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Vegan leather skirt. Cropped sweater, softer than a Persian cat’s fur, for those long days stuck at home. And a puffy goose-down parka—oversized, like the yellow one Justin Bieber’s wife, Hailey, sported around Toronto last year. These are your fall 2020 must-haves, and Aritzia’s got them all. (The company even has a men’s collection for the first time in 36 years, after the celebrity-driven puff coat craze spilled over the gender line.) As retail director Georgina McMichen leads the way around the flagship store on Toronto’s posh Bloor Street West, she also points out the expanded selection of sweats and denim. “I mean, COVID, right? Leisurewear is selling a lot more.”
The arrival of the fall lines is something of a relief, given the spring and summer seasons were largely cancelled by the pandemic. When this store reopened in May, a two-hour lineup of shopping-starved women snaked around the block, held at bay by a crew of masked staff armed with disinfectant bottles. On this Tuesday in September, the store is busy but not crowded—something it may never be again if COVID-19 permanently changes how we shop. But Aritzia, the fourth-largest Canadian-owned women’s apparel retailer, has a better chance than most chains of coming out strong, if not stronger. While the pandemic halted a run of 22 consecutive quarters of comparable sales growth, the Vancouver-based retailer registered a smaller revenue drop than many rivals, thanks to its nimble pivot to e-commerce.
A key reason Aritzia is in this enviable position is its president and chief operating officer, Jennifer Wong. Having spent her entire career at the retailer, she led many of the inconspicuous but essential initiatives that proved so crucial at the start the crisis, from establishing a robust technological infrastructure that enabled the company’s e-commerce platform to respond to the sudden demand spike, to developing a centralized distribution system that helped the retailer manage its supply chain while others struggled. “You think of fashion as buyers, creative designers—all very glamorous on the outside. But we’re very analytical,” she says. And Wong is Aritzia’s analyst-in-chief. Finance, HR, facilities, logistics, technology, operations—those are all her.
Now, Aritzia aims to capitalize on other retailers' woes by snapping up choice locations for pennies on the dollar, even as it expands online. With almost 100 boutiques across Canada and the U.S., it plans to open five or six stores this year. The end of bricks and mortar? Not if you know how to do bricks and mortar right.
The retailer’s rapid growth since going public in 2016 stands in sharp contrast to industry trend lines. Even before the pandemic hit, Canadian fashion retail was littered with flame-outs, including Reitmans, Le Château and Danier. And nine Canadian apparel retailers have filed for bankruptcy protection so far this year, along with the Canadian operations of seven foreign-owned chains, according to industry research firm Trendex. It forecasts the country’s clothing sales will plunge 30% from 2019; the biggest previous one-year drop, in 2009, was 2.3%.
So far, says Mark Petrie, an analyst with CIBC World Markets, Aritzia has shown admirable discipline in making the most of its strengths: a multibrand approach, vertical integration that makes it less vulnerable to supply-chain tangles, and “affordable luxury” positioning in a world of fast f. “One of the hardest things to pull off in the apparel industry is consistency,” says Petrie, “and Aritzia approaches things in a very methodical way.”
As a second wave of COVID-19 threatens to roil retail again, however, even the most painstaking preparations may not be enough.
One of the amusements of Zoom-enabled remote working has been the chance to peek inside the private lives of colleagues: a bold wallpaper choice here, a child barging in there. But Jennifer Wong has given little away because she’s been in the office almost every day since the lockdown started, co-ordinating Aritzia’s pandemic response. Dressed in a dark blouse with white polka dots, her dark blond hair perfectly in place, Wong could be a model for the company’s business-casual Babaton label. The pale wood desk in her office is so clean it seems to have been staged for a photo shoot, but she insists it always looks this way. A wall of windows overlooks the Port of Vancouver. That’s about all the details the videoconference screen reveals.
