#57. Eloquii is turning into the destination for on-trend plus-size fashion. We talk with CEO Mariah Chase, who has led Eloquii along with members of its original team since The Limited shut it down. Together, they have revitalized the company as it pushes the boundaries of true fashion for plus-size women, who have often been the last to receive attention—if they did at all. The Loose Threads Podcast features in-depth discussions with leaders across the rapidly changing consumer economy.

Check out the full transcript below.

Richie: [00:00:07] Welcome to the 57th episode of the Loose Threads Podcast, a show about the rapidly changing consumer economy. This episode is brought to you by Loose Threads Membership, which gives you actionable analysis, insights and events that drive growth, and Loose Threads Espresso, your energizing and high pressure filter for industry news—in context. We also have a newsletter that features the latest open letters to CEOs, podcasts with industry leaders, and news from Loose Threads. Check it all out at LooseThreads.com.

Richie: [00:00:37] Joining me today is Mariah Chase, the CEO of Eloquii, a company turning into the destination for on-trend plus-size fashion. Mariah joined Eloquii right at the beginning of its revitalization, as members of the brand’s original team brought it back, after The Limited shut it down. Mariah has led the company as it pushes the boundaries of true fashion for plus-size women, [who] were often the last to receive it—if they did at all.

Mariah: [00:00:56] There’s no reason why the size 14-and-up category can’t exist on its own as a massive, robust, multifaceted ecosystem of brands and multi-brand retailers.

Richie: [00:01:11] This is a great story about re-energizing existing brands and serving a market that has often been forgotten. Here’s my talk with Mariah Chase.

Richie: [00:01:22] So why don’t we start talking a bit about your background then we can work our way up to Eloquii existing.

Mariah: [00:01:28] So, I came out of school a really long time ago and had sort of thought that I was going to maybe be an investment banker or consultant. [I] went into fashion because that was obviously the next best thing and have been in fashion my whole career. And that has ranged in the early days from communications and PR and brand management—everything from the mass to the luxury sector—so I was working with companies that sold shoes for $19 to companies that were selling shoes for $1,900 dollars, both domestically and internationally. And then [I] kind of made a pivot and went into business development and licensing. It was at the time when fashion designers were starting to become their own mini-celebrities, but were still giving away, essentially, their IP for free—so how could you harness their intellectual property and personas to derive incremental streams of revenue?

Mariah: [00:02:21] So it was at the time [when] I met a guy named Christian Siriano who had won Project Runway and I sort of became—I don’t know if he would say this—but his de facto agent-business-manager and for a few years, in addition to being an agent for others, then was president of an accessories company. And then did my first startup in 2010, which was called Send the Trend and that was an accessories-based subscription play along the lines of a ShoeDazzle or JustFab—looks really good on paper, customers who don’t like it really don’t like it. And we ended up selling that business to QVC in 2012 and then [I] have been with Eloquii since the fall of 2013—so four years.

Richie: [00:03:02] So give us a sense of the backstory of how Eloquii came to fruition because I think it’s the first of this type that I’ve ever had on this podcast.

Mariah: [00:03:10] It is atypical, right? So we split our history into two sections and we call the first part of our history Eloquii 1.0 and the current second part of our evolution Eloquii 2.0. And Eloquii 1.0 was originally owned, operated and started by The Limited out of Columbus, Ohio. So today, still half of our company’s in Columbus, Ohio. And that was in late 2011. So The Limited had a lot of foresight and they said, “Hey, wait a second, we are losing customers who are lapsing out of our core size offering. They used to be a 10, but maybe now their size 14 or 16 on top or bottom, and we’re losing the entire customer—her entire purchase.” So they created Eloquii as a sister brand. It was operational run had a really strong team for about 18 months, at which point Sun Capital Partners which own The Limited—you know, I wasn’t in the room at the time—but they made the decision to shut it down along with a couple of other businesses they were incubating. And the comment or general knowledge is that The Limited itself wasn’t doing as well and so funneling money into incubated businesses was potentially not what was best at the time. So that really led to this interesting turn of events.

Richie: [00:04:19] Really quick—when was it shut down?

Mariah: [00:04:21] Early 2013.

Richie: [00:04:22] Okay, so two years or so.

Mariah: [00:04:23] A year-and-a-half after it launched. At the same time, our now chairman and founding investor, a man named John Auerbach—unbeknownst to anyone at Eloquii in Ohio and New York, was the fifth employee at Gilt, had left Gilt, was consulting and was saying, “I want to green-up a digitally-native plus-size brand, vertically integrated. And he saw Eloquii and he was diligencing the space, and he was like, “Eloquii is the only one I think is kind of doing something a little different and interesting—still not as differentiated.” So he, on LinkedIn, totally cold, reaches out to the creative director, and says, “I want to poach you to help me green up this digitally-native vertical brand.” And she says, “Funny. We’re being shut down—it hasn’t been announced yet. My colleagues and I are super passionate about this brand and this customer and we think there’s actually a different way to do this and a bigger opportunity. And maybe there’s another play.”

Mariah: [00:05:21] That then—coupled with the fact that when it was publicly announced to the customers that the brand was being shut down, they flipped out—that, I think both for John and for the founding team members, really cemented [the idea that] this brand has equity, “we’ve got something here.” So John actually came in and bought the assets for a nice little price in the early fall of 2013. And I think one of the smartest things that he did is he made sure to get the team, right? They weren’t part of the asset purchase—he had to negotiate and bring them on separately, but our chief merchant or chief operating officer, our creative director and our head of technical design and fit all came with, and they were the ones with the insights, the know-how, the history together. And then I glommed on. I was like the leech, [who], a couple months later, heard about this through a friend of a friend and said, “That sounds really smart and I’m going to go stalk them and try to force myself into the situation,” which luckily ended up working.

Richie: [00:06:24] Nice. What was your exposure to the plus-size market before joining? Was it something you knew of? When you realized this was really awesome and interesting, what went into that?

Mariah: [00:06:35] So I had, like John, been seeing in 2011 and 2012—while I was working on the first startup and then was an employee of QVC—I had been starting to see what was called “plus” start to just pop a tiny bit in print fashion media. For the first time, plus had a page in Marie Claire, a page in People Style Watch—it was a really, really big deal. And I noticed that and I thought that that was interesting and that was different. From my professional history, I had been in hundreds of meetings with fashion designers. This customer was never a part of the conversation and it wasn’t malicious—it wasn’t like, you know, “She’s invited to the party and let’s disinvite her.” She just was never part of the conversation. So I thought it was interesting that all of a sudden there was this new conversation that was just starting to bubble. And then when I heard about Eloquii, I liked the relaunch play—I thought that was really smart—and I could see the brand passion just by reading a lot of the comments on social. So I thought that was very compelling. And lastly, when I started to research the market, I was blown away.

Mariah: [00:07:49] Aside from having seen it pop a little bit myself, I thought the business play was smart when I started to really peel back the onion on what options this customer had and what a large percent of the population she represented. It really blew my mind, and I felt very ignorant. And it reminded me, you know, I have relatives who are this customer and I spent a lot of time with them growing up and they wore something similar—like a different version of the same outfit—every single day. And I remember as a little girl thinking, “Well, that’s the way they wanna dress.” It never occurred to me that’s the only way they could dress, because they had so few options and the majority of options were designed to hide and minimize. So that was the culmination of my interest.

Richie: [00:08:37] And so you joined a few months after the 2.0 team was assembled.

Mariah: [00:08:42] Exactly two months after, yeah.

Richie: [00:08:44] How did this all come together?

Mariah: [00:08:46] Yeah, so the plan was [that] there were two key insights coming out of Eloquii 1.0. The first was the supply chain. Right now there’s all of this talk about supply chain optimization and and that’s in part due to the collapse of a trend cycle broadly, across many consumer verticals. But we really believed that we had to take an 11-month production cycle and chop it to five or six months. And that we had to allocate as much of our inventory as possible in season versus planning it all year in advance. So that was insight number one.

Mariah: [00:09:23] Insight number two was—this customer wants fashion. She has been given tunics and leggings forever. Right? And for Eloquii 1.0, the best-selling style in the entire company’s history—18-month history—was a sequin pencil skirt in a size 18. In 2017, luckily, that doesn’t sound like such a big deal. For 2012 that blew people’s minds because everyone assumed it was going to be a tunic or it was going to be something that had stretch and all of these different things. I mean, Eloquii 1.0 would never have served her a crop top. I mean, the merchandise assortment which is—when you talk about product market fit in a business that sells stuff, the product market fit is most often times the stuff. And so our merchandise was pretty different. And we absolutely had and still have 1.0 customers who were like, “I miss 1.0. I am that more classic traditional customer.” We want to serve her, but there’s a tension between making sure that we’re also still the leader from a fashion perspective. So that’s a little heartbreaking to know that you’re not going to be everything to everyone all the time. So those four months before we re-launched—we re-launched in late February of 2014—were setting up a new supply chain, designing all new inventory, redesigning the entire site, devising a new marketing platform and plan…yeah

Richie: [00:10:56] Just a little bit.

