Aritzia Is an Influencer That Offers Choice

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Aritzia fills a gap and need for affordable style in a retail environment that is designed to deliver a satisfying upscale design experience. It’s not your Zara model for on-trend apparel that is a more utilitarian fast-fashion experience with a low-bar price point.  What’s radical about Vancouver-based Aritzia is that shopping in their stores delivers a feeling of self-fulfillment that is a cut above. You feel convinced you made the right decision to invest in affordable luxury. In their words, “Everyday luxury.” For a 39-year-old brand to stay relevant and innovative defines it as a Retail Radical.  And CEO Jennifer Wong has recently taken the helm after having spent the last 35 years at Aritzia supporting its evolution and delivering what customers want.

Known for their puffer jackets, Aritzia also has very compelling casual active attire at 30 to 50 percent lower prices than Lululemon and Athleta. The premise of the vertically integrated brand is to offer everyday luxury at prices that are affordable for the younger consumer.  This strategy has brought them high success in the past few years and is the guiding light for future growth. 

Word of Mouth

Here is a tale of the power of social media, As reported by CBC, Aritzia’s popularity in the U.S. has exploded, driven in part by TikTok, where videos about Aritzia’s #effortlesspant, (high-waisted crepe pants) have more than 20 million views.” Customers as influencers may not be a new concept, but Artizia uses their voices as a marketing tool, leveraging their online conversations. This is by design. The company is focused on driving brand awareness by expanding its social media network and influencer strategy. Aritzia is building a lively and relevant community of influencers, and it plans to strategically use social media to amplify the brand.

At Aritzia’s October 2022 Analyst Day, they shared that their clients had surpassed their boutiques as the main marketing vehicle, having doubled their client base in the past two years (tripling the U.S. base). Satisfied customers share Artitzia TikTok moments that go beyond apparel, with two billion impressions and growing at a pace of 100 million more monthly wearing and loving Artizia. That sense of connection is also a signature statement with Aritzia’s common fitting room strategy; all mirrors are placed outside the individual changing rooms. Spontaneous sharing and connection are irresistible.

The American Dream

The brand entered the U.S. market in 2007 and currently has 51 stores south of the Canadian border (68 in Canada) and revenues are split about 50-50. The year-over-year revenue for Aritzia is an impressive 46.9 percent in 2022 with a return on assets of 10.2 percent. Gross margins were 41.6 and net profit margin were 8.5 percent, above the industry average at 5.5 percent.

CBC adds, “In the last two years, Aritzia’s U.S. customers have tripled and today about half its business comes from the U.S. The brand has big plans to build on that success in the years ahead and expects that its U.S. stores will outnumber its Canadian ones by the end of the 2027 fiscal year.  As quoted by CBC, Wong says, “We believe to be a wildly successful and an internationally known brand, you have to be famous in the U.S. We will build a critical mass in the U.S. that sets us up for success internationally beyond 2027.”

The company plans to open eight new U.S. boutiques in 2024 with a long-term strategy of increasing square footage by 60 percent in 2027. The store location strategy includes a precise plan that meets a specific criterion – and it has paid off for the company. New stores show a return on investment in less than two years. Point in case, in New York, the Hudson Yards location caters to neighboring L’Oréal employees; the Fifth Avenue location is a vibrant tourist destination. On a recent visit we saw three to four generations of shoppers with men comfortably sitting in leather chairs and picking up the bill at checkout. Aritzia is a non-threatening fashion brand with simple well-constructed garments spanning petite to generous sizing.

On a broader level, the company is focused on a three-prong strategy of geographic expansion, investments in ecommerce and omnichannel experience, and building brand awareness. Ecommerce sales represent 35 percent of total revenues and grew 36 percent in the past year serving clients in over 200 countries.

In Store

The boutiques provide a subtle immersive personalized shopping experience with a highly trained staff. The store design combines a clean, uncluttered aesthetic with clear visual lines and natural details throughout the environment including plants, stone, and wood. Through its unique store design, it provides shoppers with a sense of discovery as it builds awareness and relevancy in the U.S. market.

Over the past five years, Aritzia has doubled its merchandise mix offering, expanding the depth and breadth of assortments.  In 2021 they acquired 75 percent of Canadian men’s athletic brand, Reigning Champ, accelerating their expansion into menswear and they project Reigning Champ sales to grow from $25 million to $75 million by fiscal 2027 through a mix of additional categories and style count.

Multigenerational Ecosystem

Aritzia welcomes a multigenerational clientele seeking aspirational luxury that complements at-work and at-home wardrobes. Gen Z is as comfortable as Gen Xers looking for career clothes. Aritzia has a portfolio of in-house labels, each catering to a specific life stage outlook. The brand also bridges lifestyle needs covering workwear, workout wear, and after-workwear. Aritzia has a stake in the ground with  “good design, quality materials and timeless style.” Their mix of in-house brands has a distinct fashion vision which represents the bulk (97 percent) of sales; the remainder are relevant national brands.

Known for their puffer jackets, Aritzia also has very compelling casual active attire at 30 to 50 percent lower prices than Lululemon and Athleta. The premise of the vertically integrated brand is to offer everyday luxury at prices that are affordable for the younger consumer.  This strategy has brought them high success in the past few years and is the guiding light for future growth.

The company is also involved in communities in which they serve and has broader initiatives around purpose and the planet. Aritzia is committed to reducing its impact on climate, water, and biodiversity. And in terms of inclusivity, the company has 73 percent of its senior leadership team as women and is committed to diversity in its business.

Being a Retail Radical can be playing many roles in a large field. You can be a financial hot point, a brand that loyal customers can’t live without, an influencer for looking good and making a difference, or an affordable choice for affordable luxury.  Or you can be Aritzia, which hits all these buttons by being radical in its relevance in delivering what its loyal customers expect.  And that, in today’s crazy marketplace, it’s as radical as it gets.

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