Is Traditional Retail Dead?
How Vancouver companies are thriving in a global market that no longer distinguishes between online and off.
September 18, 2017
Stepping off Cordova Street and into Julia Church’s Nettle’s Tale boutique is like walking through a portal into another world. The din of Gastown’s dense urban life quickly fades away, to be replaced by a tranquil log cabin vibe complete with raw wood design details, deer head bust and a curated collection of enamelled mugs, pocket knives and rustic-yet-upscale camping gear, all hand-selected to highlight the star of the show: Church’s own line of Nettle’s Tale swimwear.
Opened last March, the store is like a bricks-and-mortar ode to Church’s customers—active, outdoorsy women who’d rather poke around a tidal pool than sip cocktails at a swim-up bar. Nettle’s Tale gained an international following almost immediately after launching in 2014, striking a chord among women with Church’s novel approach to swimwear—she designed and sized a range of semi-custom suits based on the body types of real women in her life: her mother, her friends, even a former roommate, rather than the unobtainable physiques of fashion models. But the initial customer base didn’t come through a storefront. Rather, Church’s location in one of Vancouver’s mostly highly visible—and high-rent—shopping districts was made possible through her success selling swimwear online.
“It’s interesting: if you would have asked me at the start of my business where I wanted to be in five years, I would have glamorized Nike’s website,” Church reflects over coffee in a buzzing café across the street from her store. “I would have said, ‘I want you to pick one of our already patterned designs and say what you want the print to be, customize it, and get it shipped to you in six to eight weeks.’”
While many might assume the internet would be a challenging place to sell what is arguably fashion’s most unforgiving garment, Church found it to be an invaluable tool in building her confidence and proving her concept had legs. To test the waters, she launched a crowdfunding campaign and blew past her goal of $10,000 in a matter of weeks. She ultimately walked away with $70,000 in start-up capital and a priceless contribution in the form of international press. “We had Huffington Post and Buzzfeed, and we broke into the U.S. market, which takes some companies years,” she recalls. A pop-up shop followed, then a temporary shared retail location on Main Street, and, finally, less than three years after launching, she opened her flagship store in Gastown.
Consider her trajectory a sign of the times. While the rise of online shopping over the last two decades has been blamed for ushering in the death of retail, a look around your average shopping mall or high street shows that’s most certainly not the case. Sure, we might be facing end times for retail giants like Sears, but even Amazon’s seemingly inexorable march toward world domination now includes physical bookstores in U.S. cities from Seattle to New York, Whole Foods, and, soon, a spate of cashier-less convenience stores. Retail isn’t dead, but the rules have been rewritten, and increasingly they favour smaller, more innovative brands that are gaining traction in a global market impervious to the boundary between online and off. Vancouver, with its entrepreneurial spirit, well-educated workforce and tech-conversant global population, is home to a growing number of companies that are on the leading edge of this retail disruption.
This city hasn’t historically been known on the world stage for sartorial exports (aside from a certain alliterative yoga-pants brand, that is). But that’s starting to change, thanks to a burst of young companies that are coming of age in step with shifting market forces, says Marc-David Seidel, professor of entrepreneurship and innovation at UBC’s Sauder School of Business. Just like people, businesses are imprinted with the culture of the time and place in which they are born, he says, which is why retailers founded decades, if not centuries, ago, are struggling to keep up with changing consumer trends. However, companies emerging in Vancouver’s tech-focused corporate ecosystem are tailor-made for a global market in which consumers value good ideas, strong branding and ultra-responsive customer service over a ubiquitous presence in every shopping mall in the land. “These start-ups are basically founded at a time when people are used to shopping online or used to shopping globally,” Seidel says, adding that a relative lack of retail expertise in the city may turn out to be a strength. “We’re not burdened by pre-existing bad habits.” Seidel also notes that a major reason traditional retailers are struggling is due to bloated corporate structures and inflated costs passed down from a bygone era in which big box stores were king.
Add to that Vancouver’s status as a tourist hub and a permanent destination for people from all over the world, and products developed here can quickly find a fan base in every corner of the globe. “It used to be that in the fashion industry you had to be on the proper Paris catwalk and be in Vogue magazine,” Seidel says. “Now you just need to be on the right influencer’s feed on Instagram.”
That global marketplace was squarely in the crosshairs of Lyndon and Jamie Cormack when they launched bag and backpack company Herschel Supply Co. in 2009. With decades in the apparel industry between them—Lyndon with Vans and Jamie with K2 Sports—the brothers saw a gap in the market for their urban-meets-old-timey designs that combine vintage features like leather straps with laptop compartments. And from the start they aimed beyond B.C.’s or even Canada’s boundaries—a bit of a departure from the way many Canadian retailers had traditionally done business. “It wasn’t Herschel Supply from Vancouver with big Canadian maple leaves all over it,” says Lyndon. “It was more like, hey, there’s this idea and through travelling, through research, through a hunch, we felt that we could create something that we could bring to the world.”
