Xcel Brands Thriving With Fast-Fashion Strategy

It seems as though every day there's another retailer closing stores, declaring bankruptcy or laying off employees. Most recently, J.C. Penney announced it will be closing 140 stores; HHGregg has filed for bankruptcy; and JackThreads laid off most of its staff.

However, one company is flourishing at a time when others are failing. Xcel Brands, owner of the Isaac Mizrahi and Judith Ripka brands, among others, achieved over $500 million in annual sales last year. This success can be traced back to the company’s beginning five years ago.

“We created this company at the precise moment when retailers lost control over margin to consumers,” said Bob D’Loren, Xcel Brands’ founder and CEO. “We saw that as a fundamental disruption in the industry.”

Xcel Brands took advantage of the disruption opportunity to reimagine shopping, social and entertainment as one. Social media and e-commerce were just beginning to emerge, and this changed D’Loren’s thinking about the kinds of brands that he wanted to own.

“In the past, a lot of our brands were static,” explains D’Loren. “They didn’t have authentic personalities behind them. With this new form of media coming — social media — we realized that we would have to own dynamic brands, brands living with authentic personalities or heritage brands where we could put that kind of personality behind it to drive on social.”

These brand personalities had to extend beyond social media as well. A big component of Xcel Brands’ success is interactive television and selling products on QVC.

“We needed to be where consumers wanted to buy goods, whether that’s e-commerce, mobile commerce, social commerce, brick-and-mortar or, in our case, interactive television where we have a big business today,” says D’Loren.

Xcel Brands used QVC’s media reach of 120 million U.S. households, as well as its massive social media following, as a marketing tool. Last year, Xcel Brands' TV sales alone exceeded $350 million.

However, what Xcel Brands has been able to, well, excel at is solving the problem of the disconnect between short-lead social media and long-lead supply chains.

D’Loren and his team decided to do a deep dive into how Zara, in particular, does business because the retailer is a fast-fashion brand that's always on top of the latest trends. After analyzing Zara’s business strategy, Xcel created short lead-time capabilities, or fast-fashion capabilities. This then lead Xcel to launch three brands in spring 2016 in wholesale partners Lord & Taylor and Hudson’s Bay Company (and Xcel will add another brand to Dillard’s in spring of this year).

“The overall objective is to turn inventory faster to achieve more full-price sellthrough and better manage inventory,” says D’Loren. “That’s what we're trying to do with fast-fashion.”

And how does Xcel Brands know what consumers want? It uses data science to determine what’s trending on social media as well as Google Analytics to help in the design process.

“The key now with trends happening so fast — customers seeing things on social and wanting them immediately, and moving on quickly from style and trends because of what’s happening in social — is that we all need to listen to what our customers are saying to finally give them what they want, when they want it,” explains D’Loren. “None of this is easy. It's never easy to implement new models, but certainly, in times like this, we all need to innovate out of this challenging environment.”

D’Loren plans to continue innovating in 2017. Xcel Brands will be focusing on product quality and data analytics/science in the year ahead.

1. Product quality: Xcel Brands has a successful strategy for the speed and price value of products, however, quality is sometimes sacrificed. In 2017, D’Loren says the focus is on doing any and everything possible to move fast with high-quality products.
2. Data analytics and science: Xcel Brands will be creating a data science team so it can listen more closely to what its customers are saying, for example, on social media. “It’s all out there. You just have to go out there, get that data and analyze it,” says D’Loren. “The more that people are engaging on social and the more powerful the data analytics and search capabilities become, we're going to see an acceleration in needing to do business this way.”