Mariah: [00:10:58] I mean, it’s a startup, it’s always a hectic time.

Richie: [00:11:00] So I’m curious also to talk a bit about the 1.0 brand versus 2.0 brand and on that side, how would you describe the 1.0 brand first, and then maybe the 2.0?

Mariah: [00:11:10] It was more conservative, it was more traditional, it was more classic, it was safer, I would say. And it was not as fashion. Eloquii 2.0 is a trend-driven, feminine, polished fashion brand. Period. End of story. And we lead with trend. So when we first re-launched the business in 2014, crop tops were trending. And if you had said, “Oh, a size-20 customer is going to love a crop top,” people would have looked at you like you had six heads. Crop tops were one of our best-selling items when we relaunched. So for us, we win when we take risks that everyone else is scared to do for this customer. And that’s continued to be true.

Richie: [00:11:55] And I assume that also manifests visually […]

Mariah: [00:11:57] Completely. Completely. Yeah. One of the things that was eye-opening for me about this market was that when you first look at it, it’s very obvious that there’s a lack of options. There are more options now, but especially when we re-launched—a lack of options. And the way that they were served to her were kind of terrible. Like, you’ve got to go to the basement to shop or you’ve got to go to the seventh floor to shop, or you’ve got to do this, that and the other and we’re going to make it hard for you and the merchandise that we serve you also isn’t that great. So you don’t have a lot of it, it’s not that great and finding it is kind of painful. So of course, her discretionary income is going to go someplace else. It’s going to go to a beauty category or some sort of tangential lifestyle.

Mariah: [00:12:38] So that was sort of obvious, but I think one thing that has become more and more apparent to us is that there’s a lack of content for this customer, a lack of fashion visual language. And when you think about what sells fashion, a lot of times it’s the imagery. You know, fashion media is a multibillion-dollar-a-year industry and it serves, overwhelmingly speaking, a size zero to 12. And so if you subscribe to the idea that she needs to see it to believe it to buy it, then we believe that we’ve got to do a lot of heavy lifting when it comes to providing that visual imagery for her, and we really put a stake in the ground of saying, “We’re going to show her forward imagery.” She might think it looks a little crazy at times because it’s not something she’s used to seeing for her on body types like hers.

Richie: [00:13:33] So it wasn’t just that the product didn’t exist, but the entire ecosystem was un-built.

Mariah: [00:13:37] That’s exactly right. The infrastructure, the ecosystem. And it’s in the process of starting to be built.

Richie: [00:13:44] Was 1.0 online only or was it offline too?

Mariah: [00:13:47] So it was about 90% online. The Limited had, I think, five or six stores but they had additional space and they just popped up Eloquii shops-in-shops and those stores experienced an incremental lift over the rest of The Limited fleet of stores. So there definitely was something to the idea that this customer could either cross-shop both The Limited and Eloquii if she was kind of a transitional size, or that she just had the ability to try things on that she’d never had the ability to do before for that kind of merchandise.

Richie: [00:14:20] It’s interesting because I think H&M did a similar thing where they started this kind of plus offering which was a shop-in-shop and they shut it down also for some sort of reason. There’s an interesting trend of […] they put a toe in the water and then they kind of backed out.

Mariah: [00:14:33] We believe at Eloquii in the commitment to this customer. And I think that this sector has woken up and H&M was in the market when we were in the market initially. So they were one of the early players and I can’t speak to how much plus still has an in-store presence from them‚ I don’t know. But I will say that the industry has woken up and many, many companies are recognizing that either they need to do plus because it’s the right thing to do, or there’s a significant business opportunity and/or both. I think what we have seen in the past—and who knows of this will continue in the future—is that they test the waters and then the minute it doesn’t work, [the think] this customer doesn’t spend. She’s not a good customer. You’re not going to get it right at first, you’re just not. I mean, kudos to anyone who does, but I would argue that a retailer or a brand going into the space—especially if they’re going to go into brick and mortar where it takes longer to test and to learn and to iterate—while you don’t separately today want to sign up for any sort of long-term lease, you’ve got to commit to her, because there really is business and opportunity there. And there’s no reason why the size-14-and-up category can’t a) merge with a size-zero-to-12 category and b) can exist on its own as a massive, robust, multifaceted ecosystem of brands and multi-brand retailers.

Richie: [00:16:04] So 2014: new things starting to come together. Did it launch entirely online?

