Vetements follow up: Kanye, staying in stores longer and selling online

The response to my piece on Vetements and the exaggerated death of wholesale has been really exciting. The piece's contrarian view clearly resonated. Even so, there are a few points I want to expand on. Adam Wray, from Fashion REDEF, sent me a nice note after the piece came out highlighting a few points worth discussing further.

The celebrity effect

From Adam:

I think you might be downplaying the impact celebrity co-signs have had on the brand's success. Not that it invalidates any of the points you made. I just think that early adoption—the Kanye/Lorde picture in particular—did a ton to kick the brand's trajectory.

I didn't talk about the celebrity effect in the original piece, but it's worth diving into this point when talking about the rise of Vetements.

The Vetements timeline

Vetements started in 2014 and, over the course of the year, went from zero stocklists to 27 to 84 by the end of the year. Over the course of 2014, the brand presented a Fall/Winter '14 collection in March, and followed with a Spring/Summer '15 collection in September. I could barely find any press coverage of the Fall/Winter '14 show online, which is the collection that was picked up right away by 27 stocklists. Wholesale clearly mattered—as did Demna Gvasalia's pedigree in the industry—and buyers were impressed.

The Spring/Summer '15 show was a different story. Most notably, Vogue covered the show, which is always a big deal. This is speculation, but my guess is that the strength of the brand's wholesale accounts—the original 27—caught the attention of Vogue and its editors decided to attend the show. By the end of 2014, Vetements had 84 wholesale accounts to its name, and the visibility from Vogue definitely had an impact.

Photo by Pascal Le Segretain/Getty Images Entertainment / Getty Images

Photo by Pascal Le Segretain/Getty Images Entertainment / Getty Images

Fast forward to March 6, 2015, when Kanye shows up to the Dior Fall '15 ready-to-wear show in the now signature oversized Vetements hoodie, with Lorde by his side. The picture spawns a meme called Goth Prom, and soon enough the Vetements hoodie is mentioned alongside every piece of content generated from the meme.

Kanye, and specifically this image, absolutely had an big impact on Vetements. But I wouldn't overlook the importance of wholesale that got the brand to this point. Wholesale was the kindling; Kanye poured gasoline on the fire. Gasoline is very important to make something blow up, but you have to light the fire first. If you just dump gasoline on an unlit fire, you're only left with gasoline-soaked wood and no fire.

If Vetements didn't have its wholesale foundation, I'm guessing that the brand would not have benefitted from the Kanye moment to the degree that it did. Celebrities wear new brands often, sometimes daily. There's no shortage of brands that were a flash in the pan and but weren't able to capitalize on the celebrity-induced jolt. Without the wholesale foundation, Vetements would've sold out of all of its clothing, had a really good month, and would then have to keep building the business the normal way. Brands waiting to capitalize on celebrities wearing their clothing is not a sustainable business model. Instead, Vetements was able to use this moment to continue scaling and securing the foundation.

Vetements had two things going for it. First, because of its expansive wholesale accounts, the brand, and most importantly its retail partners, were able to capitalize on the Kanye moment. That hoodie, and likely many other pieces, sold out instantly—the Kanye effect—but they sold out at the brand's wholesale accounts. This simply reinforced the power of the brand and made the wholesale accounts love the brand even more. Vetements shares the success of these moments with its wholesale partners, which always builds good will—and good sales.

It's also interesting to think about how Kanye found the brand. Three options come to mind. Either he was reading Vogue and caught wind of the brand; he was out shopping at a store that carried Vetements and it struck his eye; or a friend told him about it. Regardless, all three of these points come back the strength of the brand's wholesale accounts. None of this would have happened without wholesale as the starting point.

Staying on the shelves longer

The second point Adam mentioned is the benefit of Vetements keeping its product in stores for longer. From my original piece:

Another conscious decision was shifting off of the normal fashion calendar. Instead of showing in March and September, Vetements now shows a men's and a women's collection together in June and January, which is usually when pre-collections are shown. According to Gvasalia, stores allocate 80% of their budget during this period, which leaves only around 20% for main collection. Vetements has figured out a way to still only make product two seasons a year, while keeping products on the shelves for a longer time period, thus reducing markdowns. This reinforces the prestige of the brand while also keeping the design expectations manageable, since they don't have to design and produce new mini collections every few months.

From Adam:

Making sure their products stay on shelves longer does two things, in my opinion: 1) It demands retailers take a more active role in building the brand and selling the clothing; 2) It gives customers time to talk themselves into a big purchase, which, in my opinion, means they're more likely to be happy with it.

These two points are spot on. If retailers have products in-store for longer, and know they won't be going on sale for a while, they are incentivized to sell the products at full price for as long as possible. This aligns the incentives, since both the retailer and the brand make more money when items sell at full price. The irony of the endless state of sales in the fashion industry is that they are in no way in the interest of the retailer or the brand.

An interesting externality of Vetements' move is that it incentivizes retailers to forecast and place orders only for the product it thinks it can sell. Even though this might lead to less upfront sales since the volume of orders might go down a bit—Vetements' reign right now probably makes this a non-issue—the chances are now much higher that everything the store buys will sell at full price, which is better for everyone.

Adam's point also alludes to the behavioral change this move has on consumers. If products are on the shelves longer, customers have more time to acclimate themselves with the products and, as Adam mentioned, talk themselves into a big purchase, which basically needs to happen when buying anything from Vetements. This maps perfectly to the idea of effective frequency, which I wrote about when discussing why buy buttons failed. The idea is that most people don't buy things upon first glance. Instead, purchases happen after repeated exposure. Keeping products in stores for longer increases the potential for effective frequency and therefore purchases. This can only help Vetements, and its retail partners, prosper.

Vetements and ecommerce

The final part I want to revisit is Vetements' interest in selling online and in-store.
From the original piece:

It's worth noting that this discussion is not really about selling online versus in-store, but about wholesale versus direct. Vetements is fully stocked online, as it is in-store. The brand outsourced the duty of selling online to retailers with excellent online and in-store presences, which was a highly astute move. The brand now has both a digital and physical presence, all while staying highly focused on the design-driven part of the business.

It turns out that Ssense, the much-loved and wildly successful retailer—which will do over $100 million in revenue this year mostly from online sales—has been a crucial account for Vetements, according to an article in the Globe and Mail from earlier this year:

Ssense’s influence on suppliers is such that it can work directly with a label like Vetements – whose following includes Rihanna and Kanye West and whose creative head, Demna Gvasalia, recently took the reins at Balenciaga – to develop exclusive capsule lines. “Ssense are great partners and our most important account as of today,” says Vetements’s CEO Guram Gvasalia.

A hidden benefit for brands who work closely with retailers, in addition to extracting better payment terms, is getting access to their data. Although most brands have nearly no insight into their wholesale accounts, a brand predicated on wholesale to the degree that Vetements is, in addition to the brand's success, likely leads to shared data. Even if the brothers will never use this data—"Guram would never come to me and say, 'We need to do that because that’s what the market asks for,'" Demna says—Ssense can use this data, which is better captured and segmented since it's from online, to forecast and place better orders, thus driving the cycle discussed above regarding Vetements' products staying on shelves longer.

The state of wholesale in 2016 is that a brand's most important account can be with a retailer whose primary business is selling online. That's pretty cool, and shows Vetements' open-minded attitude, especially compared to some other luxury brands that refuse to let their wholesale accounts sell their products online. There isn't a right answer for every business, but it's fascinating to watch Vetements both honor and disregard time-tested tenants of the fashion industry. It seems that the brand will continue to work with retailers both online and offline, and by all measures, it's clearly working. The power of wholesale lives on.