Everlane has launched its first coat collection, and there is already a waiting list of nearly 2,500 people who want the lightweight, minimalist trench, which is available in three colors and for both men and women. A spokesman for the brand noted, “The supplier told us other brands have made coats with these fabrics and sold them for over $2,000.” Everlane is offering the overcoat for $295 and the trench coat version for $250.
In case you’re not familiar with Everlane, the San Francisco-based brand boasts a foundation based on “radical transparency.” In short, it vows to provide consumers with information on its factories and costs, particularly any retail markups. And if the success of its coat range is any indication (note that the brand revealed that at least one colorway of its overcoat sold out in a single day), the brand is doing very well. Not enough proof? Consider their recently released Chelsea boot. The brand’s boots launched a few weeks ago with a 3,000-person waiting list. And as of last month, Everlane revealed that it has sold almost 30,000 pairs of its prized loafer in a year. Oh, and sales reportedly grew more than 200 percent between 2013 and 2014.
If we consider the brand’s success in conjunction with that of fellow newbie brand, Mansur Gavriel, with its waiting list-spurning “it” bags (which all embody classic, minimalist shapes and retail for less than $1,000) it seems clear that basics at affordable prices are the key to retail success right now. As Racked noted earlier this year, Everlane “has found its niche producing simple basics — button-down shirts, V-neck sweaters, trousers both slim and slouchy — in androgynous cuts, uncomplicated fabrics, and neutral colors.” Moreover, Everlane’s “strategy, as it’s been from the beginning, is to keep slowly rolling out classic products that deeply resonate with its growing list of customers.”
In addition to the appeal of such styles, Everlane also has its business model to thank for its success. The company operates in a manner that is somewhat similar to the Zara model, which has been lauded by business schools, such as Harvard, for its reduction of quantity. Business consulting firm, Third Eyesight sums up the Zara method quite well: “By reducing the quantity manufactured in each style, Zara not only reduces its exposure to any single product but also creates an artificial scarcity.”
Moreover, the decrease in the quantities produced for each style leads to a decrease in the risk of unsold inventory, which will need to be sold off at reduced prices. Everlane operates similarly; inventories are kept lean, and the goal is to sell out. As Vogue noted in an interview with Everlane’s founder, Michael Preysman, “A key part of [Everlane’s] success also seems to be its very strategic product rollouts, like the just-launched loafers and the cross-body bag. The items immediately sell out.”
Streamlining inventory is the trend, and Zara (its parent company Inditex) has pioneered this, transforming the way a portion of the retail market operates. “Streamlined inventories have become the retail standard in the wake of the 2007 recession, as stores try to control costs and improve profit margins,” wrote Quartz. “When there is less inventory in the pipeline, there is less work to do in the supply chain,” says Leslie Hand, a retail analyst with IDC Insights. Indeed, improving inventory accuracy can radically improve a retailer’s productivity. Not only does it allow a retailer to avoid having to sell off inventory at a discount, it creates the impression in the mind of consumers that its goods are limited, thereby creating a sense of urgency to shop.
If there is a secret to Inditex’s success, it is the connection between stores, the in-house designers, and its factories. The Telegraph noted further that such low inventory quantities also allows the brand to more accurately gauge and then analyze what exactly it is that consumers want. “Twice a week, a store manager will send an order to HQ. This is based on the sales data for the store but also anecdotal evidence from shoppers about what they like and don’t like.”
Given the way Everlane operates, a Zara-type model seems to work. For instance, in 2013, when Everlane first produced 1,000 handbags (ranging in price from $325 to $425) there was a waiting list of nearly 6,500 people for the next batch. They produced the following batch in accordance with this level of demand. However, there is the argument that by not delivering sufficient quantities right off the bat, Everlane is missing out on a number of sales, which could certainly add up over time. According to Quartz, this does not seem to be a massive problem at the moment: “For now, that doesn’t faze their devoted customers, many of whom will sign up for the waitlist and hold out until the new version arrives.”
If nothing, it will be interesting to see how Everlane continues to evolve in accordance with this model and what brands follow suit …