INDOCHINO CONTINUES EXPANDING AMID STRUGGLING RETAIL MARKET
Vancouver-based bespoke suit maker Indochino is riding a sales and personnel growth wave that has necessitated a new, larger global headquarters at the corner of Robson and Granville streets.
The made-to-measure menswear company also plans to add another showroom, with an announcement coming next month, said company CEO Drew Green.
The new Vancouver head office will comprise two floors and 14,700 square feet, more than double the size of the previous location at Homer near Nelson.
Green told Postmedia the new office will house more than 80 staff and can be expanded if needed.
The company’s net revenue has increased by 144 per cent so far this year, when compared with the same period in 2015, according to figures provided by Green.
He said its shipped product total has increased by 209 per cent in the same period, and the company was profitable for six months in a row in 2017.
Indochino launched as an online-only store. In 2014, it opened its first physical shop in Gastown, and now has 17 bricks-and-mortar stores in Vancouver, Edmonton, Calgary, Ottawa, Toronto, New York, Philadelphia, Beverly Hills and San Francisco, Green said.
The company has 420 employees globally, including staff in China, he said.
“The overall size of the team has more than doubled in the last two years, globally. Our head office team we keep quite lean,” he said. “This is really about space to facilitate the growth that we’ve had. The last office that we had, as great as it was, was really too small at this point.”
He said the Vancouver office represents Indochino’s global headquarters, and all of the company’s main functions are managed from that location.
Indochino is expanding within a Canadian retail scene that has been rife with contraction and closures. Recent or expected high-profile closures or rollbacks have included Sears, Mexx, Danier Leather, American Apparel, Reitmans and many other companies in Canada.
“There’s, quite frankly, been a lot of turmoil,” Green said. “Some of the brands that we’ve grown up with have gone away, and others like ourselves and other companies have thrived.”
He said Indochino made the right move to add bricks-andmortar locations, even when it feels like more shoppers are going online. The company’s sales are now nearly split between the online and physical stores, he said.
Green predicts that over the next five years, very few online-only retailers will remain.
“I think more and more of us that originated online are going to have a thoughtful approach to retail and a thoughtful approach to an omnichannel strategy,” he said.
Indochino doesn’t carry inventory. Its suits are made to order and shipped to customers.
“Everything gets created after the order gets placed,” Green said. “It makes things efficient for cash flow and profits.”
The trend of Canadian online retailers adding bricks-and-mortar stores to their digital domains will likely continue, said Matt Bertulli, a retail consultant and CEO of Demac Media.
“Without bricks and mortar, companies like Indochino, Frank and Oak and Bonobos … would struggle to make profitability,” he said.
“Everybody in the industry has been talking about it for a while. It was just a matter of time before the digital-only companies all started to move into stores. Too much of the retail dollars still happen at the store level.”
Only about seven per cent of Canadian retail sales take place online, Bertulli said, citing a recent report from eMarketer. In the U.S., it’s about 14 per cent.
“The rest of it is offline,” Bertulli said. “They (online brands like Indochino) have these massive marketing machines that are fantastic at getting in front of customers — better than the bricks-and-mortar guys ever were — but opening stores can do that much more.”
While Amazon continues to blast its way to the top of the online marketplace, small, focused brands like Indochino are finding success amid all the closures in the middle, Bertulli said.
“Take a Ren’s Pets in Ontario,” he said. “It goes up against PetSmart. I think they’ve got 12 or 15 stores now, and five years ago they had two stores. They’re aggressively growing, doing extremely well and what they all have in common is they serve a very narrow customer.”
Indochino goes after a small slice of the market.
“They’re going after urban young men who wear suits,” Bertulli said. “Snuggle Bugz here in Ontario; they go after 10 per cent of the baby segment,” he said. “They don’t care about the other 90 per cent that Toys R Us or Babies R Us goes after.”
The big retailers struggling in Canada bit off huge chunks of the market and became massive in doing so.
“The new guys and girls on the block, they tend to build smaller businesses, but they are more profitable,” he said. “They are faster and they have a better customer.”