Fashion! (Ongoing)

Katrina Lake’s verdict on my black and green palm print dress from Brighton label, Sugarhill? “Great!” Though she would say that. After all, the diminutive Lake is responsible for the dress I am wearing, as well as two other new outfits I now own.

Lake, who is elegant in a long spotted dress which looks high-end designer but turns out to be boring old Hobbs, is the chief executive of Stitch Fix, the US etailer and online clothing styling service she started in 2011. The way it works is this: customers fill in a questionnaire detailing size, style aspirations, bits of their body they like showing off and how much they want to spend. Algorithms use this data to come up with recommendations from the site’s stock, which then get refined by stylists, before a bespoke selection of clothes is sent to the customers. The client only pays for the clothes they keep; the £10 styling fee is redeemed against purchase.

For the purposes of this interview, and to mark its launch in the UK, I am testing the service. In the process, I have also secured a personal consultation from Lake. The 36-year-old is jet-lagged after flying from San Francisco with her husband and young boys (two years old and five months). Yet in the bright, sunlit Stitch Fix London office in a co-working space, she seems peppy.


I requested a “fresher work look” with no thought as to what that might look like. I said that I sometimes like trying new trends, prefer smart casual, like Whistles, H&M and Zara, hate wedge heels, leather and beige. My usual shopping tactic is to find variations on an old outfit — V-necked dress or jumper and skirt — so I wanted Stitch Fix to offer me what I wouldn’t normally choose. Despite having no expectations, the selection was surprising. I’d never have gone for a bold print but rather liked the one sent. The other clothes were nearly right — but not quite right enough. Most stylists have to work “blind”, though customers can link to their Pinterest clothes boards and scroll through pieces they like. The UK-based male stylist assigned to me, had looked me up on Financial Times videos, so maybe I had an unfair advantage.

The value of Stitch Fix, according to Lake, is that the stylists and algorithms “help surface” items among “labels that you would never think would have anything for you”. The Hobbs dress that Lake is wearing is a case in point.

So far, it seems to be working. The Nasdaq-listed company has just under 3m active clients (defined as people who have ordered and received clothes — a “fix” — in the past 12 months). In March, it reported revenues of $370m for the most recent quarter, up 25 per cent on the previous year, with a net income at $12m. It predicts full-year net revenues of $1.53bn to $1.56bn. Stitch Fix employs over 100 data scientists, with backgrounds in statistics, maths and neuroscience. Selecting outfits is still relatively labour intensive — just under 4,000 personal stylists, with fashion, styling or retail backgrounds who work from home part-time. Fifty have been recruited in the UK thus far. While the company will not share the stylists’ average number of clients, it says it monitors stylists’ work and success rate.

Stitch Fix trades on our obsession with busy-ness, as well as choice paralysis. The core customer, Lake says, is working, wants to look polished, enjoys fashion but does not have the time to go to boutiques. There are also customers who love shopping but use the service to supplement their own choices.

Brexit or not, the UK is Stitch Fix’s first foreign outpost because of its reputation for online shopping. According to Mintel’s European clothing report published last year, the UK spent £20bn on clothes and shoes in 2017, compared to £12bn in Germany and £4bn in France. Yet entering the UK fashion industry is no easy task. Samantha Dover, senior retail analyst at Mintel, says: “Stitch Fix is going up against popular online-only retailers that are well-established in the UK — such as Asos and Net-a-Porter. Many of them are experimenting with AI-powered personal styling solutions, while others such as Threads offer a similar service.” In addition, she says, customers are price-conscious, and used to discounted stock, so may be reluctant to sign up — “customer acquisition and retention could be costly”.

Lake is confident. For now, she is concentrating on serving British customers familiar clothing lines (from the UK and the continent) but hopes to mix it up later. “One of the opportunities is for us to cross-pollinate . . . to bring some British labels to the US, and vice versa.”

Stitch Fix is launching in the UK with 60 brands; the US carries more than 1,000. Like a department store, they buy wholesale. Unlike a department store, says Lake, they can give detailed feedback to brands based on data. “We understand what’s working and what’s not,” she says. “Stores often have no idea what performs, and they never know what performs with whom, and why.” She cites one brand that adapted its fittings after Stitch Fix found that women were buying it in larger sizes than usual.

To keep in touch with tastes, Lake still styles five customers a week, although she has no fashion training. Jeans are key to customer loyalty she says. “If we can get somebody a pair of jeans that fits them well, they’re just amazed.”

Trading on busy-ness and choice paralysis, customers want to look polished but don’t have time to shop Lake’s Californian uptalk clips along at a pace. She never expected to run a large clothing company. Her early ambitions were to be a doctor, enrolling on a pre-med course at Stanford University, before switching to economics. A subsequent career in consultancy persuaded her there might be a need for the kind of fashion advice she got from her sister, a fashion buyer. She started the business while doing an MBA at Harvard Business School, initially using her personal credit card to purchase clothes for her first customers — her friends and family.

Raising funds from Silicon Valley venture capitalists was a hard slog. “There are gender and diversity issues,” she says. “I’d come in and describe the experience. One [venture capitalist] said, ‘I have no idea why anybody would want something like this.’ It was difficult for them to see how delightful this would be, how difficult it is to be a woman who is working . . . and [has kids] and is trying to also look good. There was a lack of first-hand understanding of the problem I was trying to solve that made it really difficult to raise money.”

The venture capital days were also tainted with sexual harassment. “It was really hard to be a woman trying to raise money in a world of largely male venture capitalists who really reported to nobody,” she says. “The laws around sexual harassment are not set up to protect people who are [not employees].”

The company’s flotation in 2017 created new challenges, like quarterly reporting. The share price has been buffeted by analysts’ concerns about inventory management, as well as customer growth and loyalty. Is she worried about Amazon taking her on? “We always have to keep an eye on Amazon.” She insists that it can’t match Stitch Fix’s personalisation technology, but it’s hard not to imagine this could change in the future.

Could the Stitch Fix model that she describes as “human curated recommendations” work for other sectors? Beauty and travel are ripe for change, she suggests. Online dating is another industry that could be helped. “Can you imagine if somebody could weed through your swiping left and right and could just recommend high-quality . . . ” She pauses. “Men?” I suggest. “Men. I was trying to think of a better word for it. A high-quality assortment of . . . ” “Gentlemen?” “Gentlemen, yes.”

On the basis of my clothing package, singles might be in for an affordable date with a rough chance of fit — though the returns policy might need tweaking.