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Digital Natives are Ready to Scale With Consumer-First Mantras

These days it seems there’s a new apparel or accessories company cropping up every minute. Aided by e-commerce and social media, these brands are finding a toehold in the industry that didn’t exist even five or six years ago. And while their offerings may be limited initially, these little guys have big ideas—and collectively, they’re poised to take a substantial chunk of apparel business while traditional retailers are preoccupied with trying to turn their tanker-sized operations.

At this month’s Sourcing Summit, Sourcing Journal brought together several of these young companies to discuss the power of brands, the future of brick-and-mortar stores and why their missions are resonating with consumers.

“It’s about putting the customer first,” said Patrick Woodyard, co-founder and CEO of ethical footwear brand Nisolo. “It’s more of a long-term play than a short-term play. That’s one of the mistakes companies are making…they’re not thinking about the next five years. They’re thinking about how to hit this month’s target.”

By focusing on solving problems for consumers, Woodyard said he believes companies like his will be better positioned for success. “For us it’s not only how can we be more empathetic about our supply chain and the people who work within it but also our customers,” he said. The latest manifestation of this customer-first mandate is the company’s newest derby-style shoe, which is lightweight, packable and sleek without compromising on performance.

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Helping shoppers build a better wardrobe was also the impetus behind Aday, a women’s apparel company designed to provide professional women with comfortable clothing that’s simple, functional and well designed.

As a former athlete, co-founder Nina Faulhaber wanted pieces that were pulled together and stylish but steered well clear of fashion victim territory—and she believed other women felt the same. “People want to pare down and invest in quality and versatility, clothing that will last and they don’t have to throw away, so there’s a ton of room for new brands to be built,” she said, adding that even though big brands could theoretically jump on this trend, it’s unlikely they’d be successful because they’re built on different ideals. “The truth is Nike is always going to be a brand that stands for athletic performance and Lululemon will always be about yoga, and when you see that logo, that’s the only sensation you have.”

For Michelle Cordeiro Grant, building the intimates brand Lively has been about harnessing the power of mega brands like Victoria Secret, but using that influence in a new way. While she said the angel and fantasy mystic is inseparable from the Victoria Secret brand, that idea of femininity and beauty has lost its relevance with some—herself included even while she held a merchant role there.

“With Lively, I saw an opportunity to inspire around uniqueness and individuality instead of inspiring woman to be this one image or body type,” she said, adding she put that same thoughtfulness into creating a product women would actually want to wear and not be embarrassed to show off by “combining ultimate style and high comfort.”

For Lively, a big part of the process of reaching and converting consumers has come through physical spaces. The digitally native brand has found some of its most loyal customers from pop-ups that incorporate sales with other activities. “The way that physical retail is being used is transitioning quite quickly,” she said, adding some things never change. “Humans love experiences and they love being together.”

At Ministry of Supply, retail stores are a testing ground for the brand. For instance, the company has implemented 3-D printing in its Boston store, where consumers can get a garment made to order. “We’re not taking a crazy risk on 3-D until the market tells us to,” said Aman Advani, Ministry of Supply’s co-founder and CEO. “We’re only trying to stay one step ahead.”

In addition to technology, these entrepreneurs are also focused on scaling, an activity that requires building the right teams.

Cordeiro Grant’s experience in apparel, including a tenure at VF Corporation, makes her a bit different from many newcomers entering the space today, including her fellow Sourcing Summit panelists.

While she values a willingness to break the mold set by established players, Cordeiro Grant prizes the experience that comes from industry veterans as well because it means her team can easily partner with a retailer like Nordstrom since they’re all speaking the same language. “Business and the world is changing so fast, so we’re always balancing to not bog ourselves down with processes but to use process to actually allow for flexibility and creativity,” she said.

Faulhaber, too, said she recognizes the need for both traditional and new thinking as she scales her business. “Coming from Goldman Sachs, we had to recruit people who knew something about clothing, but I’ve always been a mix of industry experience—big company experience as well as young agile companies that know how to move fast and how to do things differently. So for us, it’s important to have the two schools of thought united as a team.”

When it comes to recruiting, Advani said his company is less concerned about where applicants come from and more focused on how they can help move the company forward. “Where we’ve had a lot of success in hiring is not on the scale of years of experience but in the mindset and how you solve problems,” he said. To try to get into potential team-members’ heads, the company puts them through their paces with case studies to evaluate their thought processes.

For Woodyard, the makeup of the organization is what will separate the rising stars that quickly burn out from the upstarts that will be around for years. “You’ve seen that in micro waves and macro waves with some of the brands that were the darlings of the digital native industry that ended up selling the company for less valuation than they actually used to fund the company in the first place,” he said. “The ones that will survive are focused on the long term and are doing the really not sexy side of the business, the ops side of the business, and bringing in the right expertise.”