Mariah: [00:16:09] It did, yes.

Richie: [00:16:10] How long did it take basically from when you and the team were kind of assembled to this thing is in the public again?

Mariah: [00:16:16] Five months.

Richie: [00:16:16] That’s not bad.

Mariah: [00:16:17] It was fast. It was fast and it would have been a little bit shorter. I mean, of course your launch inevitably gets delayed. We’re just waiting for that payment processing, last thing and it seemed like it took… That last checkbox, it seemed like it dragged on forever. But, yeah, four or five months.

Richie: [00:16:36] Cool. And so how did the launch go?

Mariah: [00:16:37] It was crazy. We had a very humble subject line for a relaunch email which was, “We’re back and it’s major.” Like, being super modest. But I think one of the things that we did is that we didn’t tell anyone. We had one landing page that went up a couple of months before we re-launched that said, “We’re coming back, being brought back by some of our original founders. We’re going to do things a little bit differently. We can’t wait to see you.”

Richie: [00:17:02] Was there just an email sign-up or something?

Mariah: [00:17:03] There was an email sign-up field and then there was a customer service email address in case people had gift cards from 1.0 or had a return that they wanted—whatever it might be, because we knew there was going to be this continued thread of, hopefully, buyers from 1.0. We didn’t tell a single soul, we put that up a couple of months before [the relaunch]. People were still going to Eloquii.com. And so a blogger found [the announcement and] it went viral. And at that time, I was customer service for Eloquii.com—that was an email that I was checking.

Richie: [00:17:31] And how big was the team?

Mariah: [00:17:33] Five, six.

Richie: [00:17:33] Five people. So very true startup. This was not like a major […]

Mariah: [00:17:37] It was head of tech, myself, creative director, VP of technical design, COO, head merchant.

Richie: [00:17:44] Very cool.

Mariah: [00:17:44] Evenly split between New York and Columbus, like three and three. And within three days, we had several hundred customer service inbound. Like, “Oh my god, I am crying. I cannot believe you guys are coming back. I cried when you left.” I mean, stories and stories and stories. We had customers who wrote in and said, “I’m no longer an Eloquii size range, but it was my favorite brand and I’m so sad that I actually can’t shop there anymore.” And that to me was, like, “Oh. I really think we probably have something here.” But we didn’t do anything other than that landing page. And then when we re-launched on February 20th, we turned on social media channels the night before with one Instagram post that had a little mini-calendar that said, “One day left.” And then the next morning at 8:00 a.m., flipped all the lights, email went out, site went up, everything. And the demand was pretty off-the-charts. Yeah. And that just sort of launched the fire.

Richie: [00:18:48] I think it raises an interesting question about […] Most entrepreneurs today are insistent on starting something from scratch and I think as we look at a time where finding cost-effective distribution is harder and harder to build from scratch with digital marketing, on Facebook—all these things—it creates an interesting situation where you have a lot of brands that are going through some sort of turmoil right now—either they’re getting shut down themselves or going through financial trouble, stuff like that—who have valuable assets, be it teams, be it customer list, be it IP, be it a brand that means something. It sets up an interesting situation where it seems to me a 100 times smarter to go do what you all did than it would be to start something from scratch just because of what’s already there to leverage in a way.

Mariah: [00:19:32] Well, hindsight will be 20-20. So let’s see what our evolution and outcome is. You know, knock on proverbial wood, but if I had to do this again, having started a business from scratch and having started a business that had brand equity, I would absolutely, 100%, no question do brand equity again. But I think it’s a confluence of several things. [One:] An untapped market and we were first, right? We really were—from a fashion perspective, we were first in the market. And number two: you’ve got to really, I think, judge the brand equity. How fervent is this customer base? What sort of loyalty is really there? You can get buyer files. How valuable and sticky is that by buyer file going to be? And then number three: I think the biggest learning for me was the team. Our senior team is truly world-class and they blow my mind every single day. And so if I were to do this again in the future, I think there’s something to be said for getting a bunch of really smart young people straight out of Stanford and HBS and Wharton. That’s amazing. I would always now go for the team that is really experienced, rockstar, smart, hard work ethic, but has been there and been through the choppy waters before. You just… Hacks. There are built in hacks.

Richie: [00:20:56] Yeah. It’s an interesting quandary, though, of just […] given where a lot of these legacy retail brands are going, does it create more opportunities to […]

Mariah: [00:21:04] Buy distressed assets?