Evaan Kheraj/The Globe and Mail
Her polished demeanour was apparently in evidence even when she was a teenager. Aritzia CEO Brian Hill first noticed the young sales associate during a visit to the Robson Street store three years after the company’s founding in 1984. “She had an ability to cut out the noise and eloquently share an opinion,” he says. Wong was studying economics at the University of British Columbia and planning to get “a real job” in finance. While commerce was in her blood—her father was a banker, and she used to play “business” on a toy IBM typewriter as a child—she often sketched textile patterns during class and drove her mother crazy with wilful clothing choices.
Hill, a third-generation retailer whose family’s Hill’s of Kerrisdale department store has been a Vancouver fixture for almost a century, put Wong in charge of footwear for Aritzia’s four stores. Her first big success was managing the Dr. Martens craze, working directly with the British factories to keep the iconic boots in stock. From there, she moved through human resources, legal, finance, marketing and technology, and was named COO in 2007. Five years ago, she also became president.
Wong believes Aritzia’s first big turning point was the decision in the 1990s to create multiple in-house brands aimed at different demographics, creating “an assortment of fashion apparel to appeal to mum, grandma and daughter,” as she once described it. Over time, the collection grew to more than a dozen brands, some featured in standalone boutiques. “Aritzia is the name on the door,” Wong explains, “but there is no Aritzia on the labels.” Today the three main labels are Babaton, youthful TNA, and breezy Wilfred, with various sub-brands and offshoots such as handbag lines and denim. Outside brands like Levi’s make up less than 10% of its sales.
The opportunity to build a lifelong style journey with clients makes each new customer more valuable to Aritzia than to competitors that have a more narrow demographic focus. The company gives each brand a unique aesthetic steered by a dedicated creative team. “Companies sell through private labels for two reasons: Margins are higher, and the labels give them a point of differentiation, so consumers have to come back to that retailer,” says Randolph Harris, publisher of industry newsletter Canadian Apparel Insights.
The house-of-brands approach also enables the company to shift focus and inventory with fashion’s ebbs and flows. “As consumer tastes shift and lifestyles change, a multibrand strategy mitigates the risk,” says Hill. This flexibility is further assisted by the fact that Aritzia buys its own materials, designs its own lines and even shoots its own ads, giving it greater control over pricing and quality, and enabling faster adaptation to trends. While the retailer adds trendy items each season, it stocks small quantities to gauge customer demand in case a fad proves to be short-lived. Meanwhile, it makes “deep buys” of historically successful products that get refreshed year by year, says Stephen MacLeod, an analyst at BMO Capital Markets. He estimates about half its stock is proven sellers, accounting for about 80% of sales and keeping revenues stable year to year. “That helps them be nimble in periods of market disruption, particularly through COVID,” says MacLeod. “They’re not going to be sitting on obsolete inventory if they miss a season.”
Calibrating trends is not Wong’s domain, she admits. “I give feedback as a consumer. I’m usually the boring one who has to say, ‘I’d never wear that.’” Hill and Wong have established a clean division of duties. She describes her job as “whatever Brian wants to do, wherever he wants to go with this business—I make it happen,” quickly adding, “with the team.” MacLeod is more effusive. “Brian is the creative genius behind the brands and how they go to market, and Jennifer is a phenomenal operator. She’s done a great job of putting the strategic dream into place.”
One of the initiatives Wong is most proud of is implementing a SAP enterprise management system in 2007. The board was against it, pointing out that Lululemon across the street had done a similar technological transformation at half the cost. But management persevered because Wong’s analysis showed “it was the right long-term decision, strategically,” she says. She grows animated while relating the episode. “I don’t know if that [opposition] drives me, but we said, ‘We are going to do it, and we are going to do it successfully. We. Know. This. Is. Right,’” she says, punctuating each word.
A similar willingness to stick to convictions propelled Aritzia’s move into the U.S. “Every Canadian business that went stateside retreated with their tail between their legs—what makes you guys any different?” she recalls advisers asking the team. They said the company couldn’t do it. “In fact, we did,” says Wong defiantly, launching the first stores right in the middle of the financial crisis. Aritzia’s sales at its roughly 30 U.S. locations have consistently exceeded expectations, and the market is now its main growth engine.
