A Tale of Two DTC Brands: Why Some Soar and Others Crash | This Week in Fashion, BoF Professional

On Wednesday, Softbank’s Vision Fund announced a $400 million investment into Vuori, a California-based activewear brand. Although Japan’s Vision Fund is known for investing in technology, this investment shows that Softbank sees activewear as the next big market.


Vuori is an independent brand that is small and manages its own products. “not a lot of people had heard of,”BoF was able to speak with Joe Kudla, the chief executive officer and founder. But since its inception in 2015, it’s been growing 250 percent every year. And much like the rest of the activewear space, Vuori’s business surged during Covid, with sales tripling.

The pandemic-fueled demand for yoga pants and matching bras sets is not likely to abate anytime soon. Coresight Research reports that the category accounted for $120 billion in 2020. It is expected to continue growing at a compound annual rate of 8.4 per cent through 2023, according to Coresight Research.

But not every pandemic trend — and brands that thrived off them — have faced such outcomes.

This week saw the news that Entireworld, a trendy loungewear company known for its colorful sweatsuits, was closing down. Scott Sternberg, founder of Entireworld, wrote on Instagram that the brand needed to be restructured. “significant capital to be able to compete with the countless brands out there,”But had to shutter “after years of unsuccessful fundraising”und an acquisition that fell through at the last moment (Sternberg did no respond to a request of comment).

These two brands survived the pandemic. fashionTrends now face two outcomes, which is a result of crucial business decisions made by each company around product, growth trajectories, and how they envisioned profitability.

Entireworld didn’t have a distinct product from the beginning. The brand rose to prominence at the same time that sweatsuits became a trendy, Instagrammable trend. outfitEntireworld was the place to go in early 2020 for casual wear. The brand was also challenged by other brands that produced colourful sweatsuit sets. Entireworld was unable to stand out.

“It had a good burst of initial attraction, but they were selling something you could have gotten anywhere, at a better price point,”Kristin Kohler Burrows is the senior director of Alvarez & Marsal’s consumer retail group.

“When you’re fighting against big behemoths, you have to come out with a strong point of difference and a unique iconic product, but you must also quickly figure out how to leverage that into a broader product line if you want customers coming back,” Kohler Burrows added.

Entireworld did diversify, selling an assortment of sweaters, t-shirts and undergarments, but these items didn’t catch on like its sweatsuits. Even if they are worn by Selena Gomez and Leandra Medine, it’s hard for a brand to survive on one product. “How many sweatsuits is one shopper realistically buying?” asked Kohler Burrows.

By contrast, Vuori launched as a men’s activewear brand that tackled a specific market with a specific product.

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At the time of its founding, Kudla said the men’s market lacked fitness clothing for men who “wanted a healthy lifestyle,” but did not see themselves as sports-centric as Nike or Under Armour’s customers. At the time, Vuori faced competitors like the newly-launched Rhone, as well as Lululemon, but the apparel giant had not built a strong men’s business until years later. Kudla saw a chance to make clothes that men could wear outside of the gym.

Vuori started out with moisture-wicking shorts. The brand then expanded to include athletic tees and hoodies as well as surf apparel. Kudla stated that Vuori was committed to producing high-quality products. “evergreen product.”

“When you’re speaking to one product that you do make better than anyone else, it’s a great customer acquisition driver but eventually, you have to build newness for customer retention and lifetime value,”He said. “We’re mindful of trends but we’re not slaves to them. We don’t want to be in the fashion cycle.”

Vuori is also cautious financially. Kudla said that he has a “conservative nature,”He decided that, despite watching brands like Warby Parker or Allbirds raise funding rounds to scale, he preferred to follow a slower-growth strategy. The brand hit profitability in 2017, and only after that did it grow its retail footprint and expand into women’s in 2018 (it raised $49 million in funding in 2019).

With Entireworld, Sternberg’s business blueprint looked very different. Sternberg was raising money while he was spending. During the pandemic, Sternberg was open with shoppers in marketing emails, revealing that the business could go downhill.

“Operating at a loss and hoping for investment isn’t a sound business plan, it’s a disaster waiting to happen,”BoF was told by Gary Wassner. He is co-chief executive at Hilldun Corporation, a factoring firm.

Vuori has not received the same industry approval or marketing halo as Entireworld. It certainly doesn’t have the same name recognition as competing activewear brands like Athleta, Alo Yoga, Outdoor Voices or Sweaty Betty. But while Entireworld relied solely on direct-to-consumer channels, Vuori has wholesale partnerships with Nordstrom and REI, and will soon be in the UK’s Selfridges and Cotswold Outdoor. Many startups are beginning to embrace the strategy of choosing wholesale rather than pure DTC.

“Although at a lower margin, a finite number of strategic wholesale partnerships can be very important for driving brand awareness and customer acquisition, particularly if the strategic wholesale partner shares the same customer target,” said Kohler Burrows.

Softbank has a track record of aggressively powering companies like Uber, Flipkart and WeWork to fast growth, and its plans for Vuori isn’t any different. The company plans to open over 100 stores in the US over the next five-years, and expand to Europe and Asia in the next year. Vuori will be compared to giants such as Lululemon by investors. Lululemon stated that it will surpass its 2023 goals by year’s end.

“Athleisure was growing before the pandemic, as more people were getting healthier, getting outside and focusing on fitness, and the pandemic only accelerated that,” said Kohler Burrows. “The trend has also moved to take a mix of business and athleisure attire and so brands will get great tailwinds, given that the world is going more casual.”

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It’s a crowded market but one in which brands can succeed if they roll out differentiated product and are strategic about their finances.



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Diana Pearl compiles the information.

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