To achieve their goal, the pair employed a multi-pronged approach, courting third-party retailers, independent sales consultants and distributors to get their products on store shelves, as well as launching an online store with the promise to ship worldwide. Some positive initial press put them on the global radar and almost from day one they had customers as far afield as Kuwait, Australia and Zimbabwe. It was a powerful strategy in terms of exposure for the brand—even if in those early days it carried a financial cost. “I think the bill was $94 to ship to Kuwait,” Cormack recalls. “But the beauty in the idea was if you want to buy it, you have this opportunity to buy our brand.”
Herschel now has products in more than 10,000 stores in over 70 countries and has expanded to include a line of outerwear, while the head count at its Railtown headquarters has grown to almost 170 people. Which makes it surprising the brand is only now opening its own retail locations on home turf. This July, Herschel opened its first Vancouver-area pop-up store in Deep Cove, where Cormack lives, and next spring they’ll open a 5,000-square-foot flagship store in Gastown. But for a company that’s already ubiquitous in nearly every corner of the world, including Vancouver, moving into retail isn’t as much about moving inventory as it is about building brand identity.
“What a retail experience is going to allow for this brand is to let people come into our house and see what we really care about,” says Cormack. “And what we care about is customer experience, design details and ambitious projects; we care about Vancouver…we have this ability to story-tell beyond belief.”
Experience First, Product Second
The store as a venue for storytelling first, sales second is another way retail is being redefined by the influence of online start-ups, says UBC’s Seidel. The trend of online apparel companies opening physical stores is an important step in combating the limitations of online sales, he notes, as many people are still wary of buying high-touch items like clothing online. But as companies migrate from virtual to physical, they tend to stay leaner and nimbler than traditional retailers—and in their execution, many are changing the idea of what it means to have a store. Seidel points to Vancouver-based online retailer Indochino as one player that changed the game when it opened its first physical showrooms in 2014. “They don’t really have inventory,” he says. “You go in there to make an order and they help you make a bigger order.”
Drew Green, CEO of the made-to-order suit company, is quick to point out that its showrooms, where customers can have their measurements taken and view samples but don’t buy clothing off the rack, were the invention of necessity. “The biggest thing that online-only businesses struggle with is customer acquisition,” says Green, noting that after a strong online start, going physical was a crucial strategy in maintaining growth.
Green believes the future of fashion retail lies in the “omnichannel” delivery his company—which now employs nearly 400 people in its Yaletown headquarters—helped to pioneer. To be successful, companies have to combine the best of both worlds in order to offset the respective challenges. For instance, online retailers have access to a treasure trove of analytics about consumer habits that can help them determine when and where to invest in costly bricks-and-mortar infrastructure. But it’s not enough to open a conventional store. To stand out and attract customers in the real world, companies must also provide a unique customer experience that truly embodies the brand.
To that end, Indochino’s focus on individualized customer service acts like the personification of its online approach to bespoke menswear—something that stands in stark contrast to the experience of buying mass-produced clothing off the rack. “In terms of a growth strategy, we said to ourselves, ‘Let’s not sell a product, let’s sell an experience,’” he says. But the company’s 17 showrooms across North America (with four more to open this year) also serve as a gentle introduction to the concept of buying online. More than 70 percent of customers who come into the showrooms have never interacted with the brand before, says Green, but more than half go on to make a second or third purchase online. Getting consumers comfortable with buying through both streams is the next challenge for today’s retailers, he says, and here, too, many in the industry are looking to Vancouver-based companies for leadership.
“We’re viewed as cutting-edge, leading-edge retail,” says Green, who has been invited to speak at over 20 international industry conferences this year. “They’re really looking at us and saying, ‘These guys have figured out something special and are doing it the right way.’”
That reputation has Julia Church feeling confident about her odds in growing Nettle’s Tale into another made-in-Vancouver success story. Six months after opening the store, she’s finding a wider market, thanks to discoveries by walk-by traffic and tourists, and she’s refining a style of body-positive customer service that embodies the brand. And with ambitions to one day expand her retail operations to other cities in Canada, she’s confident the relationship she built with her customers from the outset means they’ll continue to support her wherever she goes. “Women were able to say to themselves, ‘This is a concept I’m ready to see come to market, I’m willing to support it.’”
What do you think of the innovative ways Vancouver start-ups have achieved retail success? Let us know in the comments below!