Robin McGowan of custom-made men’s formalwear retailer InStitchu returns to the My Business Podcast to discuss how his business has approached revenue diversification.
- How the business is achieving 116 per cent year-on-year growth
- His tips for making fast growth sustainable
- Diversifying revenue streams in ways that fit your core business
- A nifty trick for expanding into offshore markets
Plus lots more!
Adam Zuchetti: Welcome to another episode of The My Business Podcast. Thanks so much for tuning in. We've got a business leader who we've had in the studio previously. We wanted to get him back in to discuss more of the growth. Last time he was in, he was talking more the establishment of the business and getting a new idea to market, but we wanted to get him back to really discuss the more in-depth details of taking that idea, making it come to fruition, and making sure that it's a sustainable business for the longer term.
The business was founded in 2011. It's now experiencing 116 per cent year-on-year growth and operates across three countries. So we've got Robin McGowan from InStitchu back in the studio. I wanted to cover ... Last time we spoke more about the start-up days and the founding the business, but I wanted to ... A lot of businesses, obviously, they say fail within the first three years. Those start-ups just seem to fizzle out on a good idea that doesn't have longer term legs. But you guys have been here now six, going on seven, years I believe.
Robin McGowan: Close to six, yeah.
Adam Zuchetti: Close to six. Okay. So you've obviously passed that kind of period of the trial and error, test the waters kind of thing, and you've made a sustainable business for yourselves. At what point did you really realise, though, that you had a long-term business on your hands?
Robin McGowan: Look, I think if you've got repeat orders and you've got customers coming back, I think that's a great way of figuring out if you've done a good job, because it's one thing to get customers in, but to keep them reordering and getting those repeat purchases is quite difficult. When we started to see customers coming back time and time again and really shopping with us a lot, we realised that the business was running well, but at the same time we started getting orders from different parts of Australia online, and we wanted to service those customers with a physical store as well.
Then we started building on that, so we set up Sydney, and then we set up Melbourne, Brisbane and Canberra. And you know, Canberra's a really interesting one, because it is a small city essentially, less than 400,000 people, but it's one of our best performing stores. The experience that we offer in the showroom has to be perfect. The customers have to feel like they're the only person in the room when they have that appointment, when they're getting their suit or shirt.
But yeah, I guess running a start-up or a business, you feel like you're just sprinting the whole time. You've sometimes got to stop and catch your breath, to realise how much you've achieved or how much you've done in the years prior. But I think if you're getting new clients, new customers, and you're getting them back in, I think that's a good sign that you're doing a good job, and for us it was just about giving as many guys access to our service as possible in Australia and now internationally.
Adam Zuchetti: Speaking of catching your breath, I've got figures here that say that you're growing, you're achieving year-on-year growth of around 116 per cent. That's quite phenomenal, but has been quite stable over the time that you've been operating, or have you had real sort of peaks and troughs in that growth?
Robin McGowan: Your growth rate at any time as a business owner is a tricky one. I think for us, our focus was getting new showrooms open as quickly as possible and building our team as quickly as possible. Yeah, you have ups and downs. You might have slower months than others, but for us we were just thinking about how we can get our service to more customers, how we can reach more customers, whether that's through online marketing, whether that's through doing PR campaigns, whether that's doing pop-up stores like we spoke about earlier. It's basically just about getting in front of as many eyeballs as you can and trying to get them to come in and test the product. Like I said earlier off-air, every guy really does need at least one suit, no matter what you do, either one suit or a nice shirt, and so our goal was to try and make guys want us to be that provider.
Adam Zuchetti: At 116 per cent growth, is that something that you feel is really sustainable, or do you enjoy it while it lasts and then you take those deliberate periods to bring that down and refocus so that you can then look towards the next period of high growth?
Robin McGowan: Numbers are numbers. We don't celebrate numbers per se. Our focus and our staff's focus is always making sure that our customers have a great experience and that they love the product, because at the end of the day that's all that matters, that's what's going to get guys talking or customers talking, and that's what's going to get them coming back. So I guess that's what James and I focus on, making sure that our in-store and online experience is good as it can be and making sure that the product is the best it can be, because that's what's going to drive your growth rate at the end of the day.
