Morning Brew - ☕️ Growth spurt

How DTC menswear brand True Classic is built to grow.
Morning Brew June 16, 2022

Retail Brew

Ziff Media

Hello, hello, hello. We’re still processing our excitement over meeting some of you IRL at our Gen Z event yesterday, so forgive us for jumping right into the newsletter.

In today’s edition:

Jeena Sharma, Katishi Maake

DTC

Building a True Classic

True Classic products True Classic

In just a few years, DTC menswear brand True Classic has grown from $0 to $150 million in revenue. But just how did it fashion such major growth?

The backstory: Founded in 2019, the concept for the California-based company came from CEO and co-founder Ryan Bartlett’s frustration with t-shirt companies “kind of overcharging for premiums.” So, he—alongside Nick Ventura and Matt Winnick, his fellow founders—set out to build a brand that sold basics and was built to actually look good on men.

“I was running up against the issue of shirts just not really being made for men’s bodies,” Bartlett told Retail Brew. “They expect guys to just throw it on and be happy with it, and I just wanted to do something more intentional. I wanted the shirt to really accentuate the parts of the guy that enhance their body.”

The demand: That idea seemed to resonate with the True Classic customer. At first, the DTC company was selling about 10–20 t-shirts (priced at $25.99 on average) a day. After a few months, that number went up to 400–500 t-shirts a day. “Within six months, we were selling about 1,000 a day, and just incrementally started creeping up as we increased ad spend,” Bartlett said.

He credited advertising on Facebook, in part, for True Classic’s rapid growth trajectory. “We kept putting content out and pushing budgets,” Bartlett explained. “For every dollar, we’re making $2. As long as that number wasn’t creeping down to break even, we were in a good spot,” he said.

  • Today, True Classic spends $200,000 a day on advertising, with a focus on Facebook’s AI targeting to help get the product in front of potential customers.

And the supply: True Classic partners with 10 manufacturing plants across Egypt, Turkey, China, and Bangladesh, and loading up on inventory right before the pandemic was a happy “accident,” in Bartlett’s view.

  • “When the pandemic hit, we actually saw a lift in our sales,” he said. “We increased the business 20% to 30% overnight.”

It has also focused on “owning” its demand planning to tackle the supply-chain chaos around the world. “Even though things were getting stalled at the ports, because we already had so much stuff in stock, it never really hurt us,” he said. “Even if we’re a month late, we have all this other stuff coming in all the time…We kind of lucked out with that, and didn’t under order.”

  • Bartlett said that True Classic has the capacity to order more than 200,000–300,000 pieces at once.

Looking ahead…True Classic is expanding its online presence into Australia, Canada, and the UK, and it’s exploring opening its own retail spaces. At its core, though, True Classic is a DTC company first.

“We’re from the digital world, so I’m not super bullish on traditional,” Bartlett said. “But I do see [physical retail] as a good way for customers to be able to go into the stores, try the clothing, and get some value [by] really touching and feeling the fabrics.”—JS

        

TOGETHER WITH ZIFF MEDIA

Class is (almost) in session

Ziff Media

Back-to-school shopping ain’t what it used to be. There are nuances in timing, in-store vs. online shopping, the infamous influence of inflation, and so much more.

To save brands and retailers the headache, Ziff Media gathered key insights on the highly anticipated back-to-school rush. They captured some pretty interesting info nuggets: Did you know that 54% of back-to-school shoppers say they won’t make a purchase unless they find a deal or sale? Or that 50% of Americans are open to new retailers and brands this season?

There’s a whole lotta opportunity in those insights. And just like a first-day-of-school outfit, a brand’s back-to-school approach sets the tone for the rest of the year (aka Q4 holiday season).

Learn how to make back-to-school szn more profitable and less stressful. Check out Ziff Media’s insights here.

GROCERY

At your service

Instacart+ Instacart

Don’t do a double take. Instacart isn’t entering the streaming wars, but the grocery-delivery service yesterday did announce its new subscription service, Instacart+, which will replace Instacart Express.

