success, we also realized that there are many people who prefer the in-person experience of having someone guide them through the process of designing a suit.
Our decision to evolve into an omnichannel commerce company has given us the rare opportunity to develop a completely new approach to retail centered around the customer experience and I believe that this approach will direct how we all shop in the future.
When did you start opening the spaces?
It’s been almost three years since we opened our first permanent showroom. In 2017, this network made up a significant amount of our revenue, and was our number one customer acquisition channel for our online business.
How is the company doing?
2017 is on track to be our second consecutive year of around 50% year-over-year. The past three years we have averaged rough 45% year-over-year growth.
How many locations are on tap for 2018?
We opened nine locations in 2017, ending the year with 19 across North America. This year, we’re aiming to open as many as 18 showrooms. (The sites will span North America, with potential locations including Atlanta, Austin, Nashville and San Jose as well as additional showrooms in large markets such as New York and Los Angeles).
What is the long-term expansion outlook?
Our goal is to open over 100 showrooms in North America during the next decade and explore international expansion. That said, we’ll continue to be strategic as to when and where we open new locations and will be expanding for as long as it makes good business sense.
What is the real estate strategy?
We’re looking to open in a mix of upscale regional malls, lifestyle centers and urban street locations.
How do you describe the look and feel of the showrooms?
We’ve taken a simple and modern design approach centered around the customer experience.
Showrooms are divided into zones with rows of fabric panels, mannequins showcasing the various customization and personalization options available, and spacious measuring stations that take the place of traditional changing rooms. We have two comfortable lounges, one for tailoring and another for wedding parties and larger groups to relax.
There are no cash registers. Instead, customers can browse our website on iMacs and style guides (store associates) are each armed with an iPad so they can input the fabric and customizations while they walk the customer around all the options. This isn’t your typical retail format — think Apple store but for custom apparel.
What’s been biggest challenge with brick-and-mortar?
Making the decision to invest heavily in physical retail at a time when most were stepping back was bold.
What’s been your biggest surprise or takeaway from the showrooms?
The effect our showrooms have had on an omnichannel scale has been impressive. Initially, we were concerned that a retail presence could cannibalize our online business, but instead, we were surprised to see our online sales grow twice as fast in our showroom markets than anywhere else.
Do customers, on average, tend to spend more in the showroom as compared to online?
Those who shop in store do tend to have a higher average order value than those shopping online. Whilst it may have to do with the kind of customer who chooses to buy in person, retail provides the opportunity for style guides to make suggestions and offer style tips that will often result in multiple purchases. This is the kind of thing you can only do to a certain extent online, though we’re working on it!
Tell us about Indochino’s partnership with Postmedia?
Our partnership with Postmedia, Canada’s largest newspaper company, is mutually beneficial for both parties. Postmedia has committed more than C$40 million media dollars in Indochino over the next five years, which will help us exponentially grow our market share in Canada. In turn, Post media will share a portion of our revenues in the Canadian market with the option to purchase stock at current prices. They are entirely aligned with our success as a partner and shareholder.
The partnership is a great opportunity for both companies to leverage each other’s strengths in order to grow our businesses. Both sides have a vested interest in making the partnership work, which optimizes the chance of success and greatly reduces risk. It’s a winning formula and one that I hope will pave the way for similar ventures in other markets.
Who is your target customer?
Broadly speaking, our customer is anyone looking for a great fitting, high quality suit that doesn’t cost a fortune. Our typical customer is 25-45 years old and needs a suit for work or a special event such as a wedding. He is someone who likely has never had the opportunity to own a custom suit before.
In an age of fast-fashion, is getting customers to buy a made-to-measure suit a hard sell?
When customers come to us expecting to walk out with a suit the same day, we engage them in the experience. We show how in just three weeks they can get a made-to-measure, fully personalized suit at the same or better price than ready-to-wear, which often requires lengthy alterations. And it’s working.
Have you thought about expanding into any other categories … such as women’s apparel?
I get asked all the time when we’ll start making women’s suits – you just have to walk into our showroom to see our female style guides already rocking it in Indochino. That said, there are more immediate opportunities for us to expand into new menswear categories, and this is what we’ll be focusing on. For now, at least.
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