The Sunday Telegraph - Money & Business

HOW NICOLE SCHERZINGE­R HELPED BOOST MISSGUIDED

Mr Miss guided talks to Graham Ruddick about social networking and celebrity, as the internet fashion brand that began in his bedroom heads for £100m sales

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AFTER Asos and Boohoo, meet Missguided. The UK has become a hub for online fashion businesses and these three retailers believe they can conquer the world.

Asos, despite a recent slip, is worth £4bn while Boohoo floated earlier this year with a market value of £600m despite generating profits of only £10m.

Missguided was only created five years ago, but Nitin Passi, the founder and managing director, has discovered that life moves quickly online. This fledging female fashion retailer already has a partnershi­p with a US celebrity, 8m visitors and is on course to generate £100m of annual sales by next year.

Missguided prides itself on developing its own cuttingedg­e fashion at a rapid pace. If Asos is the Topshop of the internet and Boohoo is the Primark, then Missguided is the Zara.

“We are not fast fashion, we are rapid fashion,” Passi says. “I don’t know anyone else who can turn around fashion in three to four days and sell it.” Passi, who is just 31, realised five years ago that the internet offered a unique opportunit­y to get the latest catwalk fashion to shoppers quickly. After leaving university, he travelled to New York to work in fashion with his father, who supplied high street brands.

“It was a good grounding, but it wasn’t what I wanted to do,” he says. “I moved back to the UK and the recession hit. The only thing that seemed to be growing was the internet.”

With this simple observatio­n, he set to work in his bedroom in Manchester in March 2009, building an online clothing retailer. He designed his first logo, then secured a £50,000 loan and visited wholesaler­s in the north west of England to find clothing samples. He would buy one product, take a photo, then put it online.

“If someone wanted to buy it, I would go out and get it [the product] in my car,” he explains.

Very quickly, Passi realised there was a market for rapid fashion. By November the business was generating sales of £100,000 and Passi was getting the knack of picking popular products. “I used to go out and pick out what I thought was good,” he says.

“I didn’t know, so I would talk to people and find out what was selling. I got my eye trained into what was selling. But the best way to learn was what was selling on the site. The customer reaction is the best reaction you can get.

“By November 2009 we hit £100,000 turnover and thought ‘wow, we might have something here’.”

With the foundation­s in place, Passi began to build the Missguided brand. In 2011, he brought in his own team of designers, which accelerate­d the company’s growth.

“We have grown massively since then,” he says. “We wanted to control our products. After the first year I had a good feel of what the brand wanted to be. We couldn’t rely on suppliers for that.”

The brand, Passi explains, is aspiration­al, edgy and cheeky. One look at the Missguided website, with its stripped-back fonts, demonstrat­es that the brand is more central to the business than it is to rivals Asos and Boohoo.

Missguided’s annual turnover reached £29m last year, 200pc up on the previous year, with sales expected to hit £60m for the 12 months to March 31 this year and £100m in 2015. The company currently generates pre-tax profits of about £3m.

It is based in Salford and the team has grown from Passi in his bedroom to a workforce of 450. The company aims to have 700 staff by this time next year.

The modern approach at Missguided is also reflected in its marketing, which has been as crucial to the success of the company as its fashion.

Rather than spend millions on television advertisin­g, like traditiona­l high street retailers, Missguided has used social media and celebritie­s to build its brand.

The company’s marketing team has contacted stylists and public relations companies to get celebritie­s to wear its clothing.

“From the early days we saw the influence of press and celebritie­s,” Passi says.

It is a very 21st century way of building a fashion brand and it took on a new level when the company became involved with Nicole Scherzinge­r, the former Pussycat Dolls singer and X Factor judge.

Scherzinge­r was the first celebrity to be spotted wearing Missguided products. In late 2012 she was photograph­ed by celebrity websites wearing a Missguided jumpsuit, which instantly became one of the company’s biggest selling items.

“It is really rare that celebritie­s personally pick things,” Passi says. “But she really loved the brand itself. We wanted to work with her, and she wanted to work with us.”

Knowing that Scherzinge­r was a fan of the brand, Passi approached her about starting a design collaborat­ion. The result was the launch of a new range of clothing called Nicole x Missguided, designed by the pop star.

Passi says that 160,000 people previewed the collection before its launch in March and the clothes sold out on the first day.

For Passi, design collaborat­ions with a US pop star are a long way from drawing logos in his bedroom.

“It has been quite mindblowin­g,” he explains. “It feels like 20 years but has also gone quite quickly.

“We don’t have a specific game plan. We just know what our customers want. We are looking to capitalise on those opportunit­ies. We don’t have dos or don’ts.”

The fact that Missguided is one of the fastest growing online retailers in the world and has a high-profile celebrity partnershi­p means that it has attracted the attention of investment bankers eyeing the next dotcom float.

With electrical retailer AO valued at £1.2bn and Boohoo at £600m, is Passi not tempted to cash in? “The investment bankers and venture capitalist­s have been around for three years. I refuse to see them,” says Passi, who still controls all of the business and has no debts after paying off the £50,000 loan in 2011.

“If I had £30m or £50m I wouldn’t know what to do with it. I would keep going the way we are.”

However, Missguided does have significan­t ambitions. As well as continuing to grow in the UK, it has launched American and Australian sites and plans to launch French, German and Swiss ones this year. The core focus, however, remains on the UK and the target market of women aged between 16 and 25.

“In the future we may look at how we can target different demographi­cs,” says Passi.

As Missguided grows, it is likely to bring more benefits to the local economy. Along with AO and Boohoo, it is part of a collection of fast-growing online retailers that have sprung up in the north west of England.

The company’s success could help to revitalise the UK textiles industry, which has been gutted by retailers such as Marks & Spencer moving manufactur­ing to the Far East.

More than 50pc of Missguided’s products are sourced from the UK, meaning that factories are reaping the benefits of its growth.

“Speed is our main USP and the UK is as quick as you can get,” Passi says.

The main product that Missguided does not source from the UK is footwear, where manufactur­ing capacity is limited.

However, Missguided orders the rest of its products from roughly 10 UK suppliers as it seeks the latest items on the catwalk.

The company model has similariti­es with Inditex, the owner of Zara, which has become renowned for its fastfashio­n on the high street. Inditex sources much of its fashion from the company’s giant manufactur­ing base in La Coruña in northern Spain, allowing it to restock shelves across Europe quicker than rivals who buy from Asia.

“For us, it is important for speed and supporting the economy,” says Missguided’s managing director. “But for the consumer it is about getting the latest trend they see.”

Passi believes that Manchester’s heritage in textiles and wholesalin­g played a key role in the creation of the company, and that the industry is likely to grow as new retailers emerge.

“From my perspectiv­e, I was able to set off quickly because of the wholesale market in the UK, particular­ly in the UK,” Passi explains.

“This is something that will increase and become more active. There is no doubt in my mind that the UK can meet the capacity. If we get to sales of £1bn, it may be something we have to think about.”

It is ironic that one of the newest forms of business in Britain could help to kickstart one of the most traditiona­l. But Missguided – with its triple-digit sales growth and celebrity tie-ups – poses a very real and different threat to the status quo in the fashion world.

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Born 1982 Lives Manchester Education University of Newcastle Career 2009- managing director, Missguided
Born 1982 Lives Manchester Education University of Newcastle Career 2009- managing director, Missguided

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