When it comes to shopping, it seems that men are now the new women. According to Bain & Company, since 2009 the menswear sector has been growing steadily (between nine and thirteen per cent), outpacing womenswear, while Euromonitor reports that global sales of menswear increased by almost five per cent in 2013. If you combine this data with the fact that one third of men prefer to shop online (according to research firm Mintel), then it definitely makes sense for companies to focus on solving men's shopping problems through a variety of online platforms.
The Cloakroom seems to be one such case; the company started a little more than a year ago and it received 1.2 million euros in May in a funding round lead by London-based Connect Ventures. Their concept? Eager to spend men are offered the service of a personal shopper without any charge. Following a quick style session, the personal shopper handpicks items that she believes will fit the customer in focus and prepares a box. Each box consists of ten to fifteen items and the customer can return anything he doesn't like using free shipping and returns for the Netherlands and Denmark.
We sat down and discussed with co-founder Kasper Brandi Petersen about subscription-based services in menswear, online shopping, and his views regarding fashion retail's biggest trends.
How did you come up with the idea behind the Cloakroom?
We stumbled upon Trunkclub in Chicago and were blown away by how cool the concept seemed. Online shopping doesn’t work for men because they don’t like scrolling through 200 white shirts to find the one they need. Therefore, they end up buying the same brands and go to the same brick and mortar stores as they always did. That’s a shame. My cofounder is extremely tall and wanted to have a personal shopper, but there was no similar service in Europe. So we decided to create one.
What were the difficulties in setting it up?
Personal shopping is not an easy business model to pull off. Initially it was difficult to find angel investors, because most of the venture scene in Europe is scared about big warehouses and labour-intensive processes. Secondly, we had to educate and cultivate the market from scratch because none of the Dutch and Danish men knew that they wanted a personal shopper. Most of them believed it was expensive and something only A-list celebrities like Ryan Gosling could afford.
Could you tell us a bit about your personal shopping platform? How does it work and what kind of data is important to you?
The shopping platform is tailored to fit the needs of the new breed of personal shoppers. They have direct access to the stock in our warehouse and all allocated stock (boxes that are currently with customers). Through a search engine they can use our product tags to curate outfits in a sandbox — they literally just drag-and-drop products into a white field and can play around with colours and fits. The platform is a one-stop solution, so the girls also have access to all customer profiles. We have on average sixty data points per customer, which is collected through phone, email, chat and Facebook.
How do personal shoppers collaborate with potential customers? How much time do they get to spend with each customer and how are you helping them streamline their everyday duties (creating boxes, contacting customers, etc.)?
Each personal shopper runs her own portfolio of clients and we don't micro manage how they spend their time. It also depends on the preferences of the customer. Some of them prefer to visit our showroom and have a glass of whisky. Others are in a hurry and prefer to answer a few questions by email. We have an extensive training program for all new shoppers to make sure they know how to differentiate their customer interactions. We also have a quality team that are running workshops with the girls every single week including fitting sessions with all new brands and styles that we buy from the brands. It's not unusual for us to dedicate six hours to a jeans workshop because we can see on the returned boxes that it truly makes an impact on the return rates.
We are seeing a lot of subscription-based services operating in fashion, mostly from the United States. What makes you unique?
Subscription e-commerce is great for a company, but it sucks for the consumer and we would never venture down that road. Men are scared of commitment unless it’s petty cash like a Spotify subscription or one dollar razors. Our concept is the next level of repetitive purchasing fuelled commerce, where no commitment has to be made. We trust the quality of our product and we know that a sweet email or phone call from a personal shopper at the right point in time will activate most customers.
How is technology changing the way men shop? What kind of opportunities and challenges do you see currently?
Our tech team spends little time on our website. Our biggest project is a personal shopping platform that combined ERM and CRM and that we have built from scratch. It is only open to the personal shoppers and it allows them to manage portfolios of up to 1,000 customers. Automation is the key, but not automated curation. Each outfit is curated from scratch by the personal shopper because no algorithm can predict what clothes an average male likes to wear. But emails, phone calls and product selection can be automated.
Considering that you seem to rely quite a bit on human intervention to service you customers, how scalable is your business model?
With our fulfilment outsourced and our platform live it really doesn't matter how many personal shoppers we hire in a month. The only bottlenecks are to find and train them fast enough. We are hiring five girls per month at the moment and are gradually increasing it to ten girls per month. Traditional bottlenecks are lead acquisition and fulfilment. But we run tiny stock levels compared to traditional e-commerce, and we are not a mass market business, so we don't need millions of clicks to grow. In the near future, personal shoppers will be enabled to work remotely and they will be earning small base salaries and large commissions which will enable us to hire even faster. We are never going to compromise on the curation quality by replacing personal shoppers with algorithms.
