The co-founder of high-profile custom fashion retailer InStitchu shares his experiences on competing against the big boys and developing a new form of retailing.
As Robin explains, consumers have never been more savvy: they want to know the journey “from farm to fashion”, and expect tailored products and services over a one-size-fits-all approach.
Robin joins the My Business Podcast to explore:
- His approach to winning market share from major players like department stores
- Operating as a retailer without holding any stock
- Balancing the ups and downs of being in business with a good friend
And lots more!
Speaker 1: Welcome to the My Business Podcast, insight, inspiration and wisdom for business owners, wherever they may be. Here are your hosts, Adam Zuchetti and Andy Scott.
Adam Zuchetti: Welcome to the My Business Podcast. Thanks so much for tuning in. I'm without my usual cohost, Andy Scott who's on leave today, but I have a fantastic guest in the studio. Business was founded in 2011, and they have since expanded to New Zealand as well as the US more recently. We're joined by Robin McGowan of InStitchu. Robin, thanks so much for coming to the studio today.
Robin McGowan: Thanks for having me, Adam.
Adam Zuchetti: I guess just to start us off, can you give us a bit of a background about InStitchu and how it really came about?
Robin McGowan: Yes. Essentially, InStitchu allows guys to create the perfect, tailor-made suit or shirt. It was started just over five years ago by myself and my business partner, James. We were both entering the corporate world and we just finished up our uni degrees, and we were faced with the challenge that most young guys in our position were faced with which is building that corporate wardrobe for work, getting your first suit for your first interview, that kind of stuff.
We couldn't really find something that was affordable or looked good. We'd been travelling to Asia and we'd seen what was available over there, so we thought why don't we set up a website that lets guys order a tailor-made suit online. Then, from there, the business and idea revolved.
Adam Zuchetti: Okay. That was 2011, was it?
Robin McGowan: It was, yeah.
Adam Zuchetti: Was it difficult to really take that jump that late from going professional to starting your own business?
Robin McGowan: I would say no. I would say James might answer differently and that he was working a fairly good job for a bank, whereas I was moving around a bit more. I wasn't really too worried about starting something. James, on the other hand, was in a good position. It took a bit of convincing on my end, but I think we both knew that the business idea had legs because we were already making sales quite easily to friends and family. I guess we just thought, you know what? This is going to work, so let's go for it.
Adam Zuchetti: That was actually something that I wanted to ask you about when you really knew that the business had legs and whether you had preset milestones or it was more of an epiphany that, "Hey, this is achieving revenue for us. This does have legs."
Robin McGowan: Yes. To give you an example, the way we tested it was we went to all our friends who were starting work as well, and we said, "Hey, guys, how would you like to buy a suit or shirt off us? We'll do it fair cost price, and we'll tailor-make it for you." We will use those orders as, I guess, sample orders for the supplies at that time. They were like, "Yes. Sweet."
That spread and then we did it for a number of people, but then we would continue to test our orders using our friends and family and then eventually, friends of friends heard about that and wanted to place real orders. We already knew because we were making sales that the business worked and people were happy with the quality and the price was right, and then we grew up from there.
James and I always had the vision that it was going to be a pure online business. We thought the website would just be fully automated, orders would come in, go to the suppliers, suppliers would make, send them back and we were like, "We don't have to do anything. It's going to be great." But then quickly, as you start a business, anyone knows that there's a lot of smaller things that you need to get right and it's a lot more hands on. It was interesting.
Adam Zuchetti: It's interesting that you took the approach of going to family and friends first because that's obviously what virtually anyone will do. But most business experts will say that's one of the worst things you can do because they don't want to hurt your feelings. They're going to say, "Oh, yeah. It's great. It's wonderful," and not necessarily give you that feedback that you really honestly need. Was that something at all that you were worried about?
Robin McGowan: Yeah, you're probably right. Look, at the end of the day, if the suit or shirt didn't fit or didn't look good, they weren't going to wear it and we knew that. We were able to see firsthand when the suit or shirt came back, what their feedback was. But then, look, soon after that, James and I would start going and visiting offices and just doing like little pop-up stores. We would have pop-up stores in our office, which was a tiny little office above a café in Sydney, and we would just put post on Facebook and see who wanted to come along and buy affordable, tailor-made suit. Then, that's when we started getting really feedback from real customers and orders started to grow. We thought, "Okay, let's start looking for a more permanent retail space somewhere in the city."
