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A Fading Fad? Clothing Subscription Services Fizzling Following Early Signs of Promise

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.

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James Flippin ABOUT James Flippin James Flippin is the son of a financial advisor who grew up hearing and learning about bond yields, interest rates, the stock market, and the ins and outs of Wall Street. After stints as a licensing and business broker for Marcus and Millichap in New York City, James moved into broadcasting and became a reporter and anchor. He covered crime, politics, finance, and tech at NBC News Radio while working part-time as a producer for SiriusXM. James graduated from the University of Delaware with a bachelor’s degree in political science and economics. He's also an accomplished podcaster with over 10-years of experience.

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