Richie: [00:21:06] Yes, but also, as you alluded to, it’s not just the asset or the list—it’s an amalgamation of team and understanding the customer and all of those things. But I’m curious to watch that going forward. It seems like it’s, again, if executed correctly—a big if—it has a leg up on saying, “We need to acquire customers on Facebook for $50, $100, $200 and just play that whole game, which is not that interesting anymore.

Mariah: [00:21:28] Yeah. No, I mean, we play that game, right? We do play that game, but we had—

Richie: [00:21:32] A foundation.

Mariah: [00:21:33] —a jumpstart. And we—I think, in addition to the jumpstart of just actual customers [who] were essentially free or already been amortized from a CapEx perspective with the asset purchase. That was, I think, a huge leg up. But I think one of the other interesting trends that we’re seeing—not so much in the more mature retail space—I think you will see brands that will fall into bankruptcy or have some sort of distress that are actually really great brands. I remember ten years ago, I was like, “I would love to relaunch Carhartt, CB Sports, the old ski jacket tags, or Duck Head—some of these old, cool vintage brands. I think that will always have the potential of being there and it’s just, again, a question of, “Is the confluence, is the amalgamation of other factors right? Is the price right?” And you may see that quickening as more mature retail has hit some really choppy waters. But I think what we’re seeing in the DNVB space, which is kind of blowing my mind a little bit, is I’ve now been in digital ecommerce for, gosh, almost eight years. So kind of a decent chunk of time.

Richie: [00:22:45] In internet years that’s a lot.

Mariah: [00:22:46] Yeah, yeah. And [I’ve] seen a couple of the waves. And I think the proliferation of DNVBs, venture-backed and non- is pretty seismic right now. And covering everything, right? All walks of consumer life. And so, what’s going to happen to them? Are we going to sunset these major retailers and only the Goliaths are going to survive—Amazon, Walmart, Target, Nordstrom—like the real Goliaths? Or, how big are we going to get? Because there are now so many of us. What happens to the venture capital funds that are expecting a certain return? And there are only so many buyers out there, so what are the options there? Do you start to see some SPVs and some roll-ups? I would think probably. So I think that’s also a super interesting consideration.

Richie: [00:23:37] Yeah. So launch went well, it sounds like.

Mariah: [00:23:40] Yeah.

Richie: [00:23:40] What [were] the next six months to a year like?

Mariah: [00:23:42] Fundraising. For me? It was fundraising. I started in November of 2013 and I was under the mistaken impression that it was going to be the easiest fundraise of all time because I thought it was such a no-brainer. “Listen, what I think actually matters for jack-bleep.” And that’s what I learned. [It was] a great lesson in that venture capitalists—at least at that time, and I think still today, especially now today from an ecommerce perspective—wanted to see real traction from a revenue perspective. So that meant that raising capital before we actually launched, which was when we needed the capital the most, felt like a Herculean effort. And that seed round […] Then we started to generate revenue pretty quickly and were like, “Wow, we actually need capital to fuel this revenue growth.” We closed the seed round and literally a month and a half later we opened up the A.

Richie: [00:24:40] Talk a bit to the capital intensive.

Mariah: [00:24:42] You got inventory and investors are scared of it. I totally understand, I would be too. A private equity investor who specializes in a space is going to understand the value and the opportunity and the potential and the risks and opportunities with inventory, I think. For earlier stage venture capitalists, especially at that time—I think now you see a lot more consumer-sector focused earlier stage—but at that time, it’s completely natural to have apprehension about what you haven’t spent a lot of time learning about or knowing because you’re a generalist, right? Like seed and A investors, generally speaking, are investing across so many different sectors, business models, et cetera. So that all-important CAC:LTV ratio is really the gold standard measure. So it is capital intensive to run a digitally-native vertical brand.

Richie: [00:25:35] So, raised a seed. Started working on the A. From a business perspective, you know, ten months after launch, where was it and what were you all seeing and learning?

Mariah: [00:25:44] We were seeing that her appetite for fashion was extreme. The early adopters came to us—the early adopters meaning the “it” girls who had been dying for this kind of fashion. They were thrilled. They were incredible—they still are incredible customers. We were still seeing a ton of resistance in the industry. We were looking at designer partnerships, collaborations […] Couldn’t get a meeting. Literally could not get arrested, had doors shut in our faces. The business was good, but the ecosystem was still giving us the side-eye. Like, “Oh, you’re that plus-size thing.” And even investors at that point in time were like, “I don’t get it.” I had one investor who passed on say to me, “This has never been done before so I’m not actually sure I believe it can be done.”