Wong’s stamina in the face of opposition and the way she fiercely embraces a challenge make her a great sparring partner for Hill. But it’s her analytical and organizational talent that make her invaluable. “Our marketing department cringes when I say this, but fundamentally, Aritzia sells clothes,” he says. “We’re in the fashion business. I run the fashion; she runs the business.”
During the fateful ides of March, that business faced a catastrophe. At 5 a.m. on March 15, Wong was in Whistler, B.C., on spring break with her family when she got a call from Hill. Wong dropped off her two school-aged boys at ski school and drove to the office to meet with Hill and Aritzia’s COVID-19 task force. They spent all Saturday huddled in discussions and on calls with the board. By evening, the decision was made: “We had to close all the stores in an abundance of caution,” Wong recalls. The following day, Aritzia boutiques went dark. As Pippa Morgan, executive vice-president of the retail division, puts it: “It took 36 years to open 100 stores and 36 hours to close them.”
In the preceding weeks, Wong and the pandemic task force had spent long days running through scenarios based on infection trajectories, various degrees and durations of closures, and triangulated them with anecdotal reports from staff in different cities. “We analyzed everything left to right, top to bottom,” Wong says. “Day after day, we were figuring out what our next move was going to be.”
Once the decision was made, they scrambled to put together a communications plan. Wong oversaw the engineering of new processes at the distribution centre to allow it to continue supplying online orders, with health personnel on-site and employees working in pods so if someone became ill, only that group was affected. Wong had set up a war room, its walls covered in charts and reports, and she met there daily with her top lieutenants, sometimes spending 14 hours in their own social bubble inside the otherwise empty head office. “I have never worked as hard,” she says. “But as stressful as it was, we had each other’s backs, and it was amazing to see how many people stepped up.”
Many of the strategic decisions Aritzia had made in earlier years bore fruit during the crisis. For one, having control over its supply chain gave the retailer the ability to essentially stop the presses on some inventory orders for spring and summer. With stores closed, Wong’s bigger worry was demand, so the company veered hard toward e-commerce. “That’s my game, and this was the ultimate stress test,” says Wong.
Aritzia’s website, launched in 2012, was more than two years in the making. Over time, the company kept investing in the backbone technology and upgrading the online experience, improving the layout, photography, fit information, packaging and many other facets that kept the online experience consistent with the store experience, says CIBC’s Petrie. When the pandemic hit, the company couriered clothes to models to photograph at home and moved stock from stores to the distribution centre. It didn’t lay off any staff, instead shifting many to help with e-commerce and call centre operations. The online infrastructure held up despite days that were as busy as Black Friday and Cyber Monday, says Wong. During the first months of the pandemic, Aritzia’s e-commerce revenue surged by more than 150% compared to fiscal 2020. “It’s a testament to their discipline in investing in their business,” says Petrie. “A strong e-commerce platform has been the single biggest differentiator between winners and losers over the past six months.”
The COVID-19 crisis has borne out the wisdom of Aritzia’s omnichannel strategy. It’s a big buzzword in retail, says Harris, “but you can count who does it well on three or four fingers.” Since reopening most stores in May, the retailer has continued to keep its digital and bricks-and-mortar businesses in close synch. Numerous studies show that having stores in a market drives significant e-commerce activity. The push also goes the other way: When Aritzia opened boutiques in Minneapolis and Denver, e-commerce sales in those markets doubled, says Hill.
To strengthen the links between the online and offline, the company has boosted its customer analytics and equipped sales staff (“style advisers”) with hand-held devices that allow them to record or review a client’s information and purchase history, which is synched with online data. Aritzia’s digital concierge platform helps staff serve as personal stylists, giving them access to records of customers' preferences and enabling marketing personalization. A new app will also allow advisers to stay in regular touch with customers, even sending packages of curated selections to those who prefer not to come in.
