Paid media no longer driving fashion recommendations claim fashion startup bosses


(l-r): Julie Bornstein, CMO, Sephora; Katrina Lake, founder, Stitch Fix; Jennifer Hyman, co-founder, Rent the Runway

The founders of two disruptive online fashion businesses have said bricks and mortar retailers must become customer service centres, and said magazines and paid media are no longer the most effective drivers for sales.

Speaking on a panel on defining the next generation retail experience both Jennifer Hyman, co-founder of Rent the Runway and Katrina Lake, founder of Stