2021 Brand of the Year: Aritzia climbs to new heights

With a surging ecomm and U.S. business, the fashion retailer is in full expansion mode.

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This week, strategy is rolling out profiles of the 2021 Brands of the Year. Check back throughout the week to see the long-term plans and build-building strategies behind the rest of this year’s winners, including Harry Rosen, Telus and SephoraThis story originally appeared in the Winter 2021 issue of strategy.

By Mario Toneguzzi

At a time when many fashion retailers are feeling the pain of the COVID-19 pandemic, with several closing their doors forever, Aritzia is in full expansion mode. So successful has the brand been of late that analysts see in its growth story an inkling of fellow Vancouver-based apparel co. Lululemon, now one of the largest clothing retailers in the world.

Scores of shoppers lining the streets outside Aritizia stores as pandemic restrictions loosened in early 2021 signaled the brand’s cult status. Retail analysts – perplexed by the clothing company’s resistance to the second coming of the Retailpocalypse – have pointed to younger consumers’ willingness to pay higher prices for quality clothing. Having focused on developing the perfect product mix – with styles across 10 signature labels from athleisure-focused TNA, to modern and minimalist Babaton, to vintage-inspired Wilfred – the brand caters to a mix of demographics at different price points.

“Our business has gone from a $500 million business to a $1 billion business in the last few years and our ecommerce, particularly with the pandemic, has increased meaningfully,” says founder and CEO Brian Hill. “Now we can confidently launch [new] products and [our] ecommerce channels can support whatever expansion we want.”

As the prolonged health and economic crisis knocked the wind out of many brands, Aritzia continued to invest heavily in its ecommerce platform – a move that helped it remain one click away from consumers hunkered down at home. Though COVID-19 ended 22 consecutive quarters of comparable sales growth for the company, growth in its ecommerce business helped offset what could have been significant losses.

With the worst of the pandemic behind it, Aritzia is now expanding into new product categories, including menswear through its acquisition of Vancouver-based Reigning Champ, and pushing aggressively into the U.S., which it has identified as a major source of future growth. And it’s doing all this while continuing to expand its consumer base as well as its leadership team – including its first CMO in close to two years.

After closing its boutiques in March 2020, Aritzia’s customers “immediately and seamlessly shifted from retail to online,” Hill says.

While that shift was “reassuring on several fronts” – proving not only that the brand’s customers were willing to shop that way, but also that its infrastructure could handle the volume – Hill says customers have now “enthusiastically returned” to its reopened stores while continuing to shop online, deepening his confidence in the company’s multi-channel strategy.

Aritzia has invested in new digital capabilities, including personalization and digital selling tools. It hired Will Cashman as VP of data and analytics earlier this year as part of its plan to build out those capabilities.

Since then, Aritzia has rolled out a Clientele App across all locations, equipping stylists with product information and the ability to view customer profiles and purchase histories, which can be used to curate looks from its entire online assortment. And it has introduced Fit Analytics on its site, which leverages AI to provide highly personalized size recommendations based on customers’ past purchases.

“When the pandemic hit, we had no choice but to drive our clients online,” says Hill. “Going forward, it’s all about the omni-channel experience, which is why we have a rigorous focus on ensuring all of our omni-channel experiences are up and running by the end of this fiscal year.”

Another major focus for Aritzia has been growing its consumer base, in part through new and expanded product lines.

s21_03_a03_84775_19792_on_aThe brand is gearing up to launch a swim line before the end of this year, as well as an intimates collection in 2022. That’s in addition to adding more depth to its existing assortment, including more inclusive sizing for top-selling items – all of which is contributing to its on-track five-year plan to double its style count. “We will continue to use our infrastructure to build and create new categories and sell them online, which is super exciting for us,” Hill says.

Then there’s the Reigning Champ acquisition. Although Aritzia had considered an expansion into the men’s category over the past few decades, it always maintained a disciplined focus on its women’s business, Hill says. But when the opportunity to purchase a majority stake in Reigning Champ presented itself earlier this year, the revenue growth potential was too attractive to pass up.

“The partnership provides an exciting path forward to elevate Reigning Champ to the next level as a premium athletic wear brand,” Hill says. “When you’re running an organization, you’re always looking for expansion opportunities. Men’s has always been on the table for expanding but has [previously] hit the cutting room floor.”

That doesn’t mean the company will suddenly start selling a greater assortment of men’s clothing in Aritzia boutiques, where it has tested men’s puffer jackets in recent years. Rather, the deal will help bring “incremental growth to our already surging women’s ecommerce and U.S. businesses,” while allowing Reigning Champ to leverage Aritzia’s infrastructure and tech, according to Hill.

The expansion presents Aritzia with plenty of opportunities to continue growing its loyal fan base. In September, the company hired CMO Dana Gers to help lead the marketing department from her home base in the U.S. [Update: Aritzia and Dana Gers mutually parted ways in November 2021]. Gers took over from Hill, who served as de facto CMO throughout the pandemic. With insight into American consumers and plenty of global fashion industry leadership experience – including time at Net-A-Porter, Jimmy Choo and Ferragamo – Gers came aboard to take Aritzia marketing to the next level.

Part of its strategy going forward will be to invest in social media and influencers, where it has had success in the past, Hill says.

During the pandemic, as the company’s photography studio closed and models were restricted from entering Canada, it quickly pivoted to instructing models on how to take the photos in their own homes – along with detailed instructions on styling, lighting, hair and makeup. The hack meant Aritzia did not miss a beat for its online product catalogue. And while not ideal under normal circumstances, the clothing was presented in an environment that resonated with customers’ stay-at-home reality, Hill says.

girl bootsThat kind of agile thinking will come handy as Aritzia pushes further into the next frontier: the U.S. fashion market.

In addition to having embraced ecommerce early, retail expert Bruce Winder says one reason Aritzia has succeeded where others have failed is that the company was selective in its expansion strategy before the pandemic started.

“After going public in 2016, it resisted the temptation to saturate the market with stores,” he says. “Unlike other fashion brands, they maintained exclusivity by carefully managing growth. This helped them keep overheads low to weather the pandemic financially.”

But coming out of the pandemic, the brand is accelerating its expansion plans, believing there’s “tremendous whitespace” in the U.S, according to Hill. Whereas it currently has 39 U.S. locations, it sees potential to grow up to 100 stateside shops – exceeding the 69 boutiques it anticipates having in Canada.

Aritzia’s recent financial performance gives it plenty of reason to be bullish on the market. In its most recent quarter, ending in August, the company’s year-over-year net revenue increased by 80% to $350 million. Ecommerce revenue surged by 49% on top of the 82% growth experienced in the same quarter last year. Meanwhile, U.S. sales spiked at an “unprecedented” pace, growing 174% from the year before.

“The stores we’ve opened and continue to open in the U.S have surpassed our expectations,” Hill says. “The economics are strong. It’s a prime market to advance our omnichannel growth plans.”

While the company’s results during fiscal 2021 – the period ending in May 2021 – were “impressive given the circumstances,” Hill says what’s far more important is what they signal about the future of the company post-pandemic.