How Katrina Lake Made Her Billion Dollars In The Fashion World
Katrina Lake, founder and CEO of Stitch Fix, has become a billionaire during a time when most companies are throwing their hands in the air with frustration. One of Forbe's self-made women of 2020 saw her online retail company's stock price skyrocket from the end of the year to now. It's created one of the most unique success stories in recent years.
Leveraging data science and human interaction to bring the right fabric to the right people, Lake began the company out of her Cambridge apartment in 2011 while completing her Harvard MBA. Today, they've reached heights that few could have imagined and its done so in record time.
While many well-known retailers like J. Crew and Brooks Brothers have found themselves navigating bankruptcy during the pandemic, Katrina's company has shattered expectations. How has she done it? In true Stitch Fix fashion, she's done it with style.
As opposed to many clothing companies, which rely on the old method of showing items to potential buyers and hoping they will choose them, Stitch Fix matches buyers to outfits they feel they are most likely to want.
According to the company's website, their experts ship pieces based on a person's unique style, fit, and pricing preferences in order to help them build a wardrobe which works for their lifestyle. It's quite different than the classic, "See this tie? You like it? Buy it."
Making the program even more enticing is that no subscription is required. For those weary of getting locked into monthly "boxes" and "crates", it's the perfect way to bolster your wardrobe without a long-term commitment, especially at time when most people can't predict where they will be a month from now.
What made Stitch Fix's numbers jump may have come down to just two key factors. For one, they signed up a large group of new customers. However, with a model like theirs, new customers aren't the only part of long-term success.
The key to success for a business model like this is ensuring that customers hold on to the clothes they are sent. For Stitch Fix, that's exactly what happened. Clients not only liked and kept the outfits they were provided, but continued to come back for more. Together, this lead to a larger roster of fixed stitchers and provided the company with a 10% increase in their most recent quarter.
The pandemic has created an environment where some people are afraid to even go to the doctor for fear of contracting the coronavirus. This stay-at-home attitude has been one of the biggest boons to the Stitch Fix pocketbook.
Clothing retailers who relied heavily on foot traffic to their brick and mortar stores struggled over the past year to keep their doors open. While it was difficult enough to get people into their showrooms before, COVID ramped that difficulty up considerably. That's why, for an online solution like Stitch Fix, the pandemic was actually beneficial in many ways.
Aside from simply keeping them out of malls, the new normal is keeping people out of everywhere. It is has led to a change in how we dress and what we need. It's something that Katrina and her company are keenly aware of.
As Lake explained to Marketplace.org: "I think right now what we’re seeing is some of these changes are going to be permanent. The data is showing us that, first of all, people are going to be buying apparel online in much, much greater proportions than they were historically. So right now, people are buying less clothes, people are going on fewer vacations, people have less weddings to go to, all the reasons people are buying less clothes at this very moment. And even as the market is shrinking, we are growing in the face of that. We are taking share in that world. At some point, some of those categories will come back up, people will start going back out, going to dinners, going on vacations. We do think some of that market will come back up."
It may seem like the world is getting smaller in terms of potential outreach and even possible places to go. However, the world is still getting bigger. Specifically, kids are getting bigger.
That's another big move by Stitch Fix as their foray into the children's market couldn't have come at a better time. With kids outgrowing the outfits of 2019 and parents unwilling to drag them to a potentially COVID-filled shopping center, Stitch Fix seems like the perfect solution.
What makes this an even better option for the company is that they have the luxury of expanding their line at time when others in their market are struggling to catch their breath while the water rapidly rises over their heads. By weathering the initial pandemic storm and keeping things afloat, Katrina is one Lake that seems to have smooth sailing ahead.
Sources: Forbes, Marketplace.org, Stitch Fix, Simply Rebekah
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