Richie: [00:26:36] What’s your personal and also companies’ take on the word “plus,” “plus-size”? Does that have negative connotations? Is it being kind of re-upped?

Mariah: [00:26:45] I think it’s being phased out, which I think we’re totally onboard for. We really talk about ourselves as a fashion first. You know, what I said—sort of the trend-driven, feminine, polish fashion brand for women’s sizes 14 to 28.

Richie: [00:27:00] So it’s more objectively identified by sizes.

Mariah: [00:27:04] Yes. But I will say that this customer’s had a discovery problem. So from a search perspective, her search is dominated by plus size. When we’re thinking about unbranded search terms, you know, we go hard and unbranded search because she’s hunting to find things, to surface things. But I think you’ll see more size inclusively. Target and Nordstrom are making really big pushes there, which is fantastic. And I think you’ll see more of an objective nomenclature

Richie: [00:27:34] Alright. So now into 2016, and then we’ll finish with the present. How would you talk about […] define the last two years of the business?

Mariah: [00:27:40] Yeah, I think 2016 and 2017 have been about moving from this early adopter to this early majority. And so when we first launched, we couldn’t sell a tunic to save our life. Now, this customer has been known as a big tunic shopper her entire life. We couldn’t sell tunics, we couldn’t sell leggings, we couldn’t sell anything that was traditional or classic for this customer, because the early adopters wanted fashion. They wanted the trend, they wanted things that no one else is going to give them for at least another year. And then in 2016-2017, we started to see this shift of, “Oh, we’re actually selling tunics, we’re actually selling leggings, and we can sell some basic denim now, and the complexion of our customer base has started to shift. And so there comes the necessary balance of—especially for an underserved market—who are you to whom? Because when you’re in an underserved market, you’re going to scoop up a lot of different types of customers. You can choose your swim lane or your swim lane is going to contain a broader range of customers than it would in a mature industry.

Mariah: [00:28:52] So 2016 and 2017 really were about refining and defining and I think also paying more attention to brand marketing. So when we re-launched the business, our first marketing hire who I think is probably the best performance marketer in New York City—and if anyone ever tries to steal her, I will find you and it will hurt—and I say that with respect and love. But she came from Quincy. [Eloquii] started as a real performance marketing engine. And the merchandise and the visual language and messaging sort of served as brand and we are getting so much organic. And I think in 2016 and 2017, we took a step back and we were like, “Alright, performance marketing is always going to be brand DNA, table stakes, but we also need to layer on as we see more entrants coming into the space—really some of the more qualitative, softer, hard to measure, but really important—even sometimes small tweaks—that lead to a really cohesive powerful brand.”

Richie: [00:29:53] How did you all think about price point over the evolution of 2.0?

Mariah: [00:29:58] Pricing is the Wild Wild West.

Richie: [00:30:01] It’s a black box.

Mariah: [00:30:02] In large part thanks to Amazon. But I think what you’ve seen in ecommerce more broadly is a depressive price influence because of Amazon, because of the rise of mobile, because of the rise of the facility and ease of price-comparison shopping. And also the underperformance of brick and mortar has forced more players to put more pressure on ecommerce, which just puts downward pressure on pricing. So I think you’ve seen that over the past ten years and it’s accelerated over the past five. So the plus category has traditionally been very promotional.

Richie: [00:30:36] Why?

Mariah: [00:30:37] Well, a) I think retail overall is promotional. The department store started in the 1980s. Those were the first coupons and circulars and then 2008 just sealed [the deal], along with the rise of the Internet, and again, she can price comparison shop, sealed the deal that we live in a sort of cost- plus high-low pricing strategy world, especially if you’re in mass market. Specifically for this customer, most of her merchandise ended up on the sale rack. Sale rack is 70 % off. And so when we thought about the pricing strategy for Eloquii, we were looking at what was Eloquii 1.0—we were trying to bring customers along, so if we’re going to change with the look and feel of the brand merchandise is, are we also going to change the pricing strategy at the same time? No. We made the decision not to. So, the prices are higher. She’s ultimately paying more for the items than she did in 1.0, but we still are a promotional business in a promotional category.

Richie: [00:31:37] Gotcha. From a customer base perspective, is it a coastal customer, is it a […]

Mariah: [00:31:41] Urban. Forward urban markets. That’s where she is right now.

Richie: [00:31:47] Because I assume there’s also a massive non-urban customer base.

