Successful Start

In the years leading up to the pandemic, clothing subscriptions took off. Shoppers leaned on experts to facilitate piecing together fashions in a time-effective manner. Stitch Fix (SFIX) was one such company and it experienced some success following its 2011 launch. The online fashion company charges customers a styling fee then sends customers a box of clothing selected to match their preferences.

Nordstrom (JWN) also saw potential in the space, and in 2014 bought Trunk Club. Its business model, similar to Stitch Fix, offered custom-selected boxes of apparel delivered to its customers.

Fashion is Fickle

Fashion trends are famously fleeting. Thinking back on things like legwarmers and shoulder pads, one is forced to wonder if clothing subscription services are a waning fad. Stitch Fix, which at one point boasted a share price of just over $95, more recently has traded below $10. It’s seeing diminished interest and dwindling subscribers. It seems initial customer enthusiasm often doesn’t persist, so Stitch Fix must constantly bring on new users. An estimated 40% of its Q1 2020 revenue came from new customers.

Nordstrom has already acknowledged Trunk Club fell out of fashion. In May of this year it pulled the plug on the service.

Trade Offs

For shoppers who like to lean on the expertise of those with an eye for fashion, the current challenges facing companies like Stitch Fix may spur some welcome changes. The firm is trying to dissociate itself from the subscription label. Stitch Fix will instead let consumers buy single items without the need to commit to a subscription plan or styling fee. Meanwhile, while Nordstrom dropped Trunk Club, it continues to offer in-house styling.

Shoppers who are feeling inflation’s pinch may also seek out lower-priced solutions, such as Amazon (AMZN), which offers a “try now, buy later.” Still, absent the guidance of those gifted with an eye for fashion, some may find going it alone is a less efficient option.

Things are changing daily within the financial world. Sign up for the SoFi Daily Newsletter to get the latest news updates in your inbox every weekday.

Sign up

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS22081503

The post A Fading Fad? Clothing Subscription Services Fizzling Following Early Signs of Promise appeared first on SoFi.