That time I -- a shlumpy 20-something -- went to Saks Fifth Avenue with a fashion company CEO
Recently, I trudged up to Saks Fifth Avenue to meet Veeral Rathod, co-founder of J. Hilburn, an online custom menswear maker. It was my editor's idea, who wanted a different take on the tried-and-true company profile story, and the premise was simple: We'd wander around a tony Manhattan department store and compare the two shopping experiences. It sounded fun, but as soon as I walked into the store, I suddenly remembered that I know nothing about fashion. My socks have holes in them and many of my shirts are ripped. A fashionisto I am not.
Nevertheless, J Hilburn is an interesting company. It fashions (sorry!) itself as a tech-oriented seller of menswear, most famous for its custom dress shirts, but it tries to go against the branding of traditional e-commerce, and instead frames itself as a direct seller. Its business model is similar to Avon's in its targeted audience and one-to-one shopping experience. The company believes it has come up with the perfect antidote for aimless department store meandering, and has some pretty impressive growth numbers to show for it. Last year its revenue more than doubled, and the company's sales surpassed $55 million.
Hilburn, based in Dallas, doesn't have a brick and mortar store, other than the occasional popup shop. The rest of the business is done through independent contractors that Rathod described to me as "stylists." These are the equivalent of Tupperware party doyens or Avon door-to-door saleswomen who travel to meet with potential customers, fit them, then recommend clothes.
Rathod wanted to offer me a comparison of shopping experiences and clothing qualities. Unsurprisingly, he comes across like a well-dressed professional. He wore unwrinkled slacks with a nice sweater-dress shirt combo. Compare that to my slightly baggy pants atop winter boots and ripped red sweater. In terms of our outing, he was Felix to my Oscar.
Rathod also knows his target customer, who, although richer, is not dissimilar to me. He is a successful, but not overtly wealthy ($200,ooo - $300,000 average income, says Rathod), a guy who just wants good clothes to wear to events. Nothing flamboyant nor requires a great amount of effort in discovering. He also knows that when men find a brand they like, they generally stick with it. Most men "won't go to other brands until they screw up," evidenced, Rathod says, by J. Hilburn's 70 percent retention rate.
From there, the two of us pawed through the endless selections of slacks and looked at various shirts and blazer combos then compared them to some samples he carried with him. To my untrained eye the materials looked identical. I also felt both Saks shirts and J. Hilburn ones, and as much as I tried I couldn't discern a difference. Rathod said his company uses a factory to tailor its clothes that it shares with Brooks Brothers and Nordstrom. He also said most of the fabrics his company uses are the same as any high-quality shirt found here.
J. Hilburn's works with two factories, one in Malaysia, the other in Portugal. According to Rathod, the company spent years trying to source the perfect factory. It would need to handle custom orders to scale, use new technologies other fashion companies wouldn't, and be ethical to its workers. He says these factories the bill. Rathod's co-founder Hil Davis has a personal relationship with the factories' proprietors, which helps ensure his company's needs are met.
"The two hardest parts of manufacturing are making a pattern and cutting a shirt," Rathod said. So Davis found and implemented new machines for it. It's important for J. Hilburn's customers to have a perfect cut shirt the first time around, because most of its customers only buy a few shirts a year. Rathod says that 50 percent say, when they first begin process, that they only want to buy one shirt. Then they buy more.
It's precisely because of this why the company's seven-year history isn't without its wrinkles. In its early days, Davis encountered numerous factory issues, be it ill-fitted shirts or factories not meeting deadlines. If a company is basing its business on custom menswear , and high quality service, it's imperative the clothes fit well and are shipped on time. This almost bankrupted the company, until it finally found its footing a few years back.
With its backend more or less figured out, the company's main emphasis is now customer accrual. Last year it was considered the largest seller of men's custom dress shirts, but Rathod wants to grow a lot bigger. The company uses no paid marketing, and sells nearly 20,000 shirts per month, so it depends on word-of-mouth to fuel sales. For 2014, he projects revenue will hit $80 million.
The kind of customer it gets are people who don't shop often, but when they do they buy a full get-up. "The average purchase amount is $350," Rathod says. And customers return an average of 1.8 times each year. When it comes to the price tag, $350 isn't that much, especially considering that most of the shirts he showed me at Saks retailed for upwards of $700.
So should Saks duck and cover? Well, J. Hilburn is trying to position itself as a worthy competitor in the $1 billion mens fashion industry. But companies like Saks have been around for eons, and have quite a bit of sticking power. J. Hilburn, however, is a good example of where fashion is going. While larger companies probably aren't nervous, maybe it's time they began understanding some of these new practices. Or, at the very least, take a few cues when it comes to ethical manufacturing.
As for me, am I convert? Probably not: $350 for an average purchase is generally more than my average expense. Then again, I'm not your average J. Hilburn customer. I'm just a grubby 20-something who wears ripped sweaters, hole-y socks, and wrinkled shorts with missing buttons. [Editor's note: It's true. He does.]