Adam Zuchetti: Pop-up is something that's becoming more popular, but a lot of people seemed to think that it's a big PR stunt. Whereas in your experience, that was quite a valuable market research tool. What actually goes into making a pop-up and making sure that it delivers the results that you want from it?
Robin McGowan: Yes. Pop-up for us was essentially a way for us to display our fabric range, some samples. It was a way for guys to come and get their measurements done who didn't want to do it online. And it was a way for us to engage with our target market in the real world and hear about some of their challenges of finding something that fit them well or that garment that they couldn't find for their wedding that they really wanted.
In the early days, it was very basic. Like I said, we had it in our office and you hear similar stories. In the US, I'm pretty sure the Warby Parker guys did a similar thing. They had their pop-up store in their office when the four of them were working out of it. Anyway, it's just like, "Here's our glasses. This is what we make. Come and touch them. Come and feel them. Come and try them on," so, pretty basic.
Yes, since then, we've now got seven stores or seven permanent retail stores. Retail is changing a lot and the retail landscape is changing. We're all about the experience of when someone comes in and try to make it different when you're just popping into a store.
Adam Zuchetti: Okay, all right. Where's the manufacturing actually done?
Robin McGowan: Everything is done in Shanghai, and then we use 100% Australian Merino wool for all our suits. That's something we're trying to educate customers on, both here and in the US. The US especially, there's like a misconception around wool. They don't really understand the benefits of wool and how good it actually is. Part of our entry into the US and into New York specifically is about educating guys on why you should buy a 100% wool and how Australian wool is the best in the world generally.
Adam Zuchetti: In terms of Australian wool in particular, there's the big campaign against, what do they call it, the docking of sheep. In America, PETA and things have gotten involved, saying that that's a very cruel way of doing it. But obviously here in Australia with fly strike things like that, it's an essential part of farming. Is that something that you've had to come across as part of the educational piece about Australian wool in particular?
Robin McGowan: Not really. The way we look at it is ... A lot of guys have the misconception that "Italian wool blah-blah-blah is the best," but we say, "No. They actually source it from Australia." Some of the biggest fabric mills in the world own Australian farms, so they can actually get ... Xenia owns a huge sheep station where they can actually buy the wool directly.
But when I was recently in the US, we're talking to one of the banks over there and the head of the department that organises the uniforms to say, "Oh, no. We can't wear wool. It's too hot and too itchy." And I was thinking, "Well, that's not right at all. We need to do a bit more about teaching you guys about the benefits of wool." That's something we're proud of supporting, and I guess it's allowed us to differentiate ourselves when heading into the US. We work with Walmart as well, and we buy our wool from one of the biggest purchases of Australian wool in Asia as well.
Adam Zuchetti: You're obviously still a small business. You got how many staff at the moment?
Robin McGowan: We've got close to 50 staff at the moment. Yes, so it's still relatively small. But, yeah, based in Sydney with showrooms around Australia in the major capital cities and then one in Auckland and one recently in New York as well.
Adam Zuchetti: In terms of that with what you're saying about the supply chain of larger businesses, is that something that longer-term you would like to do to own your farm, your own sheep to really control the quality and everything that goes into your products?
Robin McGowan: Yeah, I think we really like the concept of, from farm to fashion and I think consumers are becoming more concerned around where our products are coming from. I think being open about your supply chain is really important and I think customers appreciate that. I don't know about owning our own farms. James' family have a sheep station, so he's got some history there. We'd love to do a piece around actually tracking the wool from a sheep to actually seeing it on someone as a suit. I think that would be great.
Yeah, I've heard stories. Harry's in the US, the razor company, buying their own factory in Germany for like a $100 million. I don't know if that changes thing. The thought of owning something like that is a bit scary. I think if you work closely with your manufacturers, and you're honest with them, and you develop a good relationship, it works out fine anyway.
Adam Zuchetti: Speaking of manufacturers and suppliers, there's a lot of work goes into finding those suppliers, those manufacturers and making sure that they are really good. They are up to speed with what you're trying to do. How did you actually go about sourcing those and making sure that they were the right ones for your business?
Robin McGowan: Yes. I mentioned earlier we did a lot of samples through friends and family. That was literally testing different countries, family-run operations to large-scale operations. You get a feel for who's going to be best for your business. We always had the idea that we wanted to scale up, so we wanted a manufacture that would allow us to do that. James and I went over to China when we were, I think, 23 or 24 and basically did a road trip, meeting with different manufacturers. Most of them would say, "Why would we do one-off orders," because everything we do is custom and it's tailored, so it's made to order.