Adam Zuchetti: I'm interested, we were talking about Canberra and it being a very small city in terms of population but being one of your best performing sites. But it's obviously got quite a limited pool of potential customers, I suppose, and suits aren't bought with the same frequency as, say, a loaf of bread or something. How do you ensure that you are getting repeat customers continually to make sure that you're achieving growth without reaching full saturation?
Robin McGowan: For us, a lot of guys generally find shopping to be a bit of a pain and they're a bit lazy when it comes to shopping, so if they can come in and visit us once, get their measurements taken once, and then know that they can either order online whenever they want and everything's made to their size. I think that takes a lot of the headache out of shopping for a lot of guys. It means they can just pop into a store once a year if they want and pick out a bunch of fabrics and then order them from home if they need more shirts for work or whatever. I think Canberra's an interesting one because it is such a high population of public sector workers who still wear a lot of suits day in, day out.
And I mentioned weddings is a constant business stream for us and it's always growing. Guys and girls are spending more on weddings every year, and for every wedding party that we measure or fit, there might be five or six groomsmen who've never heard about us, but they're being brought in by the groom. Then they're getting married. It kind of snowballs from there. So I think that's why we've probably had a good success down there.
Adam Zuchetti: Was targeting weddings a deliberate approach for you, or does it come about quite by accident?
Robin McGowan: Totally by accident. At the time when we were starting, and still now, the price point is something that a lot of people pay attention to, especially for weddings. It is such an expensive process. Also the fact that we offer a dedicated wedding stylist who works with the groom for the whole length of the time to get the suits. Also the fact that a lot of guys might have groomsmen interstate or overseas, and the website allows them to do their measurements online or visit one of our international stores. So I think we're trying to take a lot of the headache out of weddings for guys. I think guys have two jobs, get the suits sorted and get the ring sorted.
Adam Zuchetti: And turn up on the day, hopefully…
Robin McGowan: And turn up. It kind of came out of nowhere, but now it's like I said, a big part of our business. A lot of guys will come in for a wedding suit and then come back for a work suit or come back for something for another occasion.
Adam Zuchetti: For you guys, in terms of future growth, are you looking at somehow diversifying further or is it more about doing what you do and doing it really well, and nailing that particular market?
Robin McGowan: We're focused on custom tailor-made garments, and like I said before, a lot of retailers struggle with inventory risk and buying too much stock and not being able to clear it, so we love our business model and I think it's kind of our nation. It's something where we're really focused on improving. We think in the future that production times will come down, and custom clothing will probably be something that most people can have access to. The turnaround time will probably be only a few days, and I think that's where our manufacturers want to get to and where we want to get to. We're slowly offering newer products, chinos, more casual shirting. And I think we'd like to see that grow and really be a full service custom clothing specialist.
Adam Zuchetti: Because I was thinking you could potentially look at, obviously, diversifying into women's clothing, whether you wanted to do that, accessories, shoes, those kind of things, but it sounds like you're very much focused on we make clothes and that's what we're focusing on, and improving the value, rather than diversifying into a whole bunch of different things that aren't really our core business.
Robin McGowan: That's right. InStitchu, as a brand we are focused on those products, but we actually work with other Australian brands to service the other products you mentioned. So we offer shoes, we offer sunglasses, cuff links, but we actually work with small independent Australian brands to provide that, because then again, their specialty is those products. That's the kind of model we use at the moment. We use some great smaller brands like Pacifico Optical and some other smaller accessories brands, and then they all kind of complement each other. But again, that goes back to a lot of guys coming in and just wanting to buy everything at once. So yeah, we're focused on the clothing side of things, but we also provide those other products as well.
Adam Zuchetti: I want to talk competition with you, and whether it's been a struggle for you to get customer interaction on one side, but have you had established players, menswear stores, department stores, things like that, that sell suits and then offer alterations and things on the side, have they been a really big competitor or potentially a thorn in your side?
Robin McGowan: Look, what we're doing at the end of the day is selling suits and shirts, so it wasn't anything new, it was about the way we were doing it and the service we were providing to our customers, and I think a lot of bigger players like the department stores might try and add it on as a kind of secondary service or a business that they haven't given much thought to, but then they quickly realise how much effort is required to get it right. As a brand, we're just being focused on ourselves. Jeff Bezos always says it's better to be business-focused rather than competitor-focused, so focus on what you're doing and doing it well, and don't worry about the other players.
