Retail Management

ASSIGNMENT
(Stitch Fix)

1.Katrina Lake raised $42 million and struggled to find investors to back Stitch Fix. Meanwhile, the
male-run apparel retailing start-ups such as Fanatics, The Hut Group and Wish raised on average
over $2 billion in funding. What role do you think gender played in this disparity? How could Lake
have more effectively tackled this issue?

Stitch Fix is headed by Katrina Lake and features a predominantly female workforce. Lake's concept
is to revolutionize the retail industry for women by sending a curated style box full of items. The
majority of investors were males who lacked an emotional connection to the concept or were
unable to picture how it would function. They were unable to conceive how this concept would
operate and sustain itself, and hence declined to invest. Additionally, they identified weaknesses
with the business concept, such as the fact that Stitch Fix owned their inventory. On the other side,
Katrina purposefully created that "flaw." These divergences of opinion also played a role in their
decision to refrain from investing.

● Lake could have avoided this issue by emphasizing the business's AI component in her
presentations. She could have justified the inventory-heavy model's costs and other
expenses by tying them to the intangible long-term benefits of customer loyalty, reduced
churn, and increased customer satisfaction.

● She also had the opportunity to address some investors' concerns about scalability by
demonstrating how she was already collecting various data points on a small number of
consumers, which will help them scale faster and lighter.

● Lake's educational background as a graduate of Harvard Business School enables her to

2.Lake looked across three industries to create her new market space: retail, personal stylists, and
subscription boxes. What did she take from those three industries and what did she leave behind?

Retail :

● Katrina Lake wanted to be on the cutting edge of the retail industry, and her startup caters
to individuals who enjoy fashion but dislike shopping.
● She however wanted to leverage technology to add value to the regular retail services and
create better customer experience.
● She wanted to utilise the ‘try and buy’ feature that retail offers to customers at the
convenience of their homes.

Personal Stylists :

● Personal shoppers find the right clothes according to body type sense of style etc.
● Lake's concept was essentially that of an accessible personal shopper. But having a personal
shopper meet with clients and then shop on their behalf wasn’t practical.
● Lake's perspective was far broader. Personal shoppers were meant usually for the wealthy;
She desired to build a personal shopper service for all budgets and to make it accessible to
everyone.

Subscription Boxes :

● There was an element of surprise that subscription boxes offered that often delighted the
customers.
● The customers are only aware that the goods will be trustworthy and up to standards.
3.From the buyer’s perspective, what are the unique ways which Stitch Fix offered a leap in value
beyond other retailers (brick-and-mortar and online)? What do you think will be the likely impact
of Amazon? What advice, if any, would you give to Lake concerning Amazon’s “Personal Shopper”
offering?

● Stitch Fix is extending its shopping options (such as "Shop Your Looks"), expanding into new
categories (such as children's apparel), expanding its inventory selection, and constantly
refining its recommendations.
● Stitch Fix offered an element of surprise to the customers that delighted them.
● It also provided the ability to shop from anywhere,anytime while also matching the
customers style and identity with its personalised offerings
● The items were specially curated for the customers by human stylists as well as AI algorithms
which is far different from the proposition of offline and online retail stores.
● As for its marketing initiatives, Stitch fix acted as an inspiration to women shoppers on
pinterest rather than showcasing its good that it would be selling.

Amazon’s Impact

● Despite the competition, Stitch Fix thrives due to its specific focus on providing the best
personalized styling service possible. This distinguishes Stitch Fix from Amazon, which offers
a variety of services, including movie and music streaming, as well as cloud services.
● While Stitch Fix has a separate mobile app that makes using the service more convenient,
Amazon's Personal Shopper does not have a standalone app. To access Amazon's service,
you must do so via the Amazon shopping app, which is inconvenient.

4.Will Stitch Fix’s recent purchase of Finery IP help to act as a barrier to imitation and extend its
blue ocean, especially against Amazon? With the understanding of what Finery does, how can you
imagine Stitch Fix could use this to really add value for customers?

● Finery's unique technology dynamically fills up a personal virtual wardrobe with its users' e-
receipts from clothing transactions, which users can then access via an app to keep track of
their garments and build outfits, While Stitch Fix relies on data analytics and human stylists
to hand-pick apparel and accessories for you to receive directly to your door.
● Stich Fix's approach is consistent with the objective of Finery's digital wardrobe platform,
which streamlined the dressing process and served as a source of style inspiration.
● Integration of the virtual wardrobe with data from e-receipts has the potential to transform
Stitch Fix into a shopping aggregate with a greater understanding of its customers than
Amazon.
 ● Customers can expect to receive recommendations for goods they didn't realize they
needed within the price point they specified. Stitch Fix will mine enormous quantities of data
in order to provide users with a flawless online shopping experience.
● Reduced role of the human stylists : The virtual wardrobe will mature into a virtual stylist
who will create whole ensembles for you using both new and existing wardrobe parts.

5.If you look at Stitch Fix’s profit proposition, what do you see as key challenges to growing
revenue and profits and protecting the blue ocean it created?

The key challenges can be :

● While Stitch Fix's styling service differentiates it from the majority of online and brick-and-
mortar clothes retailers, it is not the only company that follows this strategy. There are
dozens of other styling businesses comparable to Trunk Club, like Bombfell, Rent the
Runway, and Le Tote
● Retail investors are perpetually afraid of the Amazon threat, and the e-commerce giant's
value could be weighing on Stitch Fix's valuation.
● The Fix model, in which subscribers receive curated boxes on a regular basis, implies a high
return rate, given the fact that shipping both ways is free for the customer.
● The Shop your looks innovation has the potential to cut into Stitch Fix's primary competitive
advantage, its membership. Additionally, the corporation will likely need to handle direct
consumer inventory more effectively than it has in the past.
● Algorithms might have data bias: . The clothing that is fed into the algorithm is limited in the
way that it is of particular styles thus limiting the amount of options it can generate.