Stories by Kirsten Green (venture capitalist)

Expert Voices

Stitch Fix's opportunity has been underappreciated

Stitch Fix founder and CEO Katrina Lake at the 2015 Bloomberg Technology Conference in San Francisco. Photo: David Paul Morris/Bloomberg via Getty Images

The brick-and-mortar apparel market has experienced a mass customer exodus over the last two decades, and Credit Suisse predicts another 8,600 stores will shutter this year. Department stores have suffered the most, hit by nine retail bankruptcies in 2017 alone and accelerating declines in foot traffic. Despite this meltdown, shoppers are spending about the same amount. So where are those sales going?

One answer is Stitch Fix, the customized online shopping startup that went public earlier this month, raising $120 million to fund growth. The initial pricing valued the female-founded and -led company at roughly $1.4 billion, yet some have lumped it in with other e-commerce brands, like Blue Apron, whose post-IPO performance has been seen as underwhelming.

Considering Stitch Fix's revolutionary retail model and meteoric rise to $1 billion in annual revenue, these critical headlines miss several key considerations. Sure, as a company scales up in sales, its absolute growth rate declines. And yes, they have work to do in solidifying their marketing strategy. But retail trends are creating strong tailwinds for Stitch Fix.

Expert Voices

Online shopping is no fun

Our expert voices conversation about the death of retail.

Much of discretionary spending is influenced by fun factors such as community-driven engagement, inspiring moments, memorable experiences, personalized attention, emotional connection, and more. The truth is there's little of this with Amazon, and this is where brands and retailers can have the most impact to win customers, especially millennials. Technology is enabling richer and more dynamic customer engagement across channels: stores, websites, mobile apps, social media; all of this stands to further connections with consumers and raises the importance of brand as a means to stand out in a vast ecosystem.

Also, with brands moving off the pages of magazines and beyond the boundaries of store walls, they're free to engage with consumers in real time through the context of content (think Instagram, Facebook, Snapchat, and blogs).

Bottom line: These trends most often direct transactions straight to brands and specialty retailers, and will only continue in popularity.

Other voices in the conversation: