How to Write Great Cold Emails, A Conversation with Meha Agrawal

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Meha Agrawal is the founder and CEO of Silk + Sonder, a self-care membership experience for modern women that makes daily and proactive mental wellness easy and fun from the comfort of women’s homes. Silk + Sonder gives women a holistic suite of tools – a monthly wellness planner rooted in positive psychology and bullet journal techniques, a mobile app that offers peer-to-peer support and accountability, and IRL / virtual experiences to foster community. Meha has raised over $4m in capital to date, with the most recent seed round being led by Redpoint Ventures.

Meha Agrawal

Note: This interview is condensed and edited from a recent Retail X Series podcast episode.

Meha, you’ve had success in writing cold emails to investors, who ultimately invested in you. Tell us about one success you’ve had with cold outreach.

Our second investor into the company was the result of a cold outreach. After our first check, I started to get more strategic about who I wanted to bring into the company and aligned to our values and the strategic advice I was looking for. So I was very intentional about who I wanted to bring into the round. Actually, a series of folks in our preseed round were the result of cold outreach, and one was the former president at Pinterest/ former director of monetization at Facebook who had started a company around disconnection and limited screen time. So I knew he had an appetite to solve some of the same issues we are focused on and that he was aligned to the values that were core to S+S. I knew he was an operator in a similar space, but didn’t know if he was an active angel investor. I figured that cold outreach centered on exploration and curiosity was the right path. So I took my chances and wrote a thoughtful note on what we were working on, why I thought he would be a fit, and asked him if he invests. That’s a great example of someone that I didn’t even know was an active investor, but I focused on why he might be a great investor and a good fit for Silk + Sonder.

Why did you decide to do cold outreach versus trying to find a warm intro?

In that particular case, I had lukewarm connections to that investor, and those were more or less acquaintances, or friends of a colleague, or former colleagues that I hadn’t kept in touch with in a while. And that felt inauthentic to me, to reach out to them on a whim to have them make a warm intro, because then I would have to explain what we were doing, why I wanted the introduction and justify my case up front. Instead, I could put all that effort and thoughtfulness up front into a cold email. And then if I need an extra nudge, I could reach out to those warm intros. But if you’re going to put in that thoughtfulness, you might as well put that work into a very thoughtful, personalized email to that person directly. Also, I like to be in control of the input, even if I can’t control the output. And when you request a warm intro, you don’t know what context is being shared, and you don’t know how strong their connection is to your target. And it honestly felt a little like soliciting versus being honest and transparent about what you’re building and why the investor would be a fit. 

And to be honest, going direct on cold outreach and being successful with it in the early days made me be a little more strategic and thoughtful about the warm introductions I actually did request. My request for warm introductions are really personalized and easy to forward so it’s easy for the person to forward them. 

What are the elements that make a cold email great?

There’s a tactical strategy and there’s also an authenticity layer to all of this. I’ll start with the authenticity layer.

  • Know Your Style – The first step is to understand your tone and voice and style so that you can convey yourself in the email. For example, I have a very warm demeanor, so I tend to ignore those rules like don’t use exclamation points and happy faces in an email. I think of who’s reading the email – it’s a human with feelings, not a robot. And I’m sending these emails during a time when the world needs an emotional health solution like S+S. So I ensure that my vibe lands within the context of the email. I recommend that you remember you are a human too, so try to eliminate the desire to know all the answers right off the bat, and make sure that trickles through the voice. Don’t just use a cookie cutter template – you need to layer your own authentic style throughout it. That’s number one.
  • The Subject Line: Of all the elements, the subject line is the hardest. I would A/B test different subject lines to see which would get the best response, like “Connecting!” versus something with “Interested in investing…” I like the vague “connecting” type of subject lines since you don’t know much about the person, so being open and curious and not so transactional is key. So pick a subject line that is not so marketing-y and salesy.
  • Research Your Investors: You need to be targeting the right investors. What is that common thread between you and the investor? That might be that they invest in your space, have something to do with your past background, or things you have in common – connect it to something personal. For S+S, I was targeting a lot of former founders and operators. I thought they could connect with the burnout and stress that comes from building a company. Figure out why this person would be the right fit with your company.
  • Stroke Their Ego – Explain why you’re reaching out to them or how you found out about them. What are you specifically impressed by in their background? Did they write something that you were moved by? In the first couple of sentences, you want to tell them why you’re impressed by them. Everyone loves some words of affirmation from time to time!
  • Get to the Point – After stroking their ego, tell them why you’re reaching out and include 1-2 sentences on what you’re building with the progress thus far. Don’t be afraid to share numbers – showing them that you are both metrics driven and vision driven will buy them into your idea sooner. If you’re a founder, chances are you have an ambitious streak – be proud of it, most people don’t have that entrepreneurial bug and it’s important for your bold, risk-taking nature shines through! Ask if they would be interested in what you’re building. Do ask if they are actively investing and if so, you’d love to meet with them.
  • Why They’re a Fit – This is the most important piece – so explain why you think they would be a fit (and tie it back to what you mentioned you were impressed by them on). Remember that you don’t want just any money, but you also want the brains behind that money. So be thoughtful about this. Don’t be afraid to be personal about it. If you read an article about them and find a connection point, like the same hometown for instance, use that. It’s not stalking, it’s research!
  • Clear Ask – Don’t simply ask if they are going to invest – that’s just too transactional and misses the opportunity to build a relationship. Instead, ask to have a chat, and offer up some options that show an openness from you to be willing to be available and flexible. That makes it easy for the investor – it’s just a yes or no from them.

Tell us more about the comment you made about fit – “is this somebody you want on your cap table.”

In my case, I started to think about the values I’m looking for in investors, much as you would do for a romantic partner or your team. The qualities I look for are their thoughtfulness, are they smart and bright, are they a problem solver and do they have a sense of humility. That layer of consistency allows you to expand the investor pool – from those you see on Twitter or on investor lists. Instead, you think about where else are new investors? Where are the folks who have made their early money from tech startups and want to support other founders? That helps you be creative in your approach to find the investors that share your values.

How many cold emails did you send out during your preseed round and what sort of responses did you get?

I actually don’t have a number for you. But what I can tell you was that those cold emails had a far higher conversion rate than other methods. About 20-30% of them converted. Instead of seeing it as a numbers game, I focused on conversion rate, by making the initial list very targeted. Because of that, most of my emails got a response, and 20-30% ended up investing.

Mostly that great conversion rate has to do with the first paragraph in the email as we discussed above. So that even if they’re not ready to invest, they can come back and say “thanks for your email, I’ve already invested in a similar space” or “thanks for your kind words.” So you do get a response. 

If you didn’t get a response at all, would you continue to follow up with those investors?

Yes, I would follow up but with something generic acknowledging that they’re probably really busy. Something like “just wanted to bump this up to the top of your inbox” or something like that. It needs to come from a place of confidence, and not of fear of rejection. Don’t recap the original email – keep it short and sweet. And that actually worked for me in one instance – one of the leads in our preseed round needed a few followups. 

Did you ever send a cold email that maybe didn’t get a response and then later get a warm intro to the same investor? 

I typically didn’t position it that way – there were times when an investor might mention to another investor that S+S was raising and did they want an introduction, but I didn’t reach out with a warm introduction to the same investor. But sometimes investors talk to other investors and that buzz can make an investor take a second look. And that can also happen when you don’t toot your own horn in the fundraising process – in preseed rounds, where the impressiveness of the founder can be a motivation to invest, sometimes that just doesn’t come across in the deck or emails. As a founder, you need to make sure you show you have the grit and talent to build a company.

Have you used cold emails for any other purpose besides fundraising?

Absolutely. Cold emails work for hiring, especially through cold LinkedIn messages. In certain cases, you don’t have to be as specific with hiring cold outreach as with investors, but having a little bit of that personalization goes a long way.

If you take the pressure off to “close” every candidate or every investor or vendor partner, you’ll find that most often people want to be of help. Any cold email that didn’t lead to a full-time position at S+S, has led to an advisor position, or a desire to be helpful in other ways. I have become more appreciative of that and you never know where your cold email might lead you, and oftentimes it’s planting a seed for a future opportunity. 

Sample Cold Email to an Investor

Subject Line: [Something warm / not too long / generic like “connecting”]

[Name of Investor],

I love / am blown away / am impressed by etc. [write something about their accomplishments / stroke their ego in an authentic way]. I’m building a [explain what your business is, the problem you’re solving, and for whom you’re solving that problem for]. I love [connection point to something about their background / explain the shared value or connection]. 

I’m reaching out because [specify why you’re reaching out – angel investor? advisory?] – we’re doing a round [explain the terms if you have them] to [explain what you will use the funds for]. [Explain why you think they’d be a great fit]. 

Are you available [specify a time frame and medium – call vs. coffee etc. – make it convenient for them]. 

[Ending Sentiment – e.g., looking forward to hearing from you.]

Best,

[Your name] 

How to Find Angel Investors

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You’re raising a pre-seed round and you know you need to find angel investors, but how do you find them? It can be really difficult to research angels, understand who is actively investing, and figure out at what stage angels are really looking to invest. This post breaks down all the ways you can seek out angel investors, and what to do once you’ve found them.

First, for all the pre-seed founders reading this, let me just say that fundraising is hard. It’s likely your first time going to investors to ask for money and you probably don’t really know how to do it. You’re going to make mistakes. You’re going to get a lot of “no’s” before you get any “yes’s.” Your pitch deck is going to evolve – you’ll keep iterating as you learn what works and what doesn’t. You’ll learn which common questions investors ask, and how to answer them. It’s a process. Don’t give up.

What are the Different Types of Angel Investors?

Okay, now that we got that out of the way, let’s start with the definition of an angel investor. There are many kinds of angels, but I would characterize them broadly into three groups. You’ll seek out these different types of angels in different ways.

  1. Active Angels – These are angel investors that look at a lot of startups and write checks often. They may be members of an angel group. They spend a lot of time talking to startups, going to demo days, mentoring at incubators, judging pitch competitions and are highly involved in the startup ecosystem. They can be similar to a micro-VC in their approach in some ways, in that they usually have some sort of diligence process and are looking to build a portfolio. These angels are be the easiest to find as they often market themselves as angels. Note: I put myself in this category.  
  2. High Net Worth Individuals (HNWIs) – These angels have day jobs that take up most of their focus, but they can be involved in the startup ecosystem by mentoring at accelerators, etc. They may not actively seek out deals and spend all their time in the startup ecosystem, but they do invest when something crosses their desk that they like – whether that’s the founder, market or business concept that’s related to their industry. These are the angels that can be harder to seek out as they are not actively marketing themselves as angels.
  3. Friends & Family – A subset of HNWIs, your friends & family are people in your network that want to support you at the earliest stage of your company. This includes relatives, but also people like your parent’s friends, your dentist, colleagues from previous roles, etc. These are the easiest to find as you know them already.

Okay so now you know what the different types of angels are.  How do you find them?

Where to Look for Angel Investors

When you look for angel investors, you’re going to need to cast a wide net. Here are some places to start the search.

  • AngelList/Crunchbase – These are the obvious places to start, even though it can be overwhelming to search these huge databases. Just note that many angels aren’t listed, or their profiles may not be fully updated. But it’s definitely worth searching these sorts of platforms, especially to find Active Angels that might be actively investing in your sector.
  • Curated Lists of Diverse Investors – If you’re looking for diverse investors, here are a few lists I’ve found (there are probably others, but these are a good place to start):
  • Angel Groups – There are pros and cons to angel groups (for example, pro: you pitch to a lot of angels at once, con: the diligence process is much slower than for a single angel).  My take is that there are some great Active Angels in these groups and it can be worth going through the process to meet them. Some angel groups hold office hours and these are certainly worth going to for feedback, advice and to meet members. Many angel groups list the names of their members on the website. Even if you don’t want to go through the pitch process of the group, you can certainly research their members to see if any might be a fit for your business.
  • Your Network of HNWIs – If you are fortunate enough to have a network full of HNWIs, use it! HNWIs can be former colleagues, friends, relatives, your doctors, etc. Think of all the wealthy people you know that are in your network and spread the word that you’re fundraising. Sometimes these checks can be on the smaller side, but as long as they are accredited investors, HNWIs can be a great source of early stage capital.
  • Industry Executives – Senior industry executives in your sector may invest in early stage companies. For example, if you’re in the apparel industry, look for senior leaders that have invested in other startups. (e.g., Andrew Rosen at Theory, or senior executives at LVMH, etc.). Cracking this network can take a little bit of effort (LinkedIn is your friend here), but can be really worth it, not just for fundraising. One caveat here: many of these senior executives might be more interested in advising than investing, so be sure to ask them if they are active check writers.
  • Later Stage Founders – I’m starting to see more and more that later stage/exited founders are starting to invest at the angel level, particularly on the West Coast. They may invest in a specific industry or more generally, but these sorts of investors are great value-add and it’s worth doing some research (listen to podcasts they’ve been on, Medium posts they’ve written, Twitter, etc.) to see who might be a relevant founder that could invest in your business.
  • Your Founder Network – Other founders in your industry sector who have raised pre-seed/seed rounds are in a great position to make intros for you. Most are happy to pay it forward and introduce you to their angels (if there’s a fit) and even others that they have met throughout the years. It’s worth asking your founder friends for intros as angels (myself included) respond very positively to these sorts of introductions.
  • Alumni Networks – If you’ve been to college or grad school, don’t forget those networks. And you don’t have to go to a top tier school to be able to leverage alumni networks. Research your school’s alumni database to find people in your industry sector and reach out – a well-written cold email can work really well to get a first meeting or call.
  • Accelerators/Incubators – You may have gone through an incubator or accelerator program – if so, definitely use their network to find angels that are right for you. But even if you didn’t go through a particular program (especially a program that is in your industry sector), check out their website for their mentors and advisors. Some, but not all, are likely to be angels that might be a great fit for your startup.
  • Early Stage VCs – If you’re meeting with early stage VCs, they may be able to point you to angels that might be relevant for you. If they’re not investing in your company, they may not make an intro to angels, but at least give you names, which is a great place to start. Some VCs host open office hours – take advantage of those to broaden your network and get feedback on who you should be targeting.
  • Events – Events, particularly pitch events, demo days or networking events that bring together founders and funders, are a great way to meet angels. They may be speaking at the event, or just attending. While it can feel like there are a million events to attend and they’re very time-consuming, they can be a real source for finding great angel investors (shameless plug: my Retail X Series events are a good place to start).