And I think when James and I started, we always said our number one competitor was basically just the department stores, because a lot of guys were not knowing where to go, and they were wandering to the big department stores and just wandering around aimlessly, not knowing what to do. That's the off-the-rack side of things. We're providing tailor-made stuff, but again, we think a lot of those customers didn't even know about our service or what we were trying to do. So we're basically trying to get those guys to come in and see why buying custom tailor-made is a much better option.
Adam Zuchetti: On the flip side, though, is there potential for you to potentially have a concept store in those department stores, and you can sell suits and then they've got all the accessories and things like that? Potentially people, you could leverage off that way.
Robin McGowan: Yeah, potentially. I think if the experience was right. I think a lot of the big department stores will need to start changing their experience. I think they could learn a lot from what's happening in the US. I think Nordstrom are doing a good job over there at changing the business model to make it less about how many products can we get in on the floor and how much discounting can we do, to how can we actually get people to visit us and make the experience fun and enjoyable. So I think, yeah, looking at it in Australia, I'd like to see more of that, and that should be driven by the guys in charge of some the big department stores. I think once we start to see that, that's maybe when some of these more exciting brands can come in.
Adam Zuchetti: Does potential decline of foot traffic in shopping centres and things like that, does that concern you at all?
Robin McGowan: Again, that's happening globally, and I think the big guys need to understand that they'll have to change their model a bit to get those people in. Like I said, Nordstrom are doing a good job in the US. I think Walmart are trying to basically look at how can they leverage online brands to try and change the perception of bigger offline retailers. But like I said earlier, a lot of those older stagnant retail brands are being replaced by some really cool, interesting, younger retail brands, and I think that's just because consumers are changing. Millennials are more conscious about where their dollars and going, and they want retailers that speak to them and that are exciting to them.
Adam Zuchetti: But it's interesting, it's like a reverse tide, because even ten years ago we were looking at established retailers moving into online and trying to figure out how to get that to work, but now you guys are an example of an online retailer pushing in towards physical retail and changing it from that reverse concept. It's quite an interesting proposition.
Robin McGowan: Definitely. Look, at the end of the day it's all just retail, and for us it's about you shouldn't try and tell your customers where to buy from you. You should be available at all touch points. So to us it was does a customer want to come in and have that kind of showroom experience, or do they want to browse on their phone. So to us it's all retail, and it's about making sure that you're accessible anywhere to your clients.
Adam Zuchetti: Do you divvy up sales in terms of what comes from online versus in-store?
Robin McGowan: Yeah. We do. We try and track that as much as possible. It used to be quite difficult, because you might have someone browsing and then they'll make a booking, but now we're getting better at that, so we're actually able to see how many guys are coming into a store versus just buying online or how many guys are buying in-store then buying online. I think as a business owner, tracking and conversion tracking has improved, and we do still look at it as an offline, online or mobile split, but at the same time, we're not concerned with how someone wants to buy a suit or shirt, as long as they can, I guess.
Adam Zuchetti: Just for curiosity, though, what is that proportion between them?
Robin McGowan: At the moment it's probably split pretty evenly, but what we've found is that if we go to a new city and we open a new showroom, suddenly those offline sales will increase, obviously, because a lot of guys get excited and they want to come in and have that personalised fitting. And then it will kind of level off. So you'll get that excitement, guys will come in, make a purchase in-store, and then go back and make the repeat orders online.
Adam Zuchetti: Are people coming to you initially, getting measured up, get their first suit, and then potentially 12 months later come back for another one where their measurements may have changed?
Robin McGowan: Yes.
Adam Zuchetti: Is that creating any problems from you from a customer experience point?
Robin McGowan: Not really. Our website allows you to update your measurements, whether they're going up or down.
Adam Zuchetti: Are people just using the measurements from last year and then go, "Oh, it doesn't fit anymore"?
