Stitch Fix: Shoppers Splurging on Fashion Demand More Personalized Expertise

Amid ongoing economic challenges, shoppers may be willing to spring for premium fashion service, but as Stitch Fix has seen, they need to know that they are going to be getting enough bang for their buck.

These shoppers expect in-depth, personalized guidance, Stitch Fix CEO Matt Baer told analysts Tuesday (June 4) on a call discussing the online personal styling service’s third-quarter fiscal 2024 financial results. This need to step up the hands-on attention comes following the company’s 16% year-over-year decline in net revenue in the quarter as well as its 6% decrease in active clients.

“Some of the areas that we’re focused on … [include how] our stylists continue to play a critical part in our value proposition, and something that our clients have told us is that they want to get to know the stylist behind their Fixes,” Baer said. “So, part of the reimagination of the client experience will also be working to make our stylists more central part of that experience, offering new touch points for clients to interact with stylists and vice versa.”

Many consumers — but not the majority — are buying clothing online. The PYMNTS Intelligence study, “The Online Features Driving Consumers to Shop With Brands, Retailers or Marketplaces,” drew from an October survey of over 3,500 U.S. consumers. The study aimed to explore the decision-making and behavior of online shoppers.

Findings showed that, of those who purchased clothing or accessories in the previous month, 62% did so in a physical store, and 42% used an online marketplace. Plus, one in four shoppers made such purchases via a retailer’s website or app, and 20% did so through a brand’s site or app.

The study also noted that 81% of consumers who purchased clothing or accessories from an online marketplace were very or extremely satisfied, as were 70% of those who made such a purchase from a brand’s website or and 76% of consumers who did so from a retailer’s website or app.

Indeed, given these high levels of satisfaction, eCommerce players such as Stitch Fix have the opportunity to gain share from brick-and-mortar apparel retailers. The report “The Replenish Economy: A Household Supply Deep Dive,” a PYMNTS Intelligence and sticky.io collaboration, found that 11% of retail subscribers participate in Stitch Fix’s program. Of these, 52% shop in stores less often thanks to the subscription program, and another 5% have dispensed with the need to shop in stores altogether.

Baer noted that, as the company looks to reverse its negative trends, it is focused on “creating a more modern and dynamic interface [and] bringing more flexibility to that Fix experience.”

Consumer behavior appears to be gravitating toward more personalized and value-driven shopping experiences. The increase in revenue per active client (RPAC) by 2% year-over-year to $525 indicates that while the overall client base has shrunk, those who remain are spending more, valuing the customized styling and convenience Stitch Fix offers.

Still, the decrease in active clients and overall revenue points to significant challenges. Stitch Fix’s financial outlook for Q4 fiscal 2024 projects further revenue declines of up to 14% year-over-year but an adjusted EBITDA of up to $10 million, indicating cautious optimism about achieving sustainable, profitable growth.