I Have a List of Angels, Now What?

You’ve gone through all of the sources listed above and found a list of angels you want to target. Next you should create a Google Sheet that can help you track some key information and interactions during the fundraising process. No need to re-invent the wheel and create your own. This version that Jenny Fielding of TechStars has created is great.

Now that you have your spreadsheet, you need to find connections that are willing to make a warm introduction to each of the angels on your list. When you ask someone for a warm intro, make it easy for your introducer. For each warm intro you ask for, customize an email that mentions why you think that angel is a fit for your business, how much you’re raising, a short blurb about your company (include any wins/traction in particular), and a link to your pitch deck (or a pdf of the deck).

If you can’t find a warm intro, you’ll need to craft a fantastic cold email to send – here’s a great thread from Elizabeth Yin of Hustle Fund on how to do that. There are plenty of other posts on how to do this as well. Some angels may not respond to cold emails, but if well-written, many will. This takes time but can be really worth it.

Do’s & Don’ts

At this point, you’ve put together a great list of angels that you’ve researched, and you’ve gotten some meetings on the calendar through warm introductions or cold emails. So let’s go through some quick do’s and don’ts that will help you go from an initial meeting to (hopefully!) a commitment.

Do’s:

  • Do send the deck or one-pager in advance of a meeting (yes, I know some people say don’t send a deck, my view is that it’s better to send it).
  • Do practice your pitch – especially your short elevator pitch, as well as answers to the tough questions.
  • When you get a meeting, do ask the investor if they’d like to go through the deck or have a conversation. If they’ve read the deck in advance, they may want to talk through questions. Don’t assume, just ask.
  • In the first meeting, assuming it goes well, do ask the angel if they are actively investing and what their check size is. I’m surprised more founders don’t do this. You don’t want to waste time with investors who aren’t investing right now or have a check size that is not commensurate with your fundraise.
  • Do ask if your startup is potentially a fit for that investor – would they like to learn more in another meeting/call, what questions they have, what information they would like.
  • If the answer is no, do ask for feedback. You won’t always get it, but when you do, it may be helpful feedback in evolving your pitch.
  • Do remember that this is a relationship you’re creating, so it may take several meetings to get the commitment.
  • Do use FOMO to your advantage when meeting angels. Once you have some commitments, use those to close angels that you’re talking to. Some examples of ways to create FOMO: a big name that has committed, imminent closing date, only $X remaining in the round, etc.
  • Do think of every angel you meet as someone you might have a potential relationship with for 5-10 years. Do you want to be in business with this person for that long? They’re vetting you and your company, but you should also vet them.
  • Do ask angels who have committed to your round to introduce you to others who might be interested. Share your Google Sheet and see who they know or can add to the list.

Don’ts:

  • Don’t ask if the angel will invest in your company in the first minute of the first conversation. This is my biggest pet peeve when I meet with founders – I just met you, how do I know if I’m even interested or know anything about you and your team? Remember that this is about creating a relationship.
  • Don’t expect the angel to commit/write a check at the first meeting. Some angels will write a check in the first meeting (you’ve probably heard a story like this from a fellow founder). But most don’t – they need to hear more, get to know you, do some diligence, etc.
  • Don’t go to your ideal angel investor first. Meet a few others and practice first. Get a little feedback, get better at the pitch and answering questions, and only then go to your ideal investor so that you’re in the best position to get a “yes” from that investor.
  • Don’t try to spend your time turning a “no” into a “yes” in that round. A no is almost always a hard no. However, you can go back to them for future fundraising rounds, particularly if an investor says you’re too early. In that case, find out what stage/metrics they’re looking for and go back when you have them.
  • Don’t lie – not about your soft commitments, other investors you’re talking to, or really anything. This should go without saying but when an investor finds out you lied, they will tell their network, and that will torpedo your round.
  • Don’t get discouraged – you’ll get a lot of “no’s,” and it will feel like you will never get to a “yes,” but be persistent, keep iterating your pitch, keep working on your business, and you will get there.

I hope this was a helpful guide to think about how to find angel investors and what to do once you find them. Most of the above applies to finding and meeting with VCs as well, but I’ve focused on angels here because pre-seed rounds tend to be angel rounds. If you’re a founder who has had success finding angel investors in ways I haven’t mentioned above, let me know and I’ll add them to the post.

And if you’re looking for further resources on fundraising, you can find a list of articles, investors and more that I’ve put together here.

Happy fundraising!

Why I Invested in Dough

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Dough

Over the last year or so, I’ve seen a number of new startups launching brand aggregation platforms that, among other benefits, provide consumers with curated product discovery. Many of these aggregation platforms are online marketplaces (the recently announced high profile Verishop is a great example), while others are offline (e.g., Showfields). As online customer acquisition gets more and more difficult and expensive for young DTC brands (see here for more details on that trend), I believe that platforms will become even more important. Young DTC brands will increasingly seek out aggregation platforms that curate products are relevant for their target consumer – and this will be a key way for these young brands to acquire customers.

Given these trends, it’s not surprising there have been many new entrants into the aggregation platform space. Many of these focus on a particular industry vertical (e.g., ethical fashion, sustainability, beauty, fine jewelry). More recently, I’m seeing many more startups in this space focus on a particular customer segment (e.g., millennial discount shoppers). And these platforms are interesting in that they can also build a sense of community among their users, where curated shopping is just one of the key benefits. Allowing consumers to feel a sense of social purpose is another benefit that these platforms can provide. I’m betting that these sorts of aggregation models will be among the next generation of massively successful shopping platforms.

My thesis around aggregation led me to invest in a curated aggregation platform that launched earlier this month: Dough. Dough brings together inclusive, female-founded brands across a variety of categories including fashion, home, beauty and more. You’ve probably heard of some of the brands on the platform (like Dagne Dover and Alex & Ani), but perhaps not others (such as Avery Grey Soapery). The twist to Dough’s model is that becoming a member of Dough (for $89/year) gives you access to discounts, swag, exclusives and perks from all of these brands. The discounts and perks make it easier for shoppers to try new brands and vote with their wallets to support the brands (and the founders) they care about. And the icing on the cake is the community that Dough is creating. Currently, members can nominate other women-founded brands to join the platform and in fact are encouraged to do so. This community aspect will only grow over time.

I invested in Dough and its co-founders Anna Palmer and Vanessa Bruce because I believe the time is right for a curated shopping platform that allows women shoppers to be more intentional in their spending, easily discover new brands across a wide range of categories, while still providing discounts and accessibility. At the same time, Dough is providing a new channel for young DTC brands for building awareness and customer acquisition. And all while building a community of women supporting other women.

DTC 2.0: Why Stores Matter

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Store interior
Photo Credit: Unknown Author (CC BY-SA)

When I first started investing in DTC startups over five years ago, most were following the classic DTC playbook – once they developed their product, they would add social content, get SEO right through blog content and site design, collect emails and launch drip campaigns, and, most importantly, pump some money into paid acquisition (back then it was mostly on Facebook or Adwords). Some would also use press to great advantage. Back then, the market for new brands wasn’t that crowded yet, so brands could count on the playbook to build their customer base and revenues.

Today I’m seeing a customer acquisition landscape that is very different for new young brands. First, there’s a huge proliferation of brands in almost every category – just as an example, in the last six months, I’ve received pitches for pre-seed funding for six different new towel and/or sheet brands – in a market that already boasts well-known, well-funded startups including Parachute, Brooklinen and Boll & Branch (not to mention a dizzying array of incumbent brands). And that’s just in a single home textile category.

Therefore there’s more competition for the same customer, especially for those DTC brands that are targeting urban millennial women. As a result, online customer acquisition costs are going up for brands – brands now need to spend more and more on acquiring the customer online because they are competing with their peers (and in many cases more well-funded peers). As a result, many startups are now also having to raise more money in early funding rounds to be able to spend more online for customer acquisition. But I don’t believe this is sustainable for most companies.

What is the solution? I believe that there can be many solutions, but in my mind, offline strategies are absolutely critical – stores, wholesale or other forms of physical retail. Today, I’m seeing DTC startups opening up their own stores or pop-ups, utilizing wholesale or consignment sales to existing brick and mortar retailers and creating offline partnerships and events – all from very early on. And even using that physical presence to create community. A couple great examples of companies who used these strategies early in their evolution are Hatch and Stantt.*

One more trend to note that could become part of the solution for many early stage brands are the new platforms in physical retail, like the bricks & mortar marketplaces Showfields and Neighborhood Goods that bring together a curated set of young DTC brands, thereby providing offline exposure to customers that are expensive to target online.

Today, I believe that the most successful early stage DTC startups will be the ones that are opening up their own stores or pop-ups, utilizing wholesale or consignment sales to existing brick and mortar retailers and creating offline partnerships and events – all from very early on. Those are the kinds of “DTC” startups I’ll be betting on.

*Full disclosure: I am an investor in Stantt.

What’s in a Name?

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What do you call companies that sell, or allow others to sell, items to consumers? Over the last 15 years, there have been a ton of new buzzwords as young startups to innovate and disrupt, and force traditional companies to catch up. Some recent buzzwords:

  • Ecommerce.
  • Mobile Commerce
  • Omnichannel
  • Social commerce
  • Peer-to-peer commerce
  • Bricks to Clicks
  • Showrooming
  • Digitally Native Brand
  • B2C
  • Recommerce
  • Marketplace
  • Dropshipping
  • Subscription Box
  • Pop-up Shops

And the list goes on….

Honestly, it’s getting a little ridiculous. Maybe I’m old school, but don’t all these words really mean the same thing? Isn’t this just retail? Sure, it’s a more modern version of retail, and has more of a tech bent or is tech-enabled, but it’s retail just the same.

The dictionary definition of retail is “the sale of goods to the public in relatively small quantities for use or consumption rather than for resale.”

That’s why I called my event series Retail X Series. One way or another, it’s all about retail. Long live retail!

Introducing Retail X Series

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Retail X Series

What is retail today? After all the dire warnings of the “retail apocalypse,” store closings, zombie malls and retail bankruptcies, “retail” is a loaded term. But in reality, retail is changing – and the definition of the very word “retail” is no longer what it was.

Startups in what I call the “retail sector” can be B2B or B2C. They can be marketplaces or ecommerce sites. They can be digitally native brands or fashion brands. They can be technology companies that sell into enterprise (legacy) retailers like Walmart, or they can be fashion tech companies that provide products and services for fashion brands. They can be apps or sharing/rental platforms. They can be companies that provide tech services for small and medium sized bricks and mortar retailers, or platforms for influencers that are launching their own ecommerce presence. In short, the definition of retail is expanding.

And the challenges for these companies are very specific to the sector. Retail, in every shape or form, requires a knowledge of how shoppers shop and buy. Of the specific seasonality and sales cycle that is unique to this sector. Of the legacy of promotional calendars and wholesale models. Of bricks and mortar versus online versus mobile. And marketing – both online and offline.

I’ve said in previous posts that I’m looking to invest in the future of retail. But I also want to help build it. And as I looked around at the growing retail ecosystem of New York, I realized that while there are some great incubators and accelerators locally targeting the sector, there are fewer resources for entrepreneurs who are just starting out in these sectors.

That was the genesis for Retail X Series, which is launching on September 19th. What is it? It’s a retail startup boot camp program for pre-seed stage founders who are revolutionizing the future of retail. We’re hosting twice monthly events with experts covering topics from customer acquisition, to financial modeling, to seed stage fundraising, targeted specifically to B2B and B2C retail founders. Featuring great panelists who have been there, and actionable insights for early stage founders. No equity taken, no commitment to attend all sessions. I’m incredibly excited to launch soon, and if you’re a pre-seed retail founder, I hope you can join me.

Not sure if Retail X is right for you? If you’re a pre-seed founder in any of the following areas, take a look at Retail X Series and reserve your spot now:

  • Digitally native brands
  • Shopping/retail apps
  • Ecommerce/mobile commerce
  • B2C or B2B marketplaces
  • Rental/peer-to-peer businesses
  • Enterprise retail technologies/software
  • SaaS businesses targeting retailers
  • B2B or B2C fashion tech

Fit Tech is Hard

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Tape Measure

Tape Measure by Bradhoc via Flickr

Over the last few years, we’ve seen dozens of startups tackling the problem of fit in women’s apparel.* Whether it’s creating a better/custom fit or understanding how a product will fit the shopper, it’s a big space. And no wonder as poor fit is one of the biggest causes of online apparel returns (on average, the return rate in women’s apparel ranges between 30-40%). Since online returns are costly for both retailers and brands, there is a big opportunity here.

 

Fit Technologies

Fit tech startups are attacking the problem in a variety of ways. Here are a few examples of some of them:

  • Body scanning paired with product recommendations to create a perfect fit (Body Labs, TriMirror, Dress Code)
  • Crowdsourcing fit information so that shoppers make better selections (Ribbon, Fitting Room Social)
  • Surveying/asking for measurements a customer before shopping to understand their fit/size preferences (Perfitly, True Fit, Eye Fit U, Fits.me, Thread Counsel)
  • Creating images/3D avatars of the shopper to virtually “try on” clothing (Fitbay, Zeekit, MeTail)
  • Taking a shopper’s body measurements to creating completely custom apparel (Cala, Dress Mavens)
  • And many more…

 

Barriers to Fit Tech

But for all its promise, solving the women’s wear fit issue is a really tough nut to crack. There are too many barriers to list here, not the least of which is that designers create sizes based on their own fit models (and sometimes change them on a seasonal basis!) so even if you know the shopper’s exact measurements, it’s still really hard to match that to a size.

 

But one of the biggest barriers I see is that most of these fit solutions require shopper behavior to change, and in some cases, to change dramatically. And that causes friction in the user experience. For example, scanning your body before you get a product recommendation is not easy and requires a scanner to be nearby. Taking measurements is difficult, and can be a lengthy process. Filling out a long survey before shopping is annoying. All of these are barriers to shopping online, and put the onus on shoppers, instead of solving the problem on the back end, which likely lowers conversion.

 

The Future of Fit Tech

What does that mean for fit tech going forward? My guess is that body scanning and taking shopper measurements isn’t going to be the answer. Maybe it will be something that is simple as snapping a selfie. Or using machine learning to understand your fit preference over time. Or something completely new. I haven’t seen the winning solution in fit tech yet, but I’m looking for it.

 

*Interestingly, fit seems like a slightly easier problem to solve in menswear, for a variety of reasons. First, you don’t have one-piece garments like dresses that have to fit properly all over the body. Two, styles aren’t as varied, as men’s clothing is more of a “uniform” than women’s. Three, men’s clothing has historically been based on measurements (inseam, neck size, sleeve length), so men are more familiar with measuring themselves and knowing their measurements. So custom and semi-custom brands like Indochino, Threadlab and Stantt seem to work better in this space, and technologies like ClothesHorse and Fittery have seen some traction.

 

Chatbot Fever!

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Chatbot

Everlane on Facebook Messenger

Retail AI-powered chatbots are relatively new for most retailers and brands, but chatbot fever is here. There’s a lot of excitement around the technology, but most agree, it’s still early days for chatbots.

 

Early commerce chatbot functionality has been focused on things like:

  • Basic customer service – including easy queries like what are your store hours, where are the men’s shirts in the store, do you carry black skinny jeans, was my order was delivered?
  • Fashion collections – these include viewing of collections, sometimes gamified. A great example of this was the Burberry chatbot for Fashion Week 2016, which created a “maze” for their collection’s inspiration.

 

But the future of where chatbots are going (and we’re not quite there yet), is much more interesting and exciting:

  • Trusted advice – Getting styling advice from a bot that feels like a real stylist. Example: I have this printed top. What should I wear with it? This is really hard, but could be incredibly useful in increasing mobile purchasing.
  • Discovery – What is cool and trending right now in fashion? Example: The bot sends back personalized recommendations of summer tops with bell sleeves. Many of these will require some human help, especially in the early days.
  • Shopper feedback – using chatbots to gain customer insights for product development (versus boring old customer surveys). Example: Do you prefer one printed dress over another?

 

Startups like Claire, Bowtie, Operator, Banter, and AddStructure are building chatbot products for commerce. I’m sure there are plenty of others out there that I haven’t seen yet. Do you have chatbot fever? Are you working on a retail chatbot startup? I’d love to hear from you.

Who Will Bring the Fun Back to Retail?

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Nordstrom Clothing

Nordstrom.com Women’s Clothing

I recently wrote about the massive shifts in the retail landscape we’re going to be seeing over the next 5-20 years. Many of the changes we’ll see will be focused on disrupting legacy systems and processes, recreating the supply chain and making logistics even easier and faster. All of these are worthy initiatives, and I may end up investing in startups that do these things to transform retail. But right now, I’m looking for the fun, specifically the joy of discovery.

I’m looking for companies/technologies that bring the joy of discovery back to the shopping experience. Do you remember when shopping used to be fun? You would go to a mall, store or urban center. You would browse around, see interesting stores with unique product and merchandising that had a point of view (remember when Banana Republic sold safari clothing in the 80s?). You’d find something that you fell in love with and just had to have. It was fun – and it was a process of discovery. You didn’t necessarily know what you would buy when you left home in the morning, but you were excited to see what was out there.

Fast forward to today. Most malls and chain stores feel like a sea of sameness or are just plain awful experiences, with crumbling physical facilities and stores that hawk 40-50% off on a regular basis, with minimal foot traffic, even on holiday weekends. (For real-time updates on what’s happening in malls today, follow my friend @retaileye on Twitter.)

And ecommerce? It’s just an infinite scroll of product, and it works best when you have a specific item in mind that you’re searching for, not when you’re “just browsing.” Here’s an example: if you click on Women’s Clothing at Nordstrom.com, you get a list of almost 30,000 items. That is not browsing and discovery, that is torture. I’m seeing more and more ecommerce and mobile sites adding lifestyle images or “trend” sections to make discovery a bit easier, but it’s just not enough.

There are a few glimmers of hope. Chatbots are being used to help you discover new items. Reply Yes* has created a conversational commerce platform that focuses on helping you discover new items in particular categories via Messenger or SMS. Other startups are tackling discovery by making social media and published content more shoppable – and taking discovery off of the actual shopping platforms. But I’m looking for even more creative solutions to this huge problem.

Are you a startup founder working on bringing back the fun and discovery in retail? I’d like to hear from you.

*I’m an investor in Reply Yes.

Retail is Dead. Long Live Retail.

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Over the last few months, the headlines have been dire: Stores are dead. Malls are dead. Chain stores are dead. Retail is dead. Ecommerce is dead. Millennials are looking for experiences, not more stuff. Younger consumers prefer to rent, not buy clothing, accessories, etc. Amazon is eating retail. Ecommerce is unprofitable. Mobile commerce is… well, you get the idea.

While clickbait headlines scream gloom and doom about the future of retail, I just can’t believe that most or even much of a $5.5 trillion dollar industry is just going away. I refuse to believe that future generations won’t shop in physical locations or that all ecommerce will be done on just a handful of marketplace sites (e.g., Amazon or Walmart/Jet). Instead, I think that we are seeing a massive shift in what shopping means – and we’re at the very early part of that shift where stores/malls are closing, where ecommerce startups are shuttering or getting bought out at low valuations. And that makes it hard to be an optimist about the industry. But I am.

So what’s next for retail? Is it tech like chatbots, machine learning and AI? Hyper personalization? Drone delivery and instant gratification? Is it digitally native brands that do one thing extremely well? Is it disrupting the supply chain and making manufacturing easier, cheaper, more local and more environmentally friendly? Is it pop-ups and temporary space instead of stores with long leases? Or all of the above and more?

It’s early days to say what retail will look like in 10, 15 or 20 years. But I’m still actively investing in retail tech and ecommerce because change is coming and I want to be a part of it.

Fine Jewelry: The Next Luxury Frontier?

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JewelryI’ve been fascinated by the luxury space for a while now, and have been looking to invest in a luxury startup. Obviously, there have been a few notable successes in luxury ecommerce, including Net-a-Porter, Moda Operandi and Yoox, to name a few. But overall, the luxury space has been slower to adopt technology and create compelling online experiences that meet or exceed their offline store experiences.

My personal take is that it’s still early days for luxury, and we’re just now seeing luxury brands starting to maximize ecommerce, mobile and social buying. Luxury apparel and accessories brands have built their own ecommerce experiences, but participating with full price aggregators (Net-a-Porter, Neiman Marcus, Moda Operandi, as well as newer players like Orchard Mile) has been critical to brand building.

I found it interesting that fine jewelry hasn’t gotten the same attention from luxury online aggregators. Why? Because it turns out that fine jewelry is a hard business and very different from luxury fashion. It is a huge industry ($264b annually) made up of a few brands that have huge marketing budgets (Tiffany, Cartier, etc.) but only make up 12% of the total. And the rest are independent local boutiques and sites. Not to mention that about 60% of fine jewelry purchases are gifts (think bridal, anniversaries, Mother’s Day, Valentine’s Day, birthdays and more). Online sites that currently sell fine jewelry like Net-a-Porter rarely appeal to the man buying a gift for a significant other. And buying an expensive jewelry gift is a very different purchase process than self-purchase of a handbag or a jacket.

Which was why I was so intrigued when I met Jean Poh, founder of Swoonery, last fall. Jean told me about how she was building an online fine jewelry aggregator that uses a guided shopping experience based on machine learning to help shoppers buy a gift or self-purchase. And since Swoonery doesn’t hold any inventory (which can be the kiss of death for high price point items like fine jewelry), the business model made a lot of sense to me. When she told me about her vision, I was hooked and made an investment pre-launch. Swoonery launched on Sunday and I can’t wait to see how it shakes up the fine jewelry market. Check out the site at www.swoonery.com and let me know what you think. And btw, Jean was kind enough to share a discount code, in case you’re tempted – check it out below.

LAUNCH Giftcard

Why Investors Should Care about “Third Places”

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I’ve been thinking a lot about the concept of “third places” recently, and particularly how startups are capitalizing on this non-tech based macro trend.

What is a Third Place?

Ray Oldenburg is widely regarded to have been the thought leader behind the concept. In his 1991 book, third places were originally defined as “the public places on neutral ground where people can gather and interact. In contrast to first places (home) and second places (work), third places allow people to put aside their concerns and simply enjoy the company and conversation around them. Third places “host the regular, voluntary, informal, and happily anticipated gatherings of individuals beyond the realms of home and work.”

The History of Third Places

Historically, third places were the village square, local park or the community’s religious institution. In post-war America, the shopping mall and movie theater became popular and ubiquitous third places. Remember when we all used to go to the mall just to hang out, meet friends and maybe get a snack at the food court? It was a social gathering place for a mostly suburban community. But not anymore.

Online = Third Place?

Then came online. Social media sites like MySpace and Facebook and then Twitter, Snapchat and Instagram allowed us to keep in touch with our friends digitally. Technology like Viber, What’s App, Skype, FaceTime, etc. let us keep in touch with far-flung communities. But were any of these really a true third place?

Online Isn’t Enough

Evidently, online just hasn’t been enough of a third place. At the same time as we’re see ever-better ways to communicate, interact and connect to people over online channels, there’s been a renewed demand for offline places – physical locations and events where people can connect again, IRL. A new third place. But this time, it’s not one size fits all. Our third places are now interest- and community/demographic-specific. That’s a huge opportunity for entrepreneurs and we’re starting to see that play out in these sectors:

  • Boutique fitness communities – You’ve heard of them all – Soul Cycle, SLT, CrossFit, and dozens more. All with devoted fanbases who are regulars and even sport their studio’s logos when not working out.
  • Activity-based places – One of the clearest examples here is Massachusetts-based PaintNite and its many sip and paint competitors all over the country that provide a fun, easy activity that groups of friends can do together in a physical space.
  • Co-working and co-living places – WeWork may be the best known co-working space, although there are plenty of others. Newer startups include co-living models that create communities for young people early in their careers (e.g., Founder House, Common, Krash).
  • Affinity-based places – Networking communities (e.g., Ellevate, Meetup) have been the start of this trend and they do offer physical events, but I’m guessing we’ll see more of these morph into physical locations. I know of at least one startup that’s working on this, and there are probably others out there.

So why should we as investors care? Because more and more, these businesses are investable and scalable businesses – and we’re missing out if we don’t pay attention.

 

 

 

 

 

Everything is Commerce. Yes, Everything.

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Commerce

E-commerce by Maria Elena via Flickr

I’ve been an angel investor now for about a year and a half. And since I primarily focus on fashion tech and retail, I tend to see a lot of startups that are attacking the next big thing in commerce, particularly in fashion e-commerce. I’ve seen a variety of pitches that have different takes on how commerce will evolve. Some recent examples:

  • “social is the new commerce” (e.g., let’s make social media more e-commerce friendly)
  • “content is the new commerce” (e.g., influencers are key to driving commerce)
  • “mobile is the new commerce” (e.g., m-commerce will eventually outstrip other channels)
  • “search is the new commerce” (e.g., image or contextual search is critical to e-commerce)
  • “discovery is the new commerce” (e.g., discovery tools are needed to narrow product choice)

And on and on. So who’s right? Clearly, social media and friend’s recommendations impact e-commerce as well as bricks & mortar shopping. Content (particularly that of style influencers, bloggers and celebrities) does help shoppers to make choices about what to buy and what trends are important – and we’re seeing more and more of these influencers develop their own product to sell, as well as curate from existing product. And more and more shopping is done via mobile, so I think everyone would agree that mobile is big. Lastly, with the Internet allowing proliferation of products and brands, it’s hard shoppers to find what they’re looking for – so increasingly sophisticated and targeted search and discovery tools will be needed.

But maybe it’s more than those things. Maybe it’s about shoppers who become sellers as well. I read about Poshmark today – the company is now seeing about 20% of their users turn into legitimate sellers (selling more than the items from their own closet). Or maybe it’s about the maker movement – a trend that uses advances in technology to allow everyone to create new products – which creates new retailers at the same time. Or maybe most commerce goes away and it all becomes about the sharing economy.

We don’t know yet how this will all shake out – or which startups and segments will ultimately win, and for which segments of the population (well, at least I don’t know). But in an increasingly commerce-obsessed startup world, I think for now, I’m going to say that everything is (or could become) the new commerce.

Apple Watch: The Wearable That Women Have Been Waiting For?

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You’ve heard ad nauseam about the Apple Watch over the last week. The features, the function, and probably most of all, the design. Many think it’s stylish, some don’t (see here, here and here). Yes, the Apple Watch is lauded by men, who find it both functional and stylish, but will women embrace it? And if so, which women?

Chanel watch

Chanel Watch by Adrian Ruiz via Flickr

Watches Become a Daily Fashion Accessory

Let’s rewind to about five years ago. In the luxury market, oversized/boyfriend watches hit the market – this Chanel watch alone was featured heavily in press and ads, and ultimately sparked a slew of similar styles from competitors. Suddenly, watches were new again – not only a great Father’s Day gift, but an essential fashion accessory for women.

And women of all ages responded by collecting watches as they do handbags or shoes – in a variety of styles, sizes and colors. While luxury designer watches like Chanel were featured in fashion magazines, it was the affordable yet aspirational brands like Michael Kors and Marc Jacobs, among others, that became de rigueur for millennials and Gen X.

By 2012, with strong success in the category, lifestyle brands (Kate Spade,etc.)  and traditional watch brands (Fossil, etc.) responded with new offerings and styles, from rose gold and mixed metals, to various face styles (oval, round, square), bracelet/strap styles and even sizes (dainty watches recently made a comeback). Suddenly there were watches that fit every style and budget – from millennials to Boomers. By 2013, many fashion-conscious women owned a “watch wardrobe,” changing their watch daily, they way they change their handbag or shoes.

Introducing…the Apple Watch

Fast forward to today. Apple introduces the Apple Watch, with three styles (Apple Watch, Sport and Edition), two sizes and a plethora of customizable options – from colorful straps to rose gold. That’s a good thing, since watches have become a critical fashion accessory for women. But is it enough?

Who Will Buy the Apple Watch?

It’s a good bet that the Sport versions will likely appeal to young, millennial women – they’re young enough to have missed the Swatch watch and G-Shock crazes in the 80s and 90s, and the tech features will appeal to them. Cost may be an issue for many (the Apple Watch starts at $349) but millennials have been shown to spend on technology even when budgets are tight.

The more fashion-forward and expensive rose gold and gold versions will no doubt appeal to women in the global fashion industry. In fact, I would expect to see this version prominently featured Fashion Week street style images, in the press, worn by fashion bloggers, etc.

But I believe that for Gen X and Boomer women, the Apple Watch is probably less appealing – particularly after they’ve created their watch wardrobes over the last five years and aren’t looking for yet another one, no matter what features it offers.

So what’s my take? Well, the short answer is that the Apple Watch is probably right for some women (millennials, high fashion), but not nearly all – at least, not yet.

 

 

Closet Sharing is Here to Stay

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closet-sharing

Courtesy of Helene Mayer via Flickr

The sharing economy (also known as collaborative consumption) has been top of mind for many start-ups. Since the success of Rent the Runway, many fashion tech start-ups have been focusing on how to bring sharing to the fashion and retail world. Companies like Poshmark (sell and buy from others’ closets), 99dresses (fast fashion clothing swap), Gwynnie Bee (Netflix for plus size fashion) and Tradesy (sell your closet). There are also newer entrants like Kokoopa (rent your occasion-based apparel) and PeerSwap (offline clothing swaps).

Most of these sharing-based start-ups share a common target customer – the young millennial woman, a woman who is fashion-savvy, but doesn’t have the financial resources to buy brand-new items for every occasion and season, given the higher unemployment rates and lower wealth creation levels that millennials face right now. Which begs the question, what staying power do these start-ups have? What if the economy recovers? Will millennials go back to buying new items and give up sharing? When millennials become more established in their careers and families, will closet-sharing companies hit the skids?

It’s possible, but I don’t think it’s very likely – at least not for the top players in the space. One of the real benefits of the sharing economy is the eco-friendly aspect of closet sharing. For eco-conscious yet still fashion-conscious consumers, sharing closets is a way to mitigate the effect of fashion apparel production on the environment. With more and more media coverage of the pollution that apparel manufacturing causes, sharing closets has an environmentally friendly angle that will likely continue to resonate with many millennials – even if their finances allow a more disposable approach to fashion. Not to mention that shopping habits formed in your 20s tend to be maintained as you age into your 30s and 40s, which should help to keep sharing economy companies at the forefront for quite a bit longer.

So what do closet-sharing companies need to do to stay relevant to their customers over time? Instead of emphasizing only the financial benefits of using their services, they should also focus on the environmental benefits of sharing closets. As in any other sector, many of the smaller players in the market may be absorbed or shut their doors over time. But with the eco angle and creating shopping habits and loyalty around closet sharing, there is a real opportunity for closet sharing to stick around for the long-term, even as the economy improves.

Is Men’s E-commerce Over? Not Yet.

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mens

Men’s shirts, courtesy of Robert Sheie via Flickr

It’s been all about menswear for the last few years, as the US menswear market has been growing faster than the women’s market, both in stores and increasingly online. Mall-based retailers like J. Crew, Nordstrom, Lululemon, Coach and Lord & Taylor and more have beefed up their menswear sections to respond to increased demand for interesting and new viewpoints on menswear. Newly launched wholesale brands like Public School, Shinola and AXS Folk Technology are getting a lot of buzz, and the hype around many of these new brands is significant (Shinola was picked up by Nordstrom and Public School won the CFDA/Vogue competition). Even men’s underwear has been a growth category, growing 4% over the last 12 months. And don’t forget luxury designers: brands like Prada have announced a renewed focus on menswear, as have Bruno Cucinnelli and Bergdorf Goodman – the list goes on and on. Online, menswear e-commerce stalwarts like Bonobos, Mr. Porter, Jack Threads, Revolve Clothing and Need Supply have been successfully growing their businesses.

Conventional wisdom says that at some point, menswear growth has to slow and the industry will consolidate, particularly as the lines between e-commerce and bricks and mortar begin to blur. Pundits predict continued growth in the overall men’s category, currently projected to exceed $402 billion globally in 2014, which is good news for men’s e-commerce.

In fact, in just the last 12-18 months, there has been a real explosion of new e-commerce concepts and brands. Some examples?  Wits and Beaux, which, like many menswear sites, focuses on a very narrow category, in this case ties and socks. Others target a specific lifestyle like Hickoree’s, which embodies the Brooklyn hipster feel. Others focus on fit, using bespoke and made-to measure techniques, like Trumaker or Acustom. And then of course there is East Dane (owned by Amazon), offering every better and contemporary brand under the sun. There is even a new luxury watch rental site for men, Eleven James, based on the Rent the Runway model.

Which begs the question: is men’s e-commerce over? Have we hit the peak? How many more new concepts can the market really support? The answer is not yet clear, but if I had to bet, I would say we will see plenty of new menswear sites before all is said and done.

 

What’s Missing in the Mall? Great Spring Fashion.

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It hasn’t been an auspicious start to the Spring selling season. One after another, middle-of-the-road chain retailers have described the environment as “difficult,” blaming weather, the economy and competitive price pressures. With the exception of high-end designer/luxury brands, the message has been the same – retailers are not particularly optimistic about the first half of the year.

It’s true that unusually cold and snowy weather has hampered the early spring selling season and the economy is still struggling (particularly at the lower end).  But I believe a big part of the issue right now is a real lack of new spring fashion trends represented in stores – in fact, it feels like most retailers are playing it safe. During a recent mall visit, most stores didn’t feel very “springy” as color palettes across the mall were neutrals like beige, black & white and some navy. After a few seasons of bright colors, neons and colorblocking, this spring’s looks feel pretty blah – so it’s no wonder women aren’t buying them.

It’s not there aren’t fashion trends this season, it’s just that they are micro trends with more segmented appeal. Some of the key runway trends for spring fashion include: pastel colors (especially pink), flare skirts, high-waisted pants, crop tops, sheer pieces, active inspiration, overalls, floral prints and metallics. While most of these trends are represented at high-end luxury/designer stores, few of them are visible at women’s apparel retailers like Ann Taylor, Gap, Banana Republic, Express and even Nordstrom.  Or they are a very small portion of the assortment, with basics and neutrals overshadowing the newness. For many of these retailers, certain of these micro trends are difficult to interpret for their specific customer base – e.g., can Banana Republic sell a crop top to a 40 year-old woman? And unlike previous seasons, there is no one overarching new fashion trend that every retailer has bought into (note: for the last few years the overarching trend has been bright colors, inescapable throughout the mall and clearly conveying to the customer that it was time to buy color).

spring trends

Overalls at Urban Outfitters, courtesy of Retail Eye

Even at teen or millennial focused brands, the current trends seem tough for retailers to interpret. Even typically edgier retailers like Urban Outfitters are struggling. However, the current micro trends should actually appeal more to these younger, edgier customers – so perhaps it’s just the retailers that are having trouble identifying and sourcing the right items featuring the right trends?

It’s tough to say why retailers are struggling with spring fashion trends this season. But one thing seems clear – since retailers don’t have a strong fashion point of view for the season, it’s much more difficult to get shoppers in the buying mood.

Rising Luxury Prices? No Problem, Say Today’s Contemporary Brands

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Up, Up & Away Go Luxury Prices

There’s been a lot of talk recently about the rise in luxury price points, including the fact that a quilted Chanel handbag now costs about 70% more than it did five years ago (see here, here and here for more

Prada

Prada, courtesy of Herry Lawford via Flickr

examples and details). For now at least, the uber-wealthy aren’t balking at ever-higher prices for designer handbags, shoes, watches, jewelry and even apparel.

However, many aspirational shoppers that used to be able to splurge on a Prada bag every so often have been finding it much more difficult to do so. While aspirational shoppers are probably not particularly happy with the status quo, there is one group that is benefiting – contemporary brands.

A Little History on “Contemporary” Brands

Over a decade ago, brands that fit in the spot between “better” and “designer” were called “bridge” brands, but with the rise in designer brands, many of those bridge brands lost relevance and customers. But as designer brands started to rise in price (while the biggest price increases have been in the last five years, most designer items are significantly more expensive than they were around 2000), bridge brands came back – but with a new name: they are now “contemporary” brands.

Contemporary Brands: An “Aspirational” Option

Today, contemporary brands are an alternative to higher priced luxury designer brands, particularly in the accessories sector.

Kate Spade

Kate Spade storefront, courtesy of Ralph Daily via Flickr

Let’s take the handbag category as an example. Instead of buying a $2,000+ bag by Chanel, Hermes, Prada or Gucci, shoppers can now more affordably splurge on Tory Burch, Marc by Marc Jacobs or Kate Spade at less than $1,000.

Other brands that benefit from higher luxury prices?  Some big ones that are reaching up into the contemporary space including Michael Kors and Coach and even smaller, growing brands like Rafe, Longchamp, Rebecca Minkoff and Pour La Victoire.

Higher Luxury Prices = Contemporary Opportunity

Contemporary brands recognize the opportunity to lure shoppers to a more affordable, yet still aspirational form of luxury.  Michael Kors, Kate Spade and Coach have all recently announced growth initiatives to capture more of this growing market in the handbag, shoe and accessory space. And it’s not just the contemporary brands seeing the potential in this space. Some designers are using their diffusion lines (e.g., Red Valentino, B by Brian Atwood) to take advantage of the contemporary market as well. Luxury price increases show no signs of slowing in the near future, which bodes well for aspirational contemporary brands – in accessories, apparel and more.

Fashion Meets Activewear for Spring

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There’s a new look for spring and it’s a hybrid of fashion and activewear (sporty fashion? fashionable activewear?) and it is officially everywhere. It started with sporty looks all over the runways for Spring Fashion Week, continued with active/fashion hybrid looks at retail stores and entire “sporty” sections on traditional women’s websites like J. Crew – which include traditional activewear items like yoga pants paired with classic pieces like blazers. Even Nordstrom has gotten into the act: check out this recent email from Nordstrom which features fashion items that walk the line between active and fashion. A recent visit to Intermix featured windows that highlighted sporty/fashion crossover looks and fabrications that are typically seen on activewear (like mesh) sprinkled throughout contemporary brands (see image below).

But it’s not just women’s apparel brands that have started to blur the lines between active and fashion. Traditional activewear retailers have gotten into the act as well.  Recently, Lululemon launched its &Go line that features activewear that doubles as street clothes, with some early success. Adidas is also seeing strong results not only with the resurgence of Stan Smith footwear styles (particularly during Fashion Week), but also its Stella McCartney collaboration.

activewear

Fashion/active looks at Intermix

None of this should be surprising as activewear has gotten more and more ubiquitous over the last five years (see this post for more details).  From teens to moms, women have been wearing their activewear for more than just working out or going to the gym. The new twist that for spring is that these hybrid looks are not quite for working out and not quite dressy, but a blend of both, which means they can be worn really almost all the time. And that means that women can choose to shop a traditional apparel retailer to buy their spring looks or they can choose an activewear brand, making competition for spring wardrobe dollars even more intense.

While this spring’s fusion of fashion and activewear is a seasonal trend, we’ll be watching to see if women embrace it – which could have implications for the way women dress not just this spring, but in the seasons beyond.

Why Bricks & Mortar Retailers Need Pinterest

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Remember the good old days when store windows were a primary marketing vehicle and traffic driver? Store windows included mannequins, props, signage, visual imagery – all to create a lifestyle brand feel, and transport the shopper into the world of the that particular brand.  Barneys NY became particularly noted for their windows, and the holiday windows in major cities like New York were a tourist attraction (and still are, to some extent).  However, as the recession forced stores to cut costs and payroll, only flagship stores received all the trimmings of elaborate window displays. Other stores had to depend on visual banners and a few mannequins.

At the same time, mall traffic saw declines – even the last holiday season showed a 15% decline in shopper foot traffic. With fewer people at the mall and fewer elaborate displays or the store payroll to maintain them, store windows have become less important.

Enter Pinterest.  A few savvy retailers have figured out that Pinterest strategies can take the place of store windows (and catalogs, and even some traditional advertising). The best Pinterest boards create a lifestyle that is relevant to both the brand and its target shopper, and create the aspirational brand feel online.

Who’s doing this well?  By a wide margin, Nordstrom, with over 4.4 million Pinterest followers is winning in the fashion space. With 66 boards featuring product images, how-to’s, trends, wedding ideas and travel images, Nordstrom creates an aspirational, luxurious feel on all its boards that isn’t just about selling items but developing the brand.  And it’s not just fashion brands that have been able to build big followings – Lowe’s is another retailer that has taken advantage of the DIY and home-related interest in Pinterest boards to develop a following of over 3.5 million people.

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Nordstrom’s Pinterest Board via Pinterest

While aspirational brands are usually thought of as most suited for Pinterest given their high quality images, it’s not just the higher end brands that are utilizing Pinterest boards to gain large followings – Forever 21, the fast fashion teen retailer, ranks higher than Tory Burch (see chart below).

But most major retail brands have not done enough to make Pinterest a key part of their marketing and brand strategies.  And if they don’t take advantage of Pinterest, they face a windowless future.

Want to know more about Pinterest strategies employed by major retailers including Nordstrom’s in-store Pinterest initiative? Contact us or leave a comment below.

Nordstrom 4.4 million followers
Lowe’s 3.3 million followers
Lululemon 1.9 million followers
Anthropologie 434,000 followers
Sephora 285,000 followers
Pottery Barn 222,000 followers
Kate Spade 185,000 followers
Victoria’s Secret 171,000 followers
Forever 21 144,000 followers
Urban Outfitters 129,000 followers
Tory Burch 120,000 followers
Neiman Marcus 90,000 followers
Williams Sonoma 89,000 followers
Macy’s 84,000 followers
Gap 68,000 followers
Kohl’s 45,000 followers
American Eagle 42,000 followers
Ralph Lauren 40,000 followers
JC Penney 33,000 followers
Aeropostale 32,000 followers
Express 18,000 followers
Ann Taylor 18,000 followers
Loft 16,000 followers
Banana Republic 15,000 followers

Note: As of 3/15/14. Methodology includes primary account followers. Does not include ancillary accounts.