Stitch Fix’s Elizabeth Spaulding on retail’s “seismic shift”

The Future of Fashion by Vogue Business

In this final episode of The Future of Fashion: The Innovators, Stitch Fix's incoming CEO Elizabeth Spaulding discusses how the company is t

Key takeaways

• Elizabeth Spaulding says she joined Stitch Fix at the end of January 2020, about six weeks before lockdown, and that the pandemic accelerated innovation plans for the next 10 years.
• Stitch Fix has sold $7 billion worth of clothes sight unseen and reports record keep rates as it expands beyond its original fix model into a personalized store experience.
• The company launched Shop Your Looks and Trending for You, using algorithmically generated outfits anchored to items customers already own or have purchased.
• Fix Preview lets customers review 10 curated items before shipping, with Spaulding saying three quarters of people exposed to it opt in; the feature was incubated in the UK and is now rolling out across the US.
• Spaulding argues Stitch Fix's advantage over media platforms lies in
• including fit, fabric, keep/return behavior, life stage, and 7 billion ratings from Style Shuffle.

Main topics

• Stitch Fix's CEO transition from Katrina Lake to Elizabeth Spaulding
• The evolution of Stitch Fix's fix model into personalized e-commerce
• New features such as Shop Your Looks, Trending for You, Fix Preview, and live styling sessions

Notable quotes

we've sort of gone from our DVD into our streaming era.

Conclusion

The episode offers a useful look at how Stitch Fix is repositioning itself as a

Transcript preview

Speaker 4 (0:01) How fashion and luxury will evolve in the face of disruption brought on by the pandemic, new technologies, and environmental and social concerns is a question top of mind for the industry. What will fashion look like in two, three, or 10 years time? To answer it, we're spending 30 minutes each week with industry innovators leading the way through a changing landscape. I'm Hilary Milnes, and this is The Future of Fashion, The Innovators by Vogue Business. This Speaker 2 (0:23) podcast is sponsored by PayPal. the most trusted buy now, pay later brand, according to a recent survey, which gives merchants access to PayPal's 377 million users worldwide. Learn more at paypal.com slash pay later enterprise. Speaker 4 (0:42) Hello and welcome to this episode of the Future of Fashion, the Innovators by Vogue Business. I'm your host, Hilary Milnes. Stitch Fix has paved the path to personalized retail, pioneering the try-before-you-buy model and digitizing the personal stylist. Now, 10 years after launch, the company's founder Katrina Lake is transitioning to a new role and taking over as CEO is Elizabeth Spalding, who's here today to discuss Stitch Fix's path forward. Welcome, Elizabeth. Thank you, Hilary. Excited to be here. Absolutely. And I'm sure you're super busy getting ready for the new role, which starts August 1st. So we're really excited to chat. I think it's a great time to check in on Stitch Fix. You know, it's been a tough year for retail in general, but the company's bouncing back. You know, you've been at the company for a bit now. And so what is this path back to normalcy looked like for Stitch Fix? What has the past year been like? Speaker 3 (1:29) Yeah, I joined the company the end of January of 2020. So about a year and a half ago. really only about six weeks before we went into lockdown. So it was kind of an interesting experience to join a new company and really have to lead entirely remotely with only having had a chance for six weeks to really be with people in person. And I think we all have dealt with just a crazy last year and a half, whatever industry you're in. I think one thing that's so unique about Stitch Fix is just the nature of our model within this broader apparel retail environment is that, you know, we weren't burdened with stores. We weren't burdened with debt. There are a lot of things to be thankful for as we entered into that March and April timeframe as everyone was just dealing with tremendous uncertainty, both consumers, how are these folks going to want to shop? Are they going to want to wear apparel the way that they used to? Of course, not the same, but are they even going to buy clothes? And then just how to manage our supply chain, how to manage our teams. And I think for the most part, we were just incredibly fortunate because even though people weren't shopping for the same things, undoubtedly the category compressed, sales online really skyrocketed and people's behavior dramatically changed. And so for me and Katrina, it accelerated the plans we had, I think from that very moment of going into lockdown of my opportunity to focus on really accelerated innovation for the business, all the ideas I had kind of come in with strategically for the next 10 years. And for Katrina to really... help us manage through the crisis. And so as the last kind of year plus has unfolded, what it's allowed us to do is really say, what are all these next things that we think our model can become? And we kind of joke around that sort of similar to a Netflix, we've sort of gone from our DVD into our streaming era. And this idea of the fixed model originally, you know, you explained it, but for those who aren't familiar with it. has been this pretty radically idea, different idea of shopping. You know, usually you go in and you weed through racks of clothing or you filter through a ton of inventory online. We send our consumers... five items. And miraculously, because of the power of our data science, the human touch of styling, people keep around half of those things that they're shipped. And that's a pretty amazing thing that we're able to bring this amazing personalized rack of clothing to your door. You try that on in the comfort of your home. You get the advice and encouragement of our styling community. And we get better and better over time. We have increased our keep rates from those fixes every quarter on record because of the understanding of consumer preferences, the power of data science and now with the streaming arrow what i meant by that metaphor is that we now have created this own personalized store on this shopping feed experience and we launched it kind of in the middle of COVID for our existing active clients. And we've been just aggressively adding new features to that, recognizing that this is an entirely different new way of shop, of personalized discovery. And so we're really excited because we think the next phase of apparel e-commerce is going to be characterized by browse and discover and this personal touch rather than... really what has been search-based shopping through endless catalogs for the prior era. And we're really at the forefront of that because of the 10-year advantage we have. We've sold $7 billion worth of clothes sight unseen, which is kind of an amazing stat. And so we feel just incredibly fortunate and well-positioned for this next phase. Speaker 4 (4:46) Let's talk about the new shop model, because I'm sure that's a pretty big pivot from what Stitch Fix set out as the business model. And so when you pull together the idea of curation, personalization, data-led shopping, how did that all come together into the experience that users have now? And how has the Stitch Fix experience changed? Speaker 3 (5:07) Yeah, I think one of the kind of obvious early insights before launching it, and it was in beta mode right as I was joining the company, a very early incarnation. And we, in our fix experience, when we ship these fixes out to clients, we include what we call style cards, which have photography of lots of ways to where the items were shipping with things that we think you might also have or that you might want to buy in the future. And our clients have told us like, can I just... buy those other items, which is kind of an obvious use case. And in general, we know that with fixes, there's purchase occasions that we don't necessarily tap into. You know, the thing you want this weekend, the thing to fill in that outfit that maybe we showed in the style card that wasn't necessarily immediately available. And so... How it originally launched was this idea we called Shop Your Looks. And then after that, we launched Trending for You. And what that meant was we curated outfits in the context of anchoring them on something you'd already bought. So say you had a black pair of boots or you had some fun polka dot top. We would show, we would algorithmically generate 24 outfits that we'd refresh multiple times a day in your own personalized store. And that's a pretty compelling way to shop. It turned out to be far stickier and engaging than we probably even anticipated. And I think one of the reasons why is that we all buy clothes in the context of an outfit. We all want things to go with things we already own that we love. And so