Mariah: [00:31:51] It was funny, in the early days, investors during meetings would be like, “I bet you’re huge in the Midwest.” And I was like, “We got no business in the Midwest.” Aside from Chicago and Detroit and a little bit in Minneapolis […] Now we’ve seen that pick up in Chicago—it’s a very strong third market for us, it’s number three consistently. This customer is 67% of American women. So the answer is, she is everywhere. I think though, where our brand resonates right now is, you know, the 30-something, 40-something urban woman who works. Every customer I’ve ever spoken to has a job, full-time job, has her own disposable income and she’s getting dressed, right? So what we offered isn’t necessarily going to fit the suburban woman who is potentially a little bit more casual, potentially a stay-at-home mom running around in, I don’t know, jeans and leggings and et cetera.

Richie: [00:32:47] What’s been the cheapest and most expensive lesson you’ve learned working at Eloquii?

Mariah: [00:32:52] Cheapest lesson I learned was buy insurance. No I’m not kidding.

Richie: [00:32:56] Expand on that please.

Mariah: [00:32:57] So I am a riskaphile, I love risk. Our COO, thank God, is risk averse. And I remember in 2014, he was meeting with the insurance person [and told me], “I’m going to make sure we get all the insurance.” And I was like, “Why? Don’t do that. That’s like $30,000 that we can just […] We’re the size of two pennies right now. Let’s wait until there’s actually more risk to mitigate.” And, thank God, he didn’t listen to me. He went ahead and got all the insurance. And then on March 1st of 2015, the roof on our warehouse collapsed. The size of two football fields fell right on top of them and, thank god, no one was hurt. It was a 3PL that we contract with. If we hadn’t had that insurance, it would have been really bad. So it’s a strange lesson learned, but get all the insurance. It’s really not that expensive.

Richie: [00:33:42] It’s all relative.

Mariah: [00:33:43] That was the cheapest. The most costly […] When you get a hire wrong, it’s costly. Especially a senior hire who touches a lot of the business. You know, you’ve probably paid a lot to get them on board, both to a recruiter and also [to] them. But beyond that, it is the tax on the business when it’s not working and it’s hard to tie it up with a bow. We’ve made that mistake and, you know, I look back on that and I’m like, “Oof, that was rough.”

Richie: [00:34:14] Is retail interesting going forward or […] What are the plans?

Mariah: [00:34:18] We have three stores right now, so that’s 2017. Our story of 2017 is clicks to bricks. So, I will say we are in testing phase, right? So it takes longer and it is more expensive and it is harder to test because you can’t get the results right away.

Richie: [00:34:34] You can’t turn it on and off like a dial.

Mariah: [00:34:35] You have A/B testing, landing page against landing page. But when you think about this market, this customer has never had the opportunity to shop in a fashion boutique before that’s just for her. She can, again, go to the seventh floor or go to the basement. She can go to a Lane Bryant or a Torrid. So we had customers asking right away, right away, right after we re-launched and they said, “When are you going to open in Louisville? When are you going to open in Charlotte, North Carolina? When are you going…”

Richie: [00:35:05] Like, you have the internet.

Mariah: [00:35:08] Like, we’re here! You can be in your pajamas with a glass of wine, we’re here all the time for you wherever you are. But a couple of customers really just summed it up. They said, “Listen, you’re giving us a fashion destination online that we have never had before. What would that look like offline? What would Eloquii’s actual online destination look like?” We thought, “That’s viable, right?” So we are in D.C., Chicago, and then we put a store in Columbus, sort of in our backyard—it’s almost like a lab for the team. And what we can say definitively is that our customer right now is not super excited about showrooming. We tested that. She was like, “No, I’d like to walk out with my purchases so I can wear them tonight, thank you very much.” We can say definitively that the customers we acquire in-store are our cheapest and our most valuable, so there is absolutely a significant amount of incremental LTV from customers we acquire in-store who then go on to shop both channels. Pretty mind-blowing. We can definitively say that we are better suited for urban-forward environments like D.C. and Chicago and we can also say that more square footage doesn’t necessarily equal more sales. So we’ve been testing all of these different things.

Richie: [00:36:24] That’s a good bit of learnings.

Mariah: [00:36:25] Yeah, yeah. It’s been a busy seven months.

Richie: [00:36:29] What about other third party, wholesale, others—those sorts of relationships. How do you view that as a traditional direct-to-consumer brand?

Mariah: [00:36:37] Great. I mean, I’ll take Rent the Runway, for example. They have an incredible merchant whom we’ve been working with for now three years. We are one of the first brands that Rent the Runway had when they started to serve this customer. She comes in, she’s got an incredible eye. We love the brand adjacencies. They pick great things, they’re very clear and focused and is it a huge part of our business? No. But do we think that over the time of her taking a long-term view that it’s important and it could be important from a marketing perspective and a brand-awareness perspective? Yeah. So the fact that we’re getting a check for it also doesn’t hurt.

