Online may not be a new frontier for retail, but it has emerged as the primary battleground of 2020.
Shoppers have been socially distancing at home for close to four months, and have turned to the web as the engine for acquiring all of the goods and services that fuel their lives—from food to gadgets, entertainment, and of course, apparel.
Because of this reality, digitally native brands have had the highest of upper hands. While brick-and-mortar retailers work overtime to bolster their online infrastructures, direct-to-consumer businesses that built up their brands in the virtual realm have outpaced bigtime players.
Cuts, an online-based men’s wear label designed in Los Angeles and produced in China, Vietnam and the U.S., can attest to this bump in business. Founder Steven Borrelli says sales have ballooned 217 percent from early July of last year.
But ironically, the strategy that has given the brand (which sells men’s T-shirts, polos and hoodies) an advantage this year represented an opportunity for change just a few short months ago.
From digitally native to online-only
Borrelli had been looking to deviate from DTC in recent seasons, courting wholesalers and signing leases on two long-term popup spaces in New York and Los Angeles. Wanting to take a true omnichannel approach, he thought it important to blend physical retail into the mix.
But the coronavirus put an end to those plans shortly after the world rang in the new year. In recent months, the brand has been doubling down on the web-based strategy that has earned shopper loyalty since 2016. “When running a business you have to react to the current situation,” he said. “We’ve put all of our eggs into the direct-to-consumer basket.”
Cuts has implemented new services and tools to reel in shoppers, like extending its window for returns, providing more education about fabrics and creating new landing pages to help men find their desired style—and assuage any doubts about fit since they can’t try on in store.
“We were born online, and that’s really been a benefit,” Borrelli said. “If you were digitally native going into COVID, you’re at an advantage, because you really know how to operate.”
With the framework for a successful online business already in place, Cuts pulled its retail and wholesale budget for the year and reinvested into advertising on Facebook, Instagram, Snapchat and Pinterest. While the company pulled back on podcast ads in the beginning of the shutdown (because listeners were no longer tuning in during commutes to and from the office), Cuts has reinstated the ads now that shoppers have settled into a new quarantine groove.
The moves have earned the brand an army of new followers, Borrelli said, adding that “70 percent of our customers this year have been new customers.”
While he admitted that the pool of shoppers has likely shrunk overall due to financial hardship and uncertainty about the economy, many former in-store shoppers have turned to the web in droves, Borrelli said.
“Before COVID, 80 percent of men’s shopping still happened in brick-and-mortars,” he said. “Even though people in general are buying less clothing, the amount of people who have become potential customers has grown by 80 percent.”
Because of the acceleration of online activity, Borrelli has rethought his strategy on wholesale partnerships altogether. Watching other brands struggle with canceled orders and inventory issues has highlighted the inefficiencies of the model. “It just seems like things wouldn’t be in our control,” he said, “and we want to keep them in control during this very risky period of time.”
Independence is something Borrelli has come to value. The company has never sought venture capital support, he pointed out, and not being beholden to shareholders or other stakeholders has proven a blessing during this moment of uncertainty.
“The strategy of really getting to know your customers has really prepared us for something like COVID,” he added. “We don’t have this huge working loss to contend with, and we know how to execute effectively.”
Deep on data
The COVID retail landscape has fueled the rise of online, and competition is stiffer than ever, Borrelli said. Advertising on social platforms has ramped up across brands, retailers and categories, he added, but the real advantage goes to digital natives, who have owned the space for years.
“Online, there are so many data points to learn from,” said Borrelli, whose team has long assessed consumer trends through what they decide to buy, and when.
“We look at how someone purchases on their second order versus their first, like what color shirt they buy,” he added. “If someone buys during the first quarter, their behaviors may differ from someone who purchases in the fourth quarter,” he added. These insights have taught the brand how to advertise to different cohorts, and optimize promotions for different occasions.
“It’s really about learning from the data and making adjustments in real time,” he said. “For brands to be successful, you have to show [shoppers] what they want in the easiest way possible, and the only way to do that is with data.”
Large brick-and-mortar players like department stores are at a disadvantage, Borrelli said, because they’re trying to replicate the in-store experience online. Endless aisle may offer its own advantages, but it certainly isn’t a quick and easy way to shop.
“When you look at a big brand that wasn’t digitally native and all of a sudden they come to that landscape, it’s not as easy as flipping a switch,” he said. “When someone buys online, the behavior of that customer is different than someone buying in store.” According to Borrelli, the Cuts consumer is looking for dependability and convenience, and a curated assortment serves to limit confusion while helping the label to dial in on the most impactful trends.
While Cuts has long attracted millennial male shoppers, older generations have also found the brand during lockdown. “Our Gen X shoppers actually went up by 5 percent,” he said. “They were largely buying brick-and-mortar and now they’re being forced to buy online. That’s been a direct impact of the coronavirus.”
Cuts’ product mix also plays into its penchant for reaching pandemic shoppers. Slim-cut, sleek-yet-comfortable T-shirts are the brand’s bread and butter, Borrelli said. They’re comfortable enough to be worn at home all day, but presentable enough for an impromptu video chat.
The brand has also released a new polo silhouette since COVID struck, marketing it as “The Perfect Zoom Shirt.” Since it dropped this June, the style has sold out multiple times.
Despite the unprecedented circumstances of this spring season, Borrelli believes Cuts has risen above the fray because of its ultra-specialized assortment.
“Lots of brands like J.Crew, Gap and Lululemon have similar products, but they aren’t the single authority in men’s T-shirts,” he said. Guys know they can come back to Cuts time and again for their signature shirt, and that reliability can be very compelling for male shoppers.
Cuts also allows consumers to filter their selections based on three different shirt hems and five collar shapes, ranging from crew neck to V-neck, Henley, hooded and polo. Shoppers can find their perfect fit, and then come back for another version with small stylistic deviations.
“Going deep on a singular product has been a win,” Borrelli said. “We take pride in being simple—for us, it’s about doing one thing right, and that’s made it easier for customers to digest.”