Dia&Co customer opening her monthly subscription box.Courtesy Dia&Co
I’ll say it: Fashion is boring. That’s not my opinion but it’s clear that consumers think so. Sure, there are great looks, great fits and products that are priced right but you almost never hear consumers get excited about fashion products and trends the way that you heard ten years ago or earlier. It’s almost paradoxical because improvements in communication and travel have made more and better product available to more people at better values than ever before. And yes, there are segments like athleisure that are still interesting and growing, but now they’re the exception and not the rule. So what is fashion doing wrong? Or, to turn that question around, what could fashion do better?
To figure that out, I went to the part of the market that was always the most boring: Plus-size fashion. Despite being the largest segment of women (75% of American women are size 14 or higher), it’s a segment that was never interesting even when fashion was exciting for almost everyone else. The clothes themselves were mostly cheap imitations of more stylish clothes and manufacturers took the approach of, “they’ll wear what we sell them because they have no better choices.” For a long time, that worked. Plus-size women took what they could get and bought garments that “will make you look thinner.” Plus size clothes were always designed to make the wearer fade into the background and you can’t get more boring than that.
It doesn’t have to be this way. I recently visited with two fascinating companies. By rights, they should be the most uninteresting companies because almost all they sell is plus sizes. But the way they do it is different than what has come before and that makes them instructional for the rest of the fashion world.
Ashley Stewart
In 2014, Ashley Stewart, a retailer of plus-size women’s clothing rooted in the African-American community, was such a hopeless case it was about to be liquidated. Shortly before that was to happen, an investor named James Rhee of FirePine Group, LLC came along and looked at the business differently. Rhee went into the stores and spoke with customers and sales associates and found a culture of mutual respect, community and self-esteem that he thought was worth saving. As Rhee tells it, he’d had numerous jobs that had given him skills to look at businesses like Ashley Stewart. But his most relevant experience for looking at Ashley Stewart was having been a high school teacher and sports coach in a boarding school for teens struggling to reach their potential. He learned then that, “you can’t manage people by command and control. You manage them each differently and you hear how they need to be heard.” Rhee head many stories about Ashley Stewart customers, including how they are “bringing back hangers to the store so the company wouldn’t go out of business.” When Rhee heard the sales associates and customers interact, he knew this was a culture that deserved to be saved and could be made to work financially. He stepped in as CEO when the company was months away from a Chapter 7 liquidation.
What Rhee understood was that Ashley Stewart wasn’t about fashion or clothes. It was about culture and content. When he took over, he doubled down on that culture, making kindness rather than profits their most important corporate value, believing that profit would follow if the culture remained positive, kind and empowering. He treated Ashley Stewart as a venture-style startup, developing online content and building a media-driven business with creative, relevant events, enabling customers to be evangelists for the brand. Rhee created what he calls “an alternative universe,” to develop customer and employee satisfaction. Profits inevitably followed. You can watch the employees of the company tell it their way in the brief video below.
Dia&Co
Five years ago, Dia&Co didn’t exist. Today they are the leading online seller of women’s plus-size clothing by subscription (where customers get a monthly box of products curated for them). In November 2018 (according to Pitchbook), Dia&Co raised about $40 million at a [post-money] valuation of over $400 million. None of the founders or previous investors sold any stock in the offering. I have no non-public information about Dia&Co but here’s what that data tells me:
- They are near to or above $100 million in revenue.
- They make money or they are near profitability.
- They are growing rapidly.
- Their gross margins are very attractive.
- Everyone in the company believes there is a lot more growth left.
- Growth will come from expansion into new classes of product, that’s why a profitable company would want to raise more outside capital.
Why Are These Companies Successful?
Both Dia&Co and Ashley Stewart are in a business with cutthroat competition. Their competitors are big and are willing to slash prices to rock bottom to sell products. But neither Dia&Co nor Ashley Stewart define themselves by their product, plus-size fashion. They define themselves by their culture and their customer. Both companies produce an enormous amount of content, only a small percentage of which is about showing or selling product. What their content and their cultures are about is one thing: self-esteem. These companies ask themselves every day, “what can we tell our customers to help them believe they’re worth it, they deserve a good life and we respect them?” That’s the focus of their content and that’s what their culture says to their customers. With all the companies producing women’s apparel and pushing hard to sell their products at the lowest prices, Dia&Co and Ashley Stewart offer something different, they make their customers feel good about themselves.
Susie Fogelson, a consultant who is the former SVP of Marketing and Brand Strategy at The Food Network and Cooking Channel told me, “If content isn’t the second thing you do, you’re in trouble.” We are in an era where customers come to retailers and brands for something more than just the products they buy. They want to feel good about what they’re doing, about the life they’re living, about their own value system and they want to find brands, companies and communities that share their value system. When customers find like-thinking brands, they aren’t motivated by price, they are motivated by belonging and identity. If your values are clear, you can find a customer and they will share your point of view. They will pay your [reasonable and fair] price and it doesn’t have to be 40% off. Customers pay when the product is great and the values you’re espousing are meaningful in customers’ lives.
That is where the fashion business has to go, not just to be virtuous but to make money. There can never be a slacking off in the product quality, that has to be as sharp as ever. But now there’s more. Consumers want to see values and they want to believe that the people who run the company believe them. And they want to be respected for sharing those values.
These two companies get it. They make great product and treat their customers the way we all want to be treated. Consumers respect the companies back and it’s a healthy relationship in which both sides prosper. Fashion companies in the most boring, commodity-driven markets can do this and it makes all the difference. Great financial performance is a byproduct of a culture where customers and employees can both have self-esteem and communication is clear about the company’s priorities. As the winnowing of retail winners and losers goes on, we are going to see more companies prove themselves by listening to how their customers want to live and creating a corporate culture that resonates with them. That is what customers find interesting and that will make fashion interesting again.
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