Richie: [00:37:14] Category-wise, how do you decide where to focus?

Mariah: [00:37:18] So that is the art and science of a fashion business. You have a merchant and planning team that will say from a department-level perspective, “We believe our allocations should be this. Dresses should be X% of units, X% percent of revenue, etc., etc.” We launched swim this year. We believe that that is going to be, oh, let’s call it a $500,000 business in its first year […] That’s all the quantification, along with merchants saying, “We’re going to take a stand here, we believe in this.” Design will say these are the trends. This is what you should bet on. We’re coming out of a dress cycle—we’re going into suiting cycle.” And there’s that natural kind of tension between design and merchandising that happens where it’s all about the timing. Because design is generally never wrong, but the timing of when things hit and start to tick—if you’ve got the wrong inventory in the wrong bucket, guess what? It’s not going to sell.

Richie: [00:38:18] Given that you’ve shifted the business from 1.0 to 2.0 to put trend and fashion at the forefront, given all the cyclical and speed things happening at a more macro level, does that ever go too far? And how do you mitigate from a business perspective? [To go back to] the point where you’re just chasing your tail and it’s too much.

Mariah: [00:38:39] That’s hard. Because with the rise of social media and just the digital medium in general and the adoption to Instagram and smartphone […] And everything is seen immediately, all the time by everyone. You know, the rise and fall of trends is faster than it’s ever been and our creative director would say that we have gone through—we’re not even in it anymore. That a trend cycle is gone. The trend cycle has collapsed. It’s everything all the time. So what we do is we […] We find things that we believe in, we stick to them and then we react like crazy, right? So if something is really working or we think we’ve missed something, we chase into it as fast as we possibly can and if we missed it, we fail. Meaning, we’re happy to fail. We missed it, we didn’t get it, we’re not going to try because it’s over.

Richie: [00:39:31] And then as you look forward I guess one, two, three years, what’s on the horizon and what are you most excited about?

Mariah: [00:39:37] I’m excited for the ecosystem of the space. I don’t know whether or not that’s going to be good or bad for us, but it’s going to be great for the customer. So I’m hoping it’s a “tide lifts all boats” scenario—is that the expression?

Richie: [00:39:50] Yes. Why are you hesitant or not sure if it’ll all be good for you versus the customer?

Mariah: [00:39:55] Are they going to take—are people going to have more options in an underserved market? If there are a lack of options, they’ve got fewer places to go, but we have said from day one that our mission was to serve this customer from a fashion perspective. That will not change. But ultimately, we love our customer, we know a lot of our customers really personally. I had drinks with one a couple of nights ago. They’re such bad asses and I—I think we all feel like this—want them to have every possible opportunity and option that they should. And there are not enough options right now, so I’m speaking out of both sides my mouth: Maybe it’ll take away a little bit of market share, but will be the right thing for this market and it will be the right thing for this customer. And in the long term, are we all the better for that? So that’s one thing I’m curious to see develop. And then, I’m very curious to see how, both for us and for the industry, how brick and mortar continues to roll. Are all B and C malls going to go away? Is it only going to be A? Are we going to see showrooming and by-appointment become the norm? Are you going to see off-price? [Is it] just going to be A malls and off-price and then sort of destination shopping centers that has the Whole Foods and the Apple and the Lulu Lemon? Is that really what’s going to survive and and drive up price? So I think that’s going to be—as everyone’s watching it—incredibly interesting to watch.

Richie: [00:41:20] And then, just anything business-wise [that you’re] excited about that’s on the horizon?

Mariah: [00:41:24] Yeah. We have a really exciting designer partnership we’re launching next spring. We are launching lingerie. So we’ll see how that is received. And we also likely have a significant design partnership for next fall. Yeah, there’s a lot, a lot in the hopper.

Richie: [00:41:46] Awesome. Thanks so much for talking.

Mariah: [00:41:47] Yeah.

Richie: [00:41:56] Thanks for listening to the Loose Threads Podcast, check out all we have to offer at LooseThreads.com and feel free to leave a review on iTunes, we always appreciate it. Thanks to George Drake Jr. for editing this episode. We have a great roster of upcoming guests including Luc Lesénécal of Saint James, Joe Ferrara of Resonance and Michael Pollak of Heyday. Thanks for listening and talk to you soon.