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The New Formula for Building a Modern Fashion Brand

While exploiting white space has long been the key to success for new companies, the strategy is different for some startups today, especially in the saturated apparel market.

Pano Anthos, founder and managing director of XRC Labs, an incubator for innovative retail and consumer goods companies, said fashion is taking a different route by retooling and reinventing what consumers already love.

“You don’t see categories of products develop in apparel brands,” he said. That’s easier for consumer goods like deodorant or oral care, said Anthos, where new inventions are taking the space from established companies like Colgate-Palmolive or Procter & Gamble. “What you see are improvements, or design features, or iterations that are different but not necessarily a new kind of product,” he said, adding the companies that have blossomed in XRC’s cohorts are driving innovation in materials, design and the supply chain.

But in apparel, innovations are often restricted to things like textiles or aesthetic details. “In apparel design, there isn’t as much white space there, so you see more brands creating strong visual cues instead,” said Anthos. “Shoes are an area where you see a lot of this happening, particularly because people tend to own more pairs of shoes than they do shirts or pants, and they’re wearing them out, then replacing them.”

While visual cues are the most “massively identifiable” space for innovation, Anthos also pointed out that there are areas like supply chain management that are ripe for new ideas. For example, he said, M. Gemi, the footwear brand that drops new styles every Monday, works directly with suppliers and utilizes factories during off times to give customers a more accessible range of styles and prices. “In apparel, worse than ever before, it’s getting harder and harder to differentiate,” said Anthos. The model M. Gemi uses creates a distinct brand identity while also serving the customer, which is a driving factor behind the company’s success.

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Anthos said while product is always paramount, it’s not the only factor to launching and scaling today. “If you really want to focus on how to build a brand, build a community,” Anthos said. Despite its name, he said Brandless has a dedicated community of fans that love having easy access to low-cost home goods and consumer products. And Glossier, built from a blog and newsletter, transitioned seamlessly from content to product while maintaining its ferociously dedicated fanbase. That’s what consumers are looking for, said Anthos. “They’re loyalists, they’re part of a tribe. It’s not a transactional model,” he added. “That’s the big difference between becoming a $1 billion brand and a $200-million brand, it’s maintaining the lifetime value of those customers.”

XRC has seen success with the companies in its incubator that take a similar approach. The women’s subscription shaving company Billie, which was in the third cohort, hasn’t reinvented the product. Instead, it’s changing the conversation. That strategy was spreading information about the so-called “pink tax,” the price difference between men’s and women’s products, which the company estimates to be 10 percent to 15 percent. Billie presented itself as an equitable solution to the unfair pricing, and the media attention brought consumers to the service in droves. Continuing the momentum, Billie focused its next major promotional campaign around body hair, normalizing and celebrating women’s leg, armpit and facial hair.

“Isn’t it ironic that they’re doing this as a shaving company? What on earth are they thinking?” said Anthos, addressing the response to the campaign. Consumers were impressed by Billie’s confidence—the company’s decision to acknowledge a cause its consumer base was dedicated to, even though it was directly in contention with the idea of female shaving products. “Billie understands that the person is more important than the product,” Anthos explained. But the product, he added, was good, and kept customers coming back.

Anthos said that the XRC team is eager to facilitate more successes like Billie’s in its cohorts. “We’re focused on building a point of view,” Anthos said. “We’re trying to be refreshing, we’re trying to be candid, we’re trying to be honest.”

Read more about the ways in which direct-to-consumer brands are changing every facet of the industry—and the pace at which they’re doing so. Download Sourcing Journal’s Direct-to-Consumer Takeover report here. The report is sponsored by The Studio, Shima Seiki, Texworld, and AIMS360.