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Indochino’s VP Design for Product & Store Development, Dean Handspiker

Standing out in the retail space & online-to-physical retail experiences

Our guest is Dean Handspiker, Vice President of Design for Product & Store Development at custom menswear retailer Indochino. He is a seasoned executive with over 25 years of experience in international retail apparel management leading the operations, marketing, merchandising and visual direction for global brands. We explore what sets Indochino apart in the retail space and online-to-physical retail experiences.

Episode 8 of RETHINK Retail was recorded on May 23, 2019

Post Transcript

Paul Lewis:
Hi! Today we’re kicking off another episode of RETHINK Retail with my guest, Dean Handspiker. Dean is the Vice President of Design for Product and Store Development at Custom Menswear Retailer Indochino. He’s responsible for the overall vision, look and feel of Indochino’s product and retail business and brings over 25 years of experience in international apparel.

Dean, welcome to the show.

Dean Handspiker:
Thank you very much for having me.

Paul Lewis:
Just to jump right in, Indochino has been around for over a decade now and you’ve been with them for the past four years. Both of which is kind of a lifetime in today’s fast growing start up world. Tell us a little bit about the company and what sets it apart.

Dean Handspiker:
Absolutely, you know, that’s literally my favorite question, what sets us apart and how we differ from the competition, or others in retail and I guess I would say the three things about us are the most significant: we are truly omni channel, as a digitally native company, we came at it in reverse and as a result our offer to clients is a seamless journey between channels. Our clients can place an order online and come into a showroom for their fitting or reorder online once the showroom team has perfected their fit. Our clients really don’t differentiate, so we don’t either. Many retailers are still struggling with that. Number two, things that are different, I would say that we are experiential. We’re building show rooms verses stores, that really are high touch and high service.

We work with our clients one-on-one for the better part of an hour. We get to know them and what brought them in, it’s a more personal experience than your typical, shopping-in-the-mall retail store is to that. And then last, we really are, do offer a great value. As a direct to consumer brand, we don’t have that wholesale markup layer, typical of the category. We’re able to offer a better price point for a better-made garment. Kind of off the top, that’s the three things I tend to focus on when people ask me how we are different.

Paul Lewis:
What I love about your explanation is that you guys really started online and innovated, and so you moved from doing online to, as I understand it, pop-ups and now you have permanent showrooms that you’re opening across North America. What are some of the strengths of each of those categories and what are the key learnings and takeaways?

Dean Handspiker:
For sure, early on we learned that the physical stores were the most effective and efficient at new client acquisition, growing the business. That our showrooms were going to be the place that grew the clients, the client counts, the fastest and the most economically. Today, 80% of our new clients orders come from showrooms. But that said, nearly 75% of them have already visited online. Many have already ordered online but come in for their first fitting or style advice or vice versa. Come in the showroom and are reordering, so there’s that seamless play between. We really were a pioneer in pop-ups so to speak, with these traveling tailored installations back in, seven years ago nearly.

That morphed into temp showrooms of short term leases, six, twelve months here and there. That gave us the confidence to sign longer term deals starting four years ago. Really if I would share any good learnings of pop-ups, they really are important for two reasons. One, they mitigated the risks and lowered our initial investment in the space, kind of while we got our bearings, ordered the ideal clothes, developed training, all of these things that are expensive to learn if you’ve signed a long-term lease and for making mistakes. Second, they allowed us to gain credibility with landlords. When it was time to sign longer term leases, the better terms and the best shopping centers. We were able to say that we’ve proven the concept out, that we had the most revenue per square foot, high sales per square foot. That we had a flow, that we had a following that we could bring clients, as an online retailer, to their mall centers.

Paul Lewis:
You know what, as you talk about expanding and going into these retailers and to the centers, right now some people say the retail sky is falling a bit. The physical retail sky, and we’ve seen that with the announcements of Dress Barn closing their stores. In fact, Coresight Research says that over 7000 store will close this year already, compared to 6000 in total for last year. But at the same time, you’re thriving, you’re expanding, what do you attribute your success to?