Then, a lot of those manufacturers came back a few years later and said, "Oh, we'd like to work with you now." They actually flew to Australia to meet us. I think in the early days, we actually took James's dad with us because he had grey hair and because we looked so young at the time. We were just like, "They're not going to take us seriously." But, yeah, it's been a lot of, I guess, working with different manufacturers, telling them what we want, making sure that they can deliver but then always knowing that if anything happens, you've got a contingency plan.
Again, James and I spent a bit of time each month with them, whether that's Skype calls or actually on the ground with them. Yes, like I said, if you got a good relationship with them, the business will run pretty smoothly.
Adam Zuchetti: What about the fabric suppliers because obviously, you're coming in small business using bespoke ... You're making bespoke suits. From a supplier point of view, they're going to go, "Well, why would I bother supplying you guys one suit at a time kind of thing when I can do these major companies who are doing big batches of things?" Was it really difficult to get them on board with your concept?
Robin McGowan: Yes, and no. Yes, some of them understood that we were guaranteeing X number of orders over a month, so they were happy to do what we call cut lengths. It wasn't too much of an issue. Once they saw the orders coming through, they were happy. Again, it took a few meetings to get the deal done but at the moment, they're happy. The business is at a level now where they're probably doing as much fabric as they would from any other company. It's worked out well.
We like the model in the sense that a lot of retailers have that stock risk or inventory risk, and you're seeing more of that across the retail landscape especially in the US and Australia. We like the fact that we can produce a garment within three to four weeks but also update our website with new collections really quickly, faster than any other retailer could. We can have new garments in our shirt or new fabrics in our shirt really quickly as well, and we can set up new showrooms pretty quickly as well because our showrooms are very low-touch. There's not much stock.
It's basically, you come in, you've got an appointment, you'll meet with our stylists. They'll work with you to create that perfect suit or shirt. You've got the fabric samples. Everything is done via our website as well. All your data is captured in the website and then if you want to reorder, you can come back in or you can do it all online as well. Your measurements were all saved there. Your designs are saved there. The fabrics that you like are saved there.
Adam Zuchetti: I'm curious about the retail concepts because you said earlier that both you and James thought initially it would be solely online. You've now gone into the physical retail component, and without having physical stock there to sell, that must be quite an upfront cost, having the store, fitting it out, having staff member there, all that kind of thing. How do you really determine the return on investment with those stores?
Robin McGowan: Yes, it is. You're seeing a lot more online retailers experimenting with stores. You've even seen Amazon doing it with books and I think recently, they're even looking at doing a pop-up store in Japan. You're seeing ... Like I said, the retail landscape change. A lot of online players are trying to figure out offline and vice versa.
For us, everything is appointment driven, so we're able to measure up our foot traffic, I think, a lot better than a normal retailer. We can measure how many people coming in for fitting on each week do we need to spend more to generate more bookings but at the same time, every person that comes in has a unique experience and I think the more people we get through the door, the more people they tell. It works out well.
Adam Zuchetti: Why did you really decide to take the physical retail option?
Robin McGowan: Again, it was something that our customers were asking for. It was the fact they wanted to come in and probably see the fabrics, touch the fabrics or, again, get their measurements done or even just have a chat to us about something that they were wanting to create but they didn't feel they could it themselves. I think we're seeing more of that. We got a great team of stylists who work with wedding clients or just a guy who wants a suit for work. Once we've done the first one, we knew that the concept worked and we knew that for every guy that came in and got measured, it was another customer that could if they wanted to order online whenever they wanted to. For us, it was about getting as many customers measured as we could and getting as many customers coming in and seeing the product and also getting to meet the team and realising that we were a real business.
In the early days, when you're starting what essentially a fashion brand from scratch, there's no trust in the brand, really. They're like, "Well, if I'm going to give you a go, how do I know that the suit is going to look good or the suit is going to fit well?" We have to build up that trust one customer at a time. And then I think the store gave us the kind of sense that, "All right, these guys are serious about the business." Yeah, we earned the trust from the customer a bit more, I think.
Adam Zuchetti: The store is being more about building credibility rather than direct sales?
