In the coming months, Institchu will commence above-the-line marketing – it has mostly spread through word-of-mouth up to now – and launch new bricks-and-mortar stores to hit its growth targets ahead of the planned public float.
“We just opened our 13th store in Perth a couple weeks ago and we have another four to five stores planned for the next calendar year. That includes additional David Jones locations,” Robin McGowan, Institchu’s co-founder and managing director, told Inside Retail.
“That has gone really well, and it’s something we’re looking to roll out to additional locations,” McGowan said.
Longer term, Institchu aims to expand its footprint beyond Australia. It recently closed its only international showroom, in New York City, to focus on building momentum in the domestic market, but the company remains open to acquisition opportunities offshore, McGowan said.
“The vision over the next five years is to become the world’s leading custom clothing business and do what we’re doing here in Australia throughout the whole world,” James Wakefield, Institchu’s other co-founder and managing director, told Inside Retail.
Low risk, high reward
McGowan and Wakefield founded Institchu in 2011 to make custom suits more affordable and accessible for the average consumer. Instead of buying suits off-the-rack and having them tailored to fit, Institchu customers can choose from hundreds of different fabric and style options, provide their measurements and receive a custom suit in three to four weeks. Prices start at $600, which is comparable to many high street retailers.
The custom clothing model isn’t just better for customers. Because Institchu makes everything to order, it doesn’t need to hold stock or worry about marking down unsold inventory. And because it tailors every item to the customer’s exact measurements, it experiences a much lower return rate than other online retailers. This enables it to keep costs to a minimum.
At the same time, Institchu operates a small number of showrooms to guide first-time customers through the design process and facilitate group fittings for wedding parties – a major part of its business – but makes it easy for customers to make repeat purchases online.
“When Robin and I first set up this business, we analysed all the pain points and risks of traditional retail, and took measures to avoid them,” Wakefield explained. “All our showrooms are in non-traditional retail locations where rents are much cheaper and we’re using our digital strategy to drive foot traffic to stores.”
As a result of this approach, Institchu has come through Covid-19 relatively unscathed, despite the massive drop in spending on office attire and outfits for formal events like weddings during the pandemic.
“We weren’t sitting on millions of dollars worth of stock like other retailers who had just ordered for the next season,” Wakefield said. “We were able to literally just hibernate.”
Revenue is now back above pre-Covid levels and is set to continue to grow as people’s calendars fill up with a two-year backlog of events.
“In the last two weeks, we’ve hired 22 new staff, and that is largely to help with this pent-up demand we’ve got,” Wakefield said.
More than suits
Over the years, Institchu has expanded beyond suits into casual wear, such as chinos, polo shirts, and bomber jackets, and there are even more products to come, including footwear. Last year, the retailer launched custom clothes for women.
“We really want to be a one-stop shop,” McGowan said.
It’s not just growth for growth’s sake. By enabling customers to buy more made-to-order clothes, rather than off-the-rack, Institchu aims to help them reduce their environmental impact.
“The manufacturing process [of made-to-order] has less of a negative impact on the environment, there’s far less water consumption, far less wastage and so on. But also, for the consumer, it’s more of an informed purchase. They’re not just buying a garment and getting rid of it in three months’ time, they’re designing it according to their preferences and their measurements,” Wakefield said.
Institchu is currently working with suppliers to gain a better understanding of its total environmental impact. Once it has this insight, it plans to make sustainability a bigger part of its external communications.
“We’ve still got a lot of work to do as a brand, but we’ve seen a successful IPO in Allbirds with a brand that is focusing on sustainability, so I think we do see it being a big part of our business model,” McGowan said.