Dean Handspiker:
Selection is key, we’ve experimented with the ideal number of options, a mix of fashion versus commercial. We really wanted to find out what’s best to serve our clients, without overwhelming them. While we’re still tweaking and always making every effort to improve, we’re in a good place now with 10 years of data behind us. We’re curated, but we’re not limited. We are seeing the feedback from the clients that we have, what they’re looking for. Presentation also plays a huge role in our success in our category. We show large fabric panels versus the books filled with tiny swatches that you find in the typical MTM shop or typical tailor. We show lots of mannequins to inspire and educate, and more importantly not all of our clients wear suits every day, so we created an environment that accommodates guys that are new to suiting, that need to see the difference between a peak lapel and a notch, that want to be inspired again. Two of the most important things that I feel that are contributing to our success today.

Paul Lewis:
It sounds like from what you’re saying that the online, the offline sort of continuously or symbiotically feed each other. These people are coming in and having physical experiences and some people are learning about the nuances of suits and dress. But they’re able to then take that experience and go online and likewise there’s probably people who are starting their journey online and that’s propelling them into a showroom.

Dean Handspiker:
Absolutely, this seamless journey back and forth. The client doesn’t respect that there are different businesses, they exist today in many retailers. The difference between even franchise and company owned stores and all of these things, a brand is a brand, and a client wants to be able to be serviced across all of the different access points to the product without interruption, without any friction.

Paul Lewis:
Talking about that, and kind of just discussing connected experiences. I define connected experiences as the entire gambit of online, to physical, to back online or any starting point and ending point, a bit of a Möbius strip where consumers come in. But I would say in years past, stores were about price, transactions and inventory, and really we see digital winning on those fronts. So stores in-and-of themselves need to evolve into something else. What are some of the areas that you see next-gen stores needing to keep in mind as these retailers and brands going direct-to-consumer are thinking about their physical spaces. What are some key areas they should have as top of mind?

Dean Handspiker:
Certainly one of the most overused words today is experiential, but for a good reason. Retailers need to create that welcoming environment that speaks to the brand, not just the sweater on the table. That inspires them, entertains them, that provides a great service and all of these other things that we’ve let slip away with the rise of fast fashion and, then stand in line with the cash, find your size on the table over there. In my opinion, next generation stores also need to evolve to more of a showroom model, with a greater assortment on display and if necessary, fulfillment direct to home versus carrying that physical inventory to sell in space. We know our clients in suburbia are just as fashionable as downtown, that our client in Florida travels to New York and he wants that wool-flannel suit, too. Too many brands are driving their customers online by offering only a small portion of their assortment in these lower-volume stores, in their C stores or secondary market, it’s almost like their demise is self-fulfilling. If you’re not stocking it or showing it, you’re giving the client less and less reason to come and visit you. And this has driven some of our decision-making in that all of our showrooms have the same assortment regardless of volume, location, weather, etc. We want to make sure that the guy, our guy, has the full assortment available to him.

Paul Lewis:
Do you find it liberating, because you started from an online position, and are now expanding and saying “So what should the physical experience be today?” And how does the inventory work, or the approach work? Do you find it a little bit liberating where a lot of stores might feel boxed-in by old models that they’ve built up, maybe only in their own minds? Certainly, it may limit their approach?

Dean Handspiker:
No, absolutely. And it needs to be shaken, the box needs to be shaken. The client is just defaulting to online to get the best price, or in most cases, but certainly the widest assortment. And we have these great physical spaces to better display product than online is capable of doing, so why not use that to their maximum potential?

Paul Lewis:
You mentioned before that ‘experiential’ is overused, but with good reason. And I think in this new paradigm, the traditional metrics around retail environments are starting to not be as applicable. Things like revenue per square foot don’t provide the same clarity for understanding if that physical location is accomplishing the mission and delivering success for the brand overall. Do you see, are there new goals, have you coined any new key performance indicators of how you measure success for a physical environment?

