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Sep 12, 2017

Stores Magazine: Blue Skies and Blue Ribbons

TechStyle succeeding through innovation and homegrown technology.

Contrary to what recent headlines suggest, the sky is not falling. The retail industry is going through a difficult period, there’s no denying that. Still, the store closings and bankruptcies the industry is weathering have been years in the making — a byproduct of changing consumers and businesses reluctant to shift strategies.

Amidst the negativity, there has been good news: Retail sales increased 4.1 percent in the first quarter and both established retail chains and emerging entrepreneurs are growing revenue and planning to open stores in 2017.

Fabletics is just such a business. The activewear brand, launched in 2013 and best known for its celebrity co-founder Kate Hudson, is reported to be the fastest-growing activewear brand in the history of e-commerce. Last year, the division of TechStyle Fashion Group logged $235 million in North American sales and $270 million globally. Operating as a subscription model, Fabletics counts 1.2 million members, 6.5 million global Facebook followers and sells product in eight countries. There are now 21 stores open and plans call for 25 by the close of 2017.

Dustin Netral, senior vice president of Fabletics, attributes the brand’s success to multiple factors including its continuity-based subscription model, the use of technology to drive seamless customer service and the creation of a product and experience that empowers women to achieve their goals. Speaking in May at the Retail Innovation Conference, presented by Retail TouchPoints, Netral stressed that long-established market share strategies no longer apply.

“Traditionally, bricks-and-mortar retailers staked their claim based on geographical location. Even today as we’re opening stores, landlords talk to me about backfill strategies and building market presence. The reality is, none of that matters,” Netral said.

“Amazon only has a handful of stores, yet 43 percent of e-commerce sales go through Amazon. Google and Facebook are the media we choose for advertising — half of Fabletics’ ad budget is spent on Facebook to drive customer acquisition.”

Fabletics creates a personalized boutique — using constantly refining algorithms — on the first of each month, and members can shop limited-edition products and patterns at discounts of 30 percent or greater. Netral says 76 percent of site visits happen during the first few days of the month; members consider Fabletics their “monthly treat.” Most members visit the website 30 times per year.

A unique aspect of Fabletics/TechStyle’s business is IT. The company’s software is 100 percent homegrown — every code, even the call center, is built and managed in-house, giving the brand a 360-degree view of the business, from customer to inventory to manufacturing metrics.

Fabletics’ business is thriving because it understands its customer and delivers products and experiences that suit her needs.

TechStyle co-CEO Adam Goldenberg will speak about the company’s impact on how consumers shop online at NRF’s event, scheduled for September in Los Angeles. The company relies on technology and data proficiency to drive decision-making. It’s a business built for success in 2017 and beyond that refuses to cling to outdated strategies.