Issue #134

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This is issue no. 134 of 180. The last issue had a 40.01% open rate with 8.08% of you going to this article on YETI's pending IPO. Snap, Inc.'s Spectacle site is one to behold.

If you're new to this list, I try to even distribute the daily intelligence between the following categories: data, brand, eCommerce, ad tech, fintech, and media. In some cases, these stories intersect and allow you to deduce the direction of certain trends within spaces that may affect your day to day mission as an executive within these spaces.

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Today's Top Intelligence (12 Reads)

Last Word: Why Kit and Ace is Failing

Just this morning, news of Kit and Ace's failures hit Columbus, Ohio. The Vancouver brand's one and only storefront closed down just meters away from where one of the tech fashion industry's pioneers - Mizzen+Main stood in it's early days.

So, what did Kit and Ace do wrong:

I walked into my first Lululemon showroom in 2008 with my wife and Olympic bobsledding gold medalist - Steve Mesler. Considered an elite ambassador, he introduced many in the upscale area of Houston, Texas to the brand. Between 2008 and 2012, Lululemon benefitted from a surge in sport from elite fitness practitioners (though the brand was focused on yoga lovers). The ambassador circuit, both elite and otherwise, was a very powerful conduit for influence marketing. The explosion of CrossFit as a consumer culture amplified the Vancouver brand throughout North America.

In 2012, Reebok (who realized what CrossFit was doing for Lululemon) signed an exclusive licensing deal with the functional fitness company and almost overnight, Lululemon's market cap began to stumble, ultimately peaking in 2013. And of course, Reebok began it's change in fortunes. 

This is the Cliff Notes version of things, sure. But as the Kit and Ace brand rolled out, many of the same tactics were employed.

  1. Smaller showrooms, reminiscent of $LULU's U.S. takeover in 2008. 
  2. Hiring "artsy, well-connected, cool kids" who have connections with urban promoters. In Lululemon's model, these were fitness instructors. 
  3. Expensive clothing, no discounts. 
  4. In-store community events. 

The product based retailer erred in judgement was five fold. 

  1. Chip Wilson has never once acknowledged that the growth of his first company received a 70's skateboard era, Vans-like boost by an unexpected consumer segment. If I recall correctly, he discouraged further adoption.
  2. The shirts were 'tech cashmere' but the 50/50 blends were inferior to existing startups who manufacture technical button downs. 
  3. There was a need to wear Lululemon in their early days, the clothing was superior for those who move and sweat. There was no need for Kit and Ace's approach to technical wear.
  4. The rollout was much too fast. And apparel wars are never won by speed; they are won by superiority and longevity. 
  5. The gray / white / black tops were so distinctive that matching them with non-K&A apparel was very difficult for early adopters.  

Now, I'd be short-sighted to call this a eulogy. It is not, they will be around for a long time but missteps like this are hard to recover from. 

By 2PML Reader: LeanLuxe:

As we’ve already covered here at Lean Luxe, even the most ambitious modern luxury firms, Warby Parker and Everlane, to take two examples, are fully focused on building out their North American retail presence first. But even Neil Blumenthal et al understand that too many stores too quickly poses a huge risk. Warby Parker has 37 stores in the US and Toronto to Kit and Ace’s 60 worldwide. (Plus, many of Warby Parker’s are shops within preexisting boutiques, rather than stand alone Warby Parker stores.) Everlane, fanatically focused on online sales, just opened its first location this summer, having been firmly opposed to opening any permanent bricks-and-mortars up to that point. Both Everlane and Warby Parker will celebrate their seventh anniversaries in 2017. Nearly a decade old, they’ve taken a gradual, methodical approach to physical retail. So it’s odd that at just two years old, Kit and Ace has felt the need to do the opposite, especially given the proven power of online sales.