Capsules boost sales for fashion brands
Published on 17 JANUARY 2020
Labels that sell apparel in curated sets are getting a warm customer response.
Fashion retailers have boosted sales volume and average order value by bundling products into wardrobes or kits.
Customers are increasingly willing to pay for the curation and convenience of clothing sets that have already been styled.
Bundles will likely have trouble catching on in luxury fashion, where customers place higher value on unique style and pieces.
“Wardrobe dressing”, or paring down a closet to hold only a streamlined selection of reliable basics, is becoming more common in an era characterised by work hustle.
M.M. LaFleur helped pave the way for curated closets, launching wardrobe kits in 2013 that targeted working women. Brands like Wardrobe.NYC and Misha Nonoo have found success by selling sets in limited quantities, catering to customers looking for minimalist basics. This trend has extended to the off-hours: luxury sleepwear brand Lunya makes 35 per cent of its total sales from sets like the six-piece $298 Restore Travel Kit, which includes a tank top, long-sleeve shirt, trousers, socks, a sleeping mask and a tote bag.
While bundling apparel is gaining in popularity, the concept is niche, for now, says Kayla Marci, market analyst at Edited. However, she notes that bundles, particularly those personalised to customer preferences, can increase average order values. For fashion brands, helping customers deal with decision fatigue can boost the bottom line.
Boosting average order value
M.M. LaFleur’s first wardrobe kits featured eight items that can be worn in different ways for two weeks’ worth of outfits. When it was introduced online, it initially produced a 3x bump in sales overnight. The brand relaunched the model last October with expanded offerings, a new marketing strategy and a new name: Omakase, or Japanese for “I'll leave it up to you”. Repositioned as curated collections for different types of shoppers with varying needs and lifestyles, these capsules are marketed as versatile, functional solutions for women.
Founder Sarah LaFleur says that product pages for Omakase kits have a 92 per cent higher conversion rate compared to others, and sales for the individual products included within the new capsules increased 59 per cent during the four weeks immediately following the relaunch. Upon release in October 2019, a new offering called “The Mediator” resulted in a 111 per cent boost in average weekly sales for the included items.
Similarly, women’s clothing brand Aday introduced a $250 three-piece capsule uniform early in 2019. The kit helped increase Aday’s average order value to $230, up from $184. By contrast, the industry average of products per order in 2016 was 1.74, and the average order value was just $97. By offering such uniforms, fashion brands are seeing above-average results.
“Consumers may or may not have decision fatigue, but they still want to have something personally relevant and functional,” says LaFleur. “Kits can help remove friction. If curated well, they can also lend assurance in the form of the curators’ endorsement.”
Vetta, which launched in 2016 with nearly $89,000 in Kickstarter funding, follows the capsule model but differentiates itself with a focus on sustainability. The idea is that buying fewer, higher-quality pieces is a smarter and more eco-friendly way to shop.
Vetta sells five-piece capsules that can be mixed and matched to 30 different outfits, citing data indicating that US women, on average, wear only 20 per cent of their wardrobe. To make the decision-making process even easier, the brand created a quiz designed to match customers with the capsule that best fits their individual style preferences. After two months, the quiz has more than 20,000 completions, and its results page has a conversion rate 2x higher than the website’s other pages.
But the question remains: if customers are buying more clothes, can a brand truly be considered sustainable? Cara Bartlett, Vetta’s co-founder and CEO, says that the kits increase average units per transaction and average order value. In 2019, Vetta sold 2.32 products per transaction, with an average order of $232. Bundling items doesn’t help the brand significantly cut down on costs, but she thinks customers like the value of curation.
The limits of the easy sell
Despite the benefits brands derive from selling such selections, it’s unlikely that this model of dressing will become the mainstream norm. They are likely to work best for brands who already have a loyal customer base, says Michael Miraflor, strategic advisor at MediaLink who has worked with companies like LVMH and Richemont. He sees kits as especially convenient for these consumers who already know what to expect from the brand when it comes to quality, fit and messaging. In short: it’s an easy sell.
It is less likely that ultra-luxury or high fashion brands will take to this model, says Rodney Sides, Deloitte’s vice chairman of US retail and distribution. Customers who are willing to buy clothes that cost four figures and up tend to value exclusivity and customisation, he adds. “I don’t see them motivated to buy a standard wardrobe kit with items they might see on other people. For this concept to work with luxury consumers, there’d need to be an element of high-touch, one-to-one service added where wardrobe items were curated for the individual by a stylist.”
In the case of luxury or high-fashion retailers, breaking a collection into sets to be sold together also runs the risk of reducing the individual importance of items on their own. “High-end luxury brands have done well to build desire around hero items, and while it may be interesting to think of the increased AOV opportunity that could come with a kit, there’s also a risk that hero items may become too dependent on ownership of the entire uniform,” Miraflor says.
In the luxury environment, this approach may cannibalise the potential of the individual items in the kit. “I’m not saying it wouldn’t work but would make for an interesting challenge. Minimalist kits are one thing, but high-end, high-priced kits involve a very different set of considerations,” he says.