As executive chairman of Lever Style, a manufacturing group that services emerging direct-to-consumer brands, Stanley Szeto has watched fashion’s evolution from the brick-and-mortar realm to increasingly digitally native. Having helped supply some of the industry’s most coveted brands, like Theory, Hugo Boss, John Varvatos, AllSaints and Vince, Lever Style has now gone digital for good, winnowing down its roster of store-based staples.
Companies like Everlane and Stitch Fix embody the business models of the future. With unique brand stories, sustainable initiatives, extended sizing and styling services, brands like these are appealing to consumers with more than just product.
Szeto believes that while the apparel industry will remain an ongoing fixture in consumers’ lives, the way they are shopping for clothing is undergoing a permanent metamorphosis. Having felt the winds of change, Szeto has propelled Lever Style and its mission forward into the 21st century—even as the industry as a whole remains mired in the past.
Szeto will speak to the radical changes the company has made to position itself for the future at Sourcing Summit New York on Oct. 17. Sourcing Journal spoke with Szeto this week about how direct-to-consumer brand partners are changing the way that manufacturers are doing business.
Sourcing Journal: What’s so appealing about direct-to-consumer companies?
Stanley Szeto: Modern DTC companies, which I like to call digitally native brands, have several advantages that leave brick-and-mortar-based brethren behind.
Digitally native brands can afford to cater to much more specific consumer niches. Peter Manning caters to men 5 feet 8 inches and below. Shirts worn untucked don’t look like dresses, and pant legs don’t lose their tapered look due to alteration. Brick-and-mortar brands have to maintain store traffic and sales to pay rent and sales people, so they can’t afford to cater to just a small slice of the population.
Digitally native brands can be more size-inclusive. Bonobos stocks chinos with something like 200 fit/waist/length combinations. They can do that because they keep all their stock in one main warehouse. Imagine Gap stocking 200 pant sizes in each of their stores? [There’d be] overwhelmed sales staff and frustrated customers.
Many digitally native companies are founded and led by sharp young entrepreneurs with little experience in the fashion industry. They challenge conventional wisdom and come up with new ways of doing things. Think Bonobos’s guideshops, Stitch Fix’s subscription business model, and Everlane’s radical transparency positioning. Garmentos that populate brick-and-mortar companies tend to stick to the same old ways and force through incremental improvements. Have you heard “5 percent lower FOB for next season, or I bring the business somewhere else?”
SJ: As a manufacturer, how are you restructuring your own model to align with a DTC-focused world?
SS: We are fully aligning ourselves with the new digitally native world.
Most brick-and-mortar brands buy narrow and deep to minimize product cost and maximize operating efficiency. Digitally native brands, on the other hand, buy wide and shallow, then they chase when sales data tell them which styles are hot. We have figured out a way to produce 200 rather than 200,000 units in a (relatively) cost-effective manner. We have also devised ways to help brands chase best-sellers, so they can have new stock in as little as three weeks.
Brick-and-mortar brands are often started and dominated by iconic designers. Think Ralph Lauren, Giorgio Armani, and their much-admired design prowess. Many digitally native brands, on the other hand, are started by business people, and they usually focus on the customer, the messaging and the business model. We as a supply partner have honed our fashion and technical design capability for digitally native brands to leverage from, so they can focus on what they do best.
More often than not, digitally native brands target the younger generation, which cares much more about the environment. As a founding member of the sustainable fashion business consortium, we have pressed to use many sustainable and recycled materials, and we pioneered our own zero-discharge wash. We are racing to come up with innovative ways to reduce our industry’s carbon footprint.
SJ: Is this a trend you expect to see maintain? How will it shape your business going forward?
SS: No one is walking around naked, and apparel will remain a viable industry, at least in the foreseeable future. The question is who will take a bigger slice of the pie. We believe that digitally native companies will continue to take market share from brick-and-mortar ones. We have been overhauling ourselves to deliver what these rising-stars need: high quality, well-designed, sustainable products in small batches with short lead times.
Hear more from Szeto in a Sourcing Summit New York keynote presentation on Oct. 17. Visit our event page for more info and to buy tickets.