Robin McGowan: No, I think a lot of guys, if it's a year, a lot of guys will generally say I'd like to come back in or I think I've increased a bit on my biceps or my stomach or whatever, so it's really easy to update those via our sizing interface. But we've found more guys are ordering more frequently, like usually every two to three months they might be coming and buying something, because they kind of get almost hooked on the service and the fact that they can design anything or create anything, or they're suddenly in a time when they've got ten weddings to go to in a year and they're like I can't wear the same suit every wedding. So yeah, we've found once guys have their measurements they're buying more and more.
Adam Zuchetti: You've recently launched a store in the US, but that's quite a reversal. You've got the different seasons over there, you've got a different cultural fit. Has it been a really difficult process or has it been quite seamless for you?
Robin McGowan: I would it was difficult looking at it from a business owner's point of view on how to expand offshore, but we were lucky in that we had some really good key staff who were in charge of heading up that expansion.
Adam Zuchetti: Were these local staff that you took over there and ...
Robin McGowan: Yep. Yep. So the hardest part was probably just sorting out the visas and stuff like that, because we were setting up a new company, InStitchu Inc., and then we were sending over Australian staff, as well as hiring local staff. That was probably the more difficult part. Then it's, for James and I, scoping out the right space in New York, and then how do we get the brand out there, because you don't have the same brand recognition that you have where you started, or back home in Australia. So how do we get customers through the door and how do we build that brand again in a new market? For us, like I said, we were really playing on the Australian theme, especially in New York. There's a bunch of really good Aussie businesses. R.M. Williams had just set up over there, there's a bunch of kind of Aussie cafes, so we kind of tapped into that, Australians living in New York and the US market locally. Then word kind of spread from there. And then we're able to use New York as a hub to service our US customers as well.
Adam Zuchetti: It's an interesting way of doing it really, kind of tapping into the expert market, because they're going to say if you're going to go overseas, New York is pretty much the biggest you can get, so you're not doing anything by halves by going into a market like that. But the way you've done it sounds quite interesting, and I suppose it lends itself towards then going into London as a potential next market.
Robin McGowan: Potentially, yeah. I mean, we could follow the same model. But yeah, if you've got a good website, you're able to track where you're getting website visitors or where you're getting orders from, and is it a possibility that you want to look at that market more seriously. I think that's the benefit of having a good website.
Adam Zuchetti: But arguably, cities like London and New York have a much more developed retail offering than here in Australia. So that means that your potential competition ... You were saying earlier that department stores you considered as your main competitors. Is that quite a bigger challenge proportionately over there than it is here?
Robin McGowan: It could be, but we haven't found that we've changed too much. We're still offering the same products, the same price, the same service, and in the US it's working as well. It could change in a different market, but at the same time, we haven't really had to adapt the business model or change much.
Adam Zuchetti: I did want to touch on, though, obviously the US is different season to us, the reverse season, but fashion itself, that can obviously be quite fickle in terms of trends and things like that, but also not uniform across the different countries. Has that presented its own unique challenges?
Robin McGowan: For sure. Yeah, you've got to adapt what you're selling to different markets, and in the US they're ... some would say ... ahead of the curve. You've got Europe and the US and then us back here. But we'll change designs, we'll change fabrics. We've got to make sure that content is right to that market, so customers in the US are seeing the fall/winter collection and marketing, as opposed to seeing what we're doing here in Australia. So it's a challenge, but you make it work, and if you've got the right team set up in different markets, then it should run smoothly.
Adam Zuchetti: Looking back at everything that we've discussed and your six years in business, moving offshore, supply chains, everything like that, what would you say the really three big lessons that you guys have learned in those six years?
Robin McGowan: Personally, learning from my mentors, who always said plan your work, work your plan, hire staffers smarter than you. You hear that time and time again. You kind of hear these lessons and quotes from people, and when you're starting, you're like yeah, that sounds great, but you don't really take it on board as much, but then...
Adam Zuchetti: It's the implementation that counts.
Robin McGowan: Yeah, but as you start going you're like actually, that makes a lot of sense now that I've done it. So yeah, building up a solid team and, like I said earlier, being customer-obsessed rather than competitor-obsessed is a good one as well that I think we stay true to.
Adam Zuchetti: All right. Fantastic. Thanks so much, Robin.
Robin McGowan: Cheers. Thanks.