The world’s largest made-to-measure menswear company, Vancouver-based INDOCHINO, continues to see exceptional growth as it opens new stores (aka 'showrooms'), and gains consumer loyalty in the form of repeat online sales. The company’s CEO, Drew Green, says that he expected the company to finish the year with over 60% year-over-year net revenue growth over the past six months, after finishing 2016 with 54% year-over-year growth. INDOCHINO’s expansion is driven by being profitable, he noted, and the company has also just announced four more US showrooms, in some important retail locations in some of the country’s largest cities.
In an interview, Mr. Green explained the importance of the ‘lifetime value of a customer’ to INDOCHINO, and how a visit to a showroom can turn a customer into a repeat online purchaser. The in-store fitting experience is an initial relationship building tool that can then translate into further online sales, with customer measurements on file easily translating into a new suit or tailored shirt purchase. “Stores are an introductory channel for the brand,” explained Mr. Green, and that about 70% of customers in its showrooms are first-time visitors — and hopefully repeat customers.
The showroom lifts the online business, he explained, and until relatively recently, INDOCHINO was primarily an online business augmented with pop-up fittings. It was only in 2015 that INDOCHINO launched its first permanent retail space in Vancouver, and the company has now grown to boast eight showrooms in Canada and five in the United States.
The Greater Toronto Area was something of a test market for INDOCHINO, in terms of number of showroom locations in one region. There are now three INDOCHINO locations in the GTA (Downtown Toronto, Yorkdale and Square One in Mississauga), and Vancouver recently saw the opening of its second showroom at Metropolis at Metrotown in Burnaby. Mr. Green revealed that each Toronto showroom is profitable, and that opening costs for each were recovered in under a year. Having multiple locations better serves the region, and each showroom is often at capacity with client appointments. Over the weekend, for example, Mr. Green said that the Yorkdale and Square One showrooms were fully booked.
INDOCHINO’s American business is booming, and Mr. Green explained that between 65% and 70% of the company’s sales come from south of the border. INDOCHINO relies heavily on data, and uses it to determine in which markets to open retail spaces. New York City was an obvious choice and in the summer of 2016, the company opened a Manhattan showroom -- joining showrooms in central Philadelphia, Boston, Beverly Hills and San Francisco.
New York City and Philadelphia have been such strong markets, that INDOCHINO has decided to open second locations in each region. Opening on July 7 is a showroom on Broad Street across from the New York Stock Exchange, which will no doubt be a hit for the men who work in one of the world’s most important financial districts. The second Philadelphia-area showroom (opening on August 11) will be in the suburban King of Prussia shopping centre, which is not only one of the country’s largest malls, but also boasts a significant clustering of luxury brand boutiques catering to wealthy nearby Main Line residents.
A Chicago INDOCHINO showroom will also make its debut on July 14, and will be located in The Shops at North Bridge — a downtown retail centre anchored by Nordstrom’s second-highest volume unit, and located just to the north of The Loop (central business district), on North Michigan Avenue, aka ‘The Magnificent Mile’. At 1,600 square feet, the Chicago space will be the company’s smallest to date.
Suburban Washington DC is also about to see its first permanent INDOCHINO showroom, opening on July 21. It will be located at the prestigious Tyson’s Galleria, which is anchored by Neiman Marcus and Saks Fifth Avenue, as well as housing a number of notable luxury retailers. It’s clear that INDOCHINO is taking its real estate choices seriously by locating in some of America’s most important retail locations.
“It’s been a stellar year of profitable growth and we’re committed to keep growing the business in a strategic and sustainable way as we offer men around the world personalized clothing at unprecedented value,” Mr. Green said. “We’ve inspired a new way for men to shop by providing a realistic and affordable alternative to ready to wear. I’m inspired every single day by my colleagues in North America and China who have worked tirelessly to build this incredible movement.”
The US store announcement comes as the company posted outstanding growth and profitable results for the previous six-month period between Dec 1, 2016 and May 28, 2017, compared with the same period last year.
Highlights for the year-over-year period, being Dec 1, 2016 and May 28, 2017, include:
- Net revenue increase of 57%+
- Gross Margin improvement of 1100 basis points
- INDOCHINO’s customer base grew 43%
- Ad spend increased by 18% and non-showroom global headcount grew by 13%
- Both EBITDA and Net Income is on pace to improve by over $11m USD in 2017
Mr. Green said that INDOCHINO will continue to examine consumer data to determine where to open brick-and-mortar locations. Data and analytics are key to the company, and were instrumental in INDOCHINO deciding to open in Calgary, for example, recognizing that the Alberta city was INDOCHINO’s top Canadian online market. While there are no confirmed locations at the moment, Mr. Green said that Winnipeg could eventually see a showroom, as could the province of Quebec — Mr. Green figures that INDOCHINO could open three or four showrooms there at some point, though it would be important to “serve the province in the right way”, including “creating a bilingual experience”.
(Editor’s note: Oberfeld Snowcap represents INDOCHINO as brokerage in Canada)
Vancouver, not typically known for men wearing suits, is changing. Mr. Green said that men are dressing up more in the city than in the past, and that the Lower Mainland could even support another INDOCHINO showroom. The Vancouver Yaletown showroom is the company’s largest at an impressive 4,500 square feet, and it does the second-highest sales volume (it competes with the current Manhattan location for the top position).
INDOCHINO is a private company, at least for now. In February 2016, the company announced a US $30 million strategic investment by Dayang Group -- the world's largest suit manufacturer -- which has helped accelerate the company's expansion plans, significantly enhanced the product offering to its customers, and generated additional operating efficiencies. INDOCHINO announced a major international expansion last year, with the goal to open about 150 retail stores globally while selling a million suits annually by the year 2020. The company was founded in Vancouver in 2007 as an online custom suit retailer and in late 2015, co-founder Kyle Vucko was replaced as CEO by Shop.ca founder Drew Green.