Since its founding in 2011 by Katrina Lake, Stitch Fix has been credited with establishing and popularizing the concept of the subscription box service by utilizing recommendation algorithms and data science to personalize apparel items based on size, budget and style.
In 2017, it took its concept to Wall Street, selling 8 million shares and raising $120 million. Today, its market capitalization sits at $6.3 billion.
In January 2020, Stitch Fix brought in Elizabeth Spaulding, the global head and founder of Bain & Company’s digital practice, as president. In August, she will ascend to chief executive officer when Lake steps aside to assume the post of executive chair of the company.
At the Fairchild Media Group Tech Forum, in a conversation with WWD deputy managing editor Evan Clark, Spaulding outlined what has made Stitch Fix so successful and what the future holds for the personal styling service.
WWD: This is a new gig for you, taking over from founder Katrina Lake. Where are you looking to take the company now?
Elizabeth Spaulding: The last 15 months since the beginning of COVID-19, we’ve had an opportunity to just accelerate innovation for Stitch Fix. As I take on the CEO role, I hope to further capitalize on the seismic shift that’s happening within apparel retail. We’ve felt really fortunate as a business that we could go on offense during this time period, very rapidly pushing our focus on personalized apparel shopping. The Stitch Fix business we’ve created is radically different from what Katrina envisioned: just send a few items to each client that we know they’ll love. But now we’re really pushing that forward with our vision for personalized shopping and expanding innovation within our Fix business as well.
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WWD: Up until now, people have received five or so items in a box in their homes, that’s the Fix. But then you’re also adding a direct buy and shop element as well. Can you describe Shop?
E.S.: We’ve sold $7 billion worth of clothes, sight unseen, through this Fix business. We get some information from our clients, but through the power of data science, as well as the human touch of our styling service, we’re able to curate a Fix of five items for our clients. About a year ago, we launched a shopping feed for our active clients so in addition to their Fix experience, they could open up our mobile app or mobile web and see a curated feed of looks chosen for them — either items to complement what they’d already purchased to compete a look, or things we put in front of them that are trending. That’s really opened up a whole new addressable market for Stitch Fix. We know a lot of people are high intent: they’re looking for a new pair of jeans or, right now we’re seeing huge growth in rompers and jumpsuits for going out again. That allows us to show items that are just in your personal store. They will reflect your personal style and they’ll fit you. It’s just a radically different way of shopping that builds on what we did with our Fix offering. That’s been available in the last year or so for active Fix clients but our expectation in the months to come is that will become a new front door to Stitch Fix to be able to shop with us in this new personalized feed format.
WWD: In light of this, how is the Fix changing?
E.S.: What we envision is more of an integrated experience where we’re really just the destination for styling, inspiration, shopping and the services that are attached to the 6,000 stylists in our ecosystem. There are inherent limitations with Fix even though it’s still growing — we announced in our second-quarter earnings that we’d already signed up more people in those two quarters than we had in the entire prior year. But if you want something right now, that’s not something Fix can accommodate [and we’re hoping to become] the go-to destination for personalized styling and shopping.
WWD: Everything is so tech focused, but you have this big group of stylists. How big a part of the special sauce is that?
E.S.: So much of our secret sauce is styling, not shopping. In our shopping experience, one of the first things we introduced was an outfit-based feed to algorithmically generate outfits. People want a pair of jeans or a new fun top to go out again, but it’s all within the context of an outfit, so it’s powered by our algorithms but trained by our styling community. You can click in for advice from a stylist when you’re in that feed. We envision the value add of that human touch will continue to be powerful, whether it’s more behind the scenes in helping us curate our machine-learning models, or in front of the scenes. We’ve also been incubating this year live styling where consumers spend 30 minutes with a stylist and that’s a new way of getting a Fix from us. It’s not an either-or and the stylist is playing a very instrumental role in what may feel a little more tech-focused or self-service. Their fingerprints are really on that curated shopping feed.
WWD: Data is another thing everyone is talking about. Why is your data better that other retailers’ or do you have a different model?
E.S.: I think there’s a big difference in the kind of data people are gathering, and a lot of that can be small data, not big data. We’re gathering data on fit and size and that whole notion of item feedback that is unique and different: What really drove you to love that thing? What didn’t work? We have the benefit of not just understanding each client but extrapolating that to the 4 million active clients that we have. We predict the likelihood of an item being successful for each client, leveraging the combination of fit, the prior purchases, the style preferences. When our stylists open up the software tool that we’ve created, they can pick things with a little lower likelihood of success that can push the client into some risk as well as a few things we know they’ll absolutely love. Our clients really appreciate that. They say, “I never would have picked this item, but you got me to try it.” And now adding life styling and shopping, there’s even more data we can gather. I think that’s the difference. You might have a lot of consumer transaction data, but that doesn’t have the richness to really understand preference and fit.
WWD: Do people spend spend less time on Stitch Fix because the selection has been narrowed down for them or more time because they’re more engaged?
E.S.: Before I joined, I had pulled some data to see how often people engaged with Stitch Fix and I was shocked to see the percentage of daily active users off the base of our iOS downloads. And part of that is style shuffle: we create these little addictive moments so people want to engage with us. But the way our shopping feed works is it updates all the time. So we’ll show you what’s available right now based on inventory and what we think you will prefer, but if you come back in a little while, it’ll be a different set of looks. That keep clients coming back again and again because it’s like your own personal boutique that just refreshed with some new outfits that might be great for you. We did a collaboration last summer with Katie Sturino — we have a lot of influencers we work with — and in the future, we can see influencers making suggestions inside of Stitch Fix. So that’s another reason to come to us: hopefully it’s really convenient, but it’s also really fun and enjoyable to get inspiration that brings you back again and again.
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