The deets: Subscribers to the new service will have access to a slate of shopping features, including family accounts and family carts for households to share and collaborate on the cart-building process.

  • The service also offers free delivery on orders over $35, reduced fees, and a 5% credit on some pickup orders.

“With today’s launch, we’re making Instacart+ the most cost-effective way for families to buy groceries and essentials with Instacart, delivered in as fast as 30 minutes,” Daniel Danker, head of product at Instacart, said in a statement.

Instacart is attempting to ensure users keep using the platform while sales for e-grocers have tapered off as shoppers return to normal shopping habits, Grocery Dive noted. Instacart said that, on average, its subscribers last year spent nearly 2x more each month than non-subscribers.

  • Last month, the company also upgraded its customer ratings system and rolled out new features, like a section in the app that gives users info on batch accuracy.

Zoom out: Instacart recently confidentially filed paperwork for an IPO, despite stock-market declines and struggles for the company over the past year, which included losing three top execs. In March, Instacart also slashed its valuation from $39 billion to $24 billion.—KM

        

WHAT ELSE IS BREWING

  • Revlon, following recent speculation, has filed for Chapter 11 bankruptcy.
  • Amazon finally dropped the dates for Prime Day this year: July 12 and 13.
  • Walmart is upping pay for pharmacy technicians to more than $20 an hour on average.
  • Kroger reported strong Q1 earnings overall, but gross margins saw a dip.
  • Abbott halted production at its just-reopened Michigan baby-formula plant due to flooding.

TOGETHER WITH VERICAST

Vericast

Clipping coupons is cool again . It’s true: Gen Z shoppers love a good deal, especially discounts on products and services that focus on comfort and sustainability. Ready to reach younger shoppers? Vericast’s 2022 Retail TrendWatch report has the full scoop on customer expectations, and it’s available right here.

SWAPPING SKUS

Today’s top retail reads.

Inven(s)tory: How some retailers’ responses to the pandemic resulted in all that excess inventory, including “phantom demand,” prompting stores to order too much. (Wired)

In the weeds: Since storied Manhattan restaurant Eleven Madison Park went vegan last year, insiders say it’s been chaotic. “It was definitely a huge toll on my mental health,” Chandler Yerves, a junior prep cook who quit, told Insider. “It was definitely the most egotistical restaurant I’ve ever been in in my life.” (Insider)

Furmès: In China, Gen Z consumers are spending extravagantly on their pets, and luxury brands are introducing lines to meet that demand. (Jing Daily)

Mind your business: Morning Brew’s Business Casual podcast, that is. Join journalist Nora Ali and comedian Scott Rogowsky as they chat with creators, thinkers, and innovators about today’s biggest and most significant business stories, what they mean, and why you should care. Listen here.

NUMBERS GAME

The numbers that you need to know.

This weekend, for some, is all about Big Dad Energy. During the week before Father’s Day last year, demand for outdoor grills and smokers on Amazon’s US marketplace was up 51%, while golf equipment was up 28%, according to a report from marketplace analytics firm Pattern, which believes 2021’s numbers are an indication of what’s to be expected in 2022.

  • Golf shorts weren’t just popular on Father’s Day—Memorial Day saw a 163% spike in demand.

While these classic dad categories saw some of the highest increases in demand last year, other typical Father’s Day gifts weren’t as popular: Men’s novelty neckties, for example, saw a 19% decline in demand, while socks and hosiery only saw an average 3% bump.

But, but, but: All those spikes in demand cannot solely be attributed to Father’s Day, Pattern’s report noted. Smart and regular watches saw demand increases of 42% and 35%, respectively, in 2021, but that was likely due to Amazon Prime Day, which came right after Father’s Day.

  • “Traditional gifting categories (by holiday), seasonality, and price points influence consumer behavior and can help brands better understand how to forecast demand for their products across online marketplaces and even inform creative decisions and promotional cadence,” the report said.

+1: Shoppers are expected to spend $20 billion on Father’s Day gifts this year, nearly on par with last year’s $20.1 billion figure, according to the NRF.

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Written by Jeena Sharma and Katishi Maake

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