Indochino’s strong growth trajectory continues to attract investors looking for a retail rock star amid a challenging environment for many well-known store brands.
The Vancouver-based made-to-measure men’s wear company reported a new investment from Mitsui & Co., an investment and trading company headquartered in New York City that also has invested in apparel brands such as Max Mara and Paul Stuart. This follows a $42-million injection in 2016 from global garment manufacturer Dayang Group—the world’s largest suit maker—to fuel its transition from e-commerce company to true omnichannel retailer. Of note, that deal included product development benefits as well, enabling Indochino to taps Dayang’s expertise to create new suiting silhouettes and offer greater customization options for customers.
Mitsui’s investment comes as Indochino notched another successful fiscal year. In 2017, the retailer not only achieved full-year EBITDA profitability but also doubled its showroom fleet from 10 to 20 stores in North America, growing revenue by 50 percent for the second year running.
A company spokeswoman said INDOCHINO plans to open as many as 18 new showrooms in 2018.
Indochino’s success reflects the changing taste of consumers—and in particular, Millennials—as many shoppers actively seek out both products and retail experiences that fit their lifestyles and preferences instead of vice versa. “Our strong sales and earnings growth demonstrate that the Indochino brand resonates with consumers and has become a mainstream alternative to ready-to-wear clothing,” Indochino CEO Drew Green said in a statement.
[Read more on customized apparel: Zara Released Denim Line Customized By Employees]
The 11-year-old company arrived on the market at just the right time; because the economy was roiled by the Great Recession, consumers began to prioritize affordability above all else. What’s more, Indochino’s brand promise—that shoppers “don’t need to spend a fortune on a custom wardrobe”—was a hit as consumers began to demand customization and personalization in a rejection of mass-market clothing.
The company’s online roots helped keep costs low initially, though eventually it saw the opportunity to get closer to the customer through physical retailing and began opening showrooms in key locations throughout North America, from Beverly Hills to Ottawa to Washington, D.C. The decision to build out a physical footprint followed the popularity of Indochino’s “Traveling Tailor” pop-up series that began in 2011 and included a partnership with Uber, which offered discounted rides to the limited-time retail shops.
Consumer interest in customized clothing shows little sign of abating. Recent research from Lanieri.com and YouGov reveals that close to half of Americans would like customized apparel, would spend an average of $207 on it—and men would outspend women on made-to-measure garments by $60. Not surprising, Millennials are fueling this demand for apparel that suits their unique style.