Online custom suit retailer Indochino is expanding its footprint in the physical retail world. The Vancouver-based company tested the bricks-and-mortar waters with its Traveling Tailor pop-up shops in several U.S. markets in 2013, and in Canada in 2014.
The pop-ups were a success, leading the company to open its first permanent store in 2014 in Vancouver. Last month, Indochino opened a permanent flagship location on King Street in Toronto. It’s the first location to feature Indochino’s new showroom design, complete with leather sofas, iMac working stations and a Nespresso bar. The retailer also has permanent showrooms in New York, San Francisco, Philadelphia and Boston.
Marketing talked to Peter Housley, who joined Indochino as CMO in February, about why it’s building physical stores and how its ecommerce roots give the company a leg up in the omni-channel world.
In the late ’90s, you were SVP of marketing at Zellers, and before that, VP of marketing at Eaton’s. How has your experience at more traditional department stores helped you in your role at a retailer with ecommerce roots?
Let me answer that sort of sideways. I was chief executive officer of Lavalife [from 2000 to 2003] and we were one of the first digital pure plays in Canada and one of the success stories in terms of how to build a digital brand. Subsequent to that, I’ve kept my digital currency pretty current… To go back to my retail roots—the art of buying and selling and merchandising, understanding the consumer needs, building an assortment that is exciting and relevant to them—none of that’s changed in the history of retail and especially in apparel retail.
I had made a decision a few years ago that I wanted to [get] back into retail. The conundrum was, I really like working for successful companies. When you look at the bloodbath in Canada of Target, Mexx, Jacob and Le Chateau, and others that are struggling, Indochino was this high-growth company on fire, moving from online pure play, to Traveling Tailor, to now having stores in Toronto, New York, Boston, Vancouver, Philadelphia and L.A. [which is opening] next month. It starts to look pretty glamorous.
Why is Indochino expanding its permanent bricks-and-mortar locations?
If we think about the consumer and how guys want to buy a suit, there is an element in all of us that like to touch product; we like to feel the fabric. When you’re buying a $500 suit online, there’s a consideration phase that you need to go through before you will just easily make a purchase. The notion of having a showroom where you can see what the fabric looks like really helps a lot. So it’s a nice complement to the online business.
Traditional retailers are trying to figure out how to adapt as technology transforms the landscape. How does Indochino’s online business model give the company a leg up in the bricks-and-mortar space?
It’s huge. First of all, our showrooms are measurement showrooms. They don’t actually carry any inventory. They have fabric panels and style guides and essentially, we walk you through the process of what would be the online journey. We take your measurements and we help you with the choices to customize your suit… So from the standpoint of an inventory showroom, that becomes a very efficient business model. If we do our job well, then we will hand customers back and forth between the retail environment and online. For example, some guys will get a suit online… but should it need an alteration, they can take it into the store and have that high-touch service experience to get the suit perfect.
From the standpoint of business traction alone, when we go into a new market with a store, we already have a significant database of previous customers that have come to us either online or through one of our Traveling Tailors. We activate our business through a very cost-effective email marketing campaign, which says, for example, ‘Indochino has just arrived on Newbury Street in Boston, so guys get in, touch the fabric, see the new collections, meet one of our style guides.’ We’re able to create very quick demand in these cities and of course, that drives word of mouth. So it becomes a fairly organic marketing approach.
The Toronto location is the first to feature the new showroom design. Can you describe what the store experience is like?
What you see in Toronto is the new prototype, which will be retrofit to all our stores. The layout is really designed for the customer experience. For example, we’re building grooms lounges in our stores, where a group of five or six guys can get measured together. We’re putting foosball tables into the grooms lounges, so if one guy is standing around while the other guy is getting measured, we’ve got a little bit of horseplay that can happen.
[The showroom is] a nice environment of what I call high-tech meets high-touch. The high touch is the tailoring and old-world craftsmanship, while the high tech is configuring your suit online, taking your measurements and walking through your options online.
I’m going to start by saying there is a trend of guys wearing suits again. We’re calling this a man-aissance or a suit-aissance. Statistically we see that over 35 years of age, somewhere around 5% of guys are wearing suits to the office. For those under 35, that number is more like 11%. So what we want to do is fuel this “suit up” movement and put more men in more suits all of the time. [We have] three customer profiles. We see a continuum of infrequent suit wearers: it’s my first job, it’s my first interview, I need a suit once in a while. Then there are guys who are wearing a suit every day, and they have slightly different suit-buying needs and preferences for how they would shop. Underneath that, we all have a need for suits for special occasions [such as] weddings. At Indochino, the disrupting part of our model is we have now made custom, made-to-measure suits affordable to the masses. Generally speaking, our suits are in the $500 range and the competitive benchmark would be a $1,000 suit. So we’re offering incredible value to all three of those customer profiles.
On the marketing front, what’s the best way to reach your target audience?
In this day and age, one of the most efficient ways to reach customers is through digital. We know how to find guys. We know how to find guys in urban areas who are white-collar workers. We use sophisticated retargeting tools to serve up digital ads to anyone who’s visited our website. We have a big thrust through both Facebook and Google, display advertising and paid search. Another layer would be public relations.
What are your expansion plans?
We just opened our sixth store [in Boston]. We’re opening in L.A in about a month and then we plan to have two or three more before the end of the calendar year. We’re targeting five to 10 for next year.