Dean Handspiker:
Yes and no. We’re still closely monitoring the typical KPI, AOB, UPT, CPA, the whole alphabet, really. But when we look at sales and crediting sales to channel, we look at it in two ways: both acquisition and true fulfillment, which channel is fulfilling, which channel is acquired in that client so that we can first and foremost track our marketing spent, that’s really very important for all digitally native companies that came from a place where every dollar was closely tracked for return. But also, we want to make sure that we’re properly attributing expenses and revenue against each showroom’s plan out to ensure that each location is in fact still a contributor. So it’s the yin and yang, pull and push on that. And that was something that it took a minute for us to get to it as well. We used to internally challenge each other “Oh no, the client bought online but then came to the showroom so really it’s a showroom sale,” and vice versa. And we wasted time and energy discussing this, and once we looked at the two views it became fair for all parties, and we were able to focus on more important things.

The advantage that online brands have in their physical expansions, is the data of where their customers are today. The typical view of expansion, looking at a bunch of desks and presentations around demographics for the mall and what the average age and income and education-level is, that’s important to a degree, but more important is the location of our customers today online. If they’re closer to this mall than that, then that’s where we’re probably going to choose. If they’re more on this side of town verses that, that’s the street we’re going to choose, so that we can be closer to where we think clients are. And we’ve only then that of course success is followed through word-of-mouth, repeat business, we have a built-in fan base in that area already, and in that city and in that area of the city already. So we’ll kick off the showroom, and then build from there. The online channel usually sees a little bit of a downward spiral for the first six months in that market, but then after six months it grows again and with the repeat business it flourishes. We see both succeeding with each other as opposed to without each other.

Paul Lewis:
That’s really an interesting point, because I would say that choosing your physical location was entirely based upon models of real-estate areas and things like that. In the past, and then you chose your location and built your customer base, and you have this unique way of being able to do it almost a little bit in reverse. You can look at where you’re already trending well, and use that data as an indicator of where you might want to put a location in. It’s just interesting how you’re able to look at it from again a different perspective, and then go build the physical experience, both all the way from the location to what happens when you walk into one of the stores.

Dean Handspiker:
Absolutely. And the data will tell us, how big of a bet to place, it will guide us in decisions from an investment in the quantity of space and also the cost of the space, so that we’re right-sizing our bets, so to speak, when we go into new markets.

Paul Lewis:
Wow, really fascinating. So one last question: as we look forward, is there any new technologies or cultural trends, or consumer trends that you think are going to have either a big impact on your business or just a big impact on retail in general as you kind of look down at the next three to five years, I don’t know if anyone can see much farther out than that.

Dean Handspiker:
Absolutely, certainly the customizable aspect of our business is something that I’m seeing taking off across a variety of categories, people are wanting their goods, their merchandise, their fashion, individualized, customized, made-their-own in some unique way. The price and the technology is improving to the point that that can be done much more cost-effectively than it could, say, ten years ago or further past. The demand is going to be there both in-store as well as online for custom-made apparel and accessories. So that’s the biggest trend that I see expanding at all price points, not just at the luxury end, but at commercial levels as well.

Paul Lewis:
Interesting. I completely agree, I think that as that capability becomes more scalable, we’re going to see that across a wide range of products, especially clothing, which is a highly-personalized item. I think even a much wider set of goods are going to become personalized and tailored to specific interests. And again, that online ability to see how big the market is and to get your price points in line is going to allow that new type of business perspective.

Dean Handspiker:
Absolutely.

Paul Lewis:
Well great. Listen, it was very nice having you on the show today. Thank you very much for making the time.

Dean Handspiker:
No, thank you for having me, I really appreciate it. It’s always fun to talk about the thing that I enjoy doing the most, which is building this brand to where we are today.

Paul Lewis:
Great, alright, thank you very much, Dean.

Dean Handspiker:
Thank you, goodbye.