Hundreds of retail employees re-ceived remote training on the concierge platform, its live-chat features and email marketing. At the retailer’s behest, some also went into social media overdrive, which has been growing increasingly important to the retailer as it makes inroads stateside. “Our whole marketing objective is to get famous in the U.S.,” says Hill. “We’re still an unknown entity. Social media is one of many vehicles, but in the fashion business, it’s an important one.” When Meghan Markle, Duchess of Sussex (whose stylist has a connection to Aritzia), was photographed in a Wilfred Cocoon coat, Aritzia team made sure the world knew it, and the line sold out. Sophie Grégoire Trudeau, Hailey Bieber and the supermodel Hadid sisters are other famous figures who gave Aritzia a social media boost. The popularity of the Super Puff, an all-time bestseller, has been almost entirely due to social. To boost sales, Aritzia invested in an Instagram campaign with Kendall Jenner, who reportedly gets north of US$500,000 per post. Other celebrity sightings led to stock sellouts, which further fuelled the buzz. The latest Super Puffs, now also available for men, are the stars of fall window displays in Aritzia’s flagship stores, and the company recently opened Super Puff pop-ups in New York and L.A.
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Stores continue to be the company’s primary marketing vehicle. In recent years, it expanded several flagships, adding coffee shops where style advisers can grab drinks for clients and larger fitting rooms with couches for shoppers' entourages. Hill works closely with an in-house team of architects and designers to curate everything from fixtures to artwork to music. The efforts have paid dividends. Aritzia’s sales per square foot are well above its peers, analysts report, and recently opened stores have returned the investments within two years.
It remains to be seen whether COVID-19 will permanently change shopping dynamics. “Customers will need more reason to visit stores,” says Petrie. “Now it’s not about staying longer in the store—companies need to be consistently introducing excitement into their assortment.” Harris, however, believes the slump in store traffic will be brief. “A year from now, Canadian apparel retailing will look exactly the same as it did a year ago, and the COVID period will be viewed as a bad dream.” While consumers might make fewer trips to malls, clothing is less vulnerable to the e-commerce shift than sectors like groceries because it’s not a commodity. He points out that Winners is the No. 1 clothing retailer in Canada because its tactile browsing experience can’t easily be duplicated online.
Hill has given every indication that Aritzia’s boutique expansion will continue, especially stateside. The company has identified roughly 100 locations that could support stores, and given the troubles of its retail competitors, there are many deals to be had. Aritzia secured its New York Super Puff pop-up location, for example, at less than 30 cents on the dollar compared to a few years ago.
Despite its strong navigation of the pandemic to date, Aritzia has been hit hard. In the second quarter, net revenue was down more than 25% from the previous year, and in-store sales in July were roughly 60% of pre-COVID levels. A long-term shift toward more casual clothing may permanently impair its Babaton and Wilfred labels. And Petrie warns an overreliance on influencers could put Aritzia’s image at risk.
But it has been a model of strong execution. Around the time of the IPO, Wong recalls a TV commentator opining that there was nothing special about its business model; it was just a good executer. “I remember Brian and I looked at each other, and we were like, ‘That’s a bad thing?’” The top leaders spend more time in stores than in their offices, and she personally visits stores regularly, partly to stay on top of operations (“When I say something in front of a group at a podium, I need to know what the frick I’m talking about”) and partly to scope out staff standouts who would benefit from grooming and promotion, as she did herself.
Looking back on the months of closures, Wong sounds relieved. “We were planning for a lot worse.” But the recent resurgence of the virus makes it clear the pandemic isn’t over, which could mean more emergencies ahead. After 33 years, is she not tempted to try something else? She pauses to consider. “I haven’t had to go anywhere for career challenges or opportunities,” she says. With every major initiative she took on, she had no direct previous experience, yet she was entrusted with leading it. “I like to drive things to be solved or fixed or built,” Wong says. “I always have to be moving the peanut forward, so to speak. If I don’t feel forward motion, I’m less happy.”