How does your service address the many different styles and looks that may constitute a male customer’s preferences?
We are doing our buying in a way that none of our brands have seen before. We do preorders from 50 brands and own all products. But our stock levels are very low and we restock every day instead of every season. It means that the personal shoppers have new products to choose from everyday and that it is almost impossible to make the same box twice because we buy so few of each item. It also means that we are not able to sell the same products to a customer twice in a year if he really likes it, but we are not a catalogue business so that’s the trade-off.
What are the biggest challenges for fashion companies trying to offer an effortless mobile browsing and shopping experience to demanding customers worldwide?
Curation. You have to set up a slick recommendation engine so you only show relevant products to your customer in the right fits, sizes and colours. We are struggling with this and are developing our mobile app from scratch. Our solution is to show looks that the customer can browse through and he then selects a style instead of the actual product.
Currently, a lot of fashion brands are focusing on quality content. How important is content to you, and in your view, how is it affecting the world of fashion e-commerce?
Content is worth very little to your consumer if you leave it up to him to execute on it. We try to cobble blog posts about flower printed sweaters together with personal shopper requests. If you as a customer like a look we post on Facebook, it is very easy for us to get a personal shopper to send you that look in the sizes and price categories you prefer.
According to American entrepreneur and investor Marc Andreessen, “Retail guys are going to go out of business, and e-commerce will become the place everyone buys. You are not going to have a choice.” Do you agree with this notion and if so, why?
I am not a big fan of the term e-commerce. There is commerce, and we are all competing no matter what label you put on us. The Cloakroom is somewhere in the middle between traditional e-commerce and retail because we don’t sell products in our showrooms and we don’t sell them online — you can only get them through your personal shopper.
As e-commerce continues to grow, how do you see physical retail spaces responding to this challenge? Do they need to focus more on creating concepts and offering a richer in-store experience?
I hope traditional retail will read the writing on the wall and develop towards the experience we are offering in our showrooms. No one should ever leave a store with a plastic bag with clothes in it. Instead, customers go to the stores to get a rich experience, try stuff on and get advice from style experts. The stores should run showrooms with very limited inventory and then ship the purchases to the customer as soon as he leaves the store. Each shopping assistant should be empowered to serve online and offline customers through Facebook, email and phone and they should get commission based on both their online and offline sales.
Do you believe that social media channels like Pinterest could offer a seamless shopping experience?
Yes – for women. For men, it’s a horrible mess of inputs and opinions. To make Pinterest interesting to men there needs to be curation and personal advice.
We see brands becoming publishers and publishers stepping into retail sales, with the most recent example being the joint venture between Lucky magazine and BeachMint. How do you see the relationship between media and retailers developing in the future?
They should be fostering closer relationships without loosing the authority that comes from independence. Private labels will be a mayor profit generator in the future and the right media power can accelerate an apparel brand at an extreme pace. But the connection between the two partners should not be promoted.
Collaborative consumption, personalised recommendations, social shopping. Are there any online trends that have the potential to disrupt fashion?
It is already happening. Trunkclub was bought for $350m by Nordstrom just a while ago, which shows how extremely fast the pace of change is. Retention and loyalty is the key to profitability in the fashion industry. It’s the only way to counter the horrible discount race that the industry has posed on itself the past years. Personalised service and catalogues makes it a lot harder to commoditise a product and it makes price less important. At The Cloakroom we don’t even do seasonal sales and the brands love it.
Do you feel that the current advancements in 3D printing have the potential to disrupt fashion?
I hope. I would for sure love to not have to spend money and resources on our big warehouse in the countryside and daylong shipments across the continent. We are a service company that happens to sell clothes, so we can adapt. It’s much harder to adapt if you are an e-commerce giant like Zalando or Asos.
Which fashion-related startups are you watching closely?
Stitchfix in the US is innovating personal shopping by developing sick recommendation algorithms and enabling women all over the country to manage very large client portfolios from the couch in their home.
What are your three biggest headaches at the moment?
Getting enough stock from risk-averse brands who are scared of rapid growth. Recruiting enough talented, charming and hungry personal shoppers from six different countries. The main reason why we opened a Copenhagen office is to get easier access to Swedish and Danish talent. Recruiting enough back-end developers, but I guess that’s the bottleneck of most tech start-ups.