Robin McGowan: Well, yeah, exactly. The sales came, but I think it was an intentional decision by James and I to say, "No, this is ... We're going to really take the time to build this brand up. Retail is changing." We never thought we would be like a retail brand with stores, but that's the way it's gone. But I think retail is being replaced by new innovative, more exciting brands and I think the old stagnant brands are realising that, but they've been a bit slow to react.
Adam Zuchetti: Now, I want to come to the people behind the business. You and James were mates before you started the business. I'm curious about whether that relationship has really been strained by going into business together.
Robin McGowan: Yeah, what do they say, "You should never go into business with friends." But look, James and I, we were at school together. We were at uni together doing different degrees. I would say no. We haven't ... You have your ups and downs but at the same time, we found it really beneficial to have a co-founder, someone you can run ideas by, someone you can ... who's there to second question what your decisions are or reassure you on certain decisions.
I would say, to me, having a co-founder has been really beneficial. Some businesses have two CEOs, and James and I run it that way. We know what each other is better at than the other, so we let one another go down different paths depending on what's come up. Like any business owner or business owners will know you have your stressful times and tough times but at the same time, it's good having that other person so you can talk about it, I guess. It's like any solo entrepreneur would have their mentors or people that they go to when they've got questions. I think we run it the same way.
Adam Zuchetti: How do you deal with disagreements between you though, particularly on those core strategic directions?
Robin McGowan: Flip a coin.
Adam Zuchetti: Flip a coin?
Robin McGowan: No, I think you have discussions, sometimes more deeper or heated discussions. But at the same time, you're both working towards the same goal, which is focusing on the business, and your customers, and your staff. I think it's always a discussion usually more often than not, we agree on the same thing because we know what we're trying to get to. Yeah, there's, I think, more benefits to having that business partner or that co-founder than not.
Adam Zuchetti: Okay. What about exit planning because that can be one of the big issues that co-owners come to blows with if one wants to leave before the other or they've got different opinions? Did you have discussions very early on about exit planning and what your strategy was going to be if one of you wanted to leave or you wanted to sell within a particular time or anything like that?
Robin McGowan: Not really. I think that's laid in the early days when you draw up your shareholder's agreement or your partnership agreement. But no, that was never discussed. Yeah, we're always just focused on getting that new store open or hiring that next staff member who we desperately needed or figuring out how many suits were needed to sell this month. That's the way we run things.
Adam Zuchetti: There seems to be two kinds of people who go into business, and one kind is those who really loved what they're doing and that's why they go into it. And others seemed to look at it very much as an asset and they want to build that asset. They've got a time frame and then we're going to sell it for profit. It seems that you guys are more the former rather than the later. Is that true?
Robin McGowan: Yeah. We love the fact that InStitchu has become a credible brand, almost a fashion label amongst guys in Australia. I think you never realise how far you come until you've looked back at what you've built. And in the startup world, a year feels like forever and I think when you look back, how many staff you had 12 months ago or how many orders you were doing or how many customers were you seeing, that's when you realised, "Well, we actually created something really cool here and pretty impressive." I think that gets you excited to just keep going as a business owner and keep doing as much as you can to get that business to a level that you're happy with and is sustainable.
Adam Zuchetti: Looking back, there have been any really big staff-ups that you've made or things that went spectacularly wrong that have been a fantastic learning tool for you?
Robin McGowan: You're always learning all the time. There's small staff-ups. There's big staff-ups. I think we have been lucky and that we've been hiring really impressive staff, and we built a really solid team. You try to reduce the number of staff-ups that happen along the way. In the early days, we did a licencing agreement with a group in the UK. It wasn't a staff-up by any means. It still got us exposure and orders in the UK market but we ended up revoking that and bringing it back in-house because at the time, it was a really quick way to get into the UK market but at the same time, we lost a little bit of the control that we had. But, again, you're always learning and I think that's the best part about running a business, learning and growing.
Adam Zuchetti: Just to finish this off, Robin, what would you say is your biggest source of inspiration in business?
Robin McGowan: Everyone has got their idols, business idols. I'm a big fan of Richard Branson. I think you got to have fun in business. You can't be serious all the time and I think if you have fun, your staff will enjoy themselves a bit more. But again, I love, personally, when I see a happy customer walking out of the door with his InStitchu suit bag and I've got no idea who he is but I just see him walking down the street with a big smile on his face. Yeah, that gets me excited, I guess, about the brand and where we are and where we can get to.
Adam Zuchetti: All right, brilliant. Thanks for joining us, Robin.
Robin McGowan: Thank you.