The Big Bet of Subscription Clothiers

The popularity of subscription retailers has grown significantly over the last decade. While traditional subscription services like newspapers and magazines have dwindled in subscribers; companies like Dollar Shave Club, StitchFix, and BlueApron are cashing out in industries once dominated by traditional brick-and-mortar. While these services are popping up in even more industries, the fashion industry has remained one of the best performing markets for subscription services.

Companies like Stitch Fix and Trendy Butler have used different methods to set themselves apart from traditional retailers, but they have many elements in common: personalization, smart data, and strong customer relations.

For Stitch Fix, an online styling service and estimated $2 billion company, uses real stylists in-house to pick five different pieces of clothing based on the customer’s “style profile”. The customer is charged a $20 “styling fee” and the clothes are shipped free of charge. The customer then has the option to keep all five at a 25% discount or select options to either exchange or return unwanted pieces—free of charge, too.

So how is a company offering so many free services and budget-friendly options valued at $2 billion? According to the company’s IPO filing to the SEC—the answer is data science.

The company stated in its public filing, “Our merchandise data tracks dimensions that enable us to predict purchase behavior and deliver more personalized fixes.”

This along with the company’s usage of predictive algorithms and human judgement, Stitch Fix can more accurately pair a client with the right match. Stitch Fix is a fashion retailer adapting with the times. As cited in its SEC filing, the company mentions an important statistic in its ascent to growth–average monthly department store sales declined $6.4 billion, or 33%, from 2000 to 2016. What companies like Stitch Fix are doing right is personalizing a depersonalized eCommerce market.

With the average subscriber of these kinds of services are dominated by college educated millennials, personalization is going to remain one of the most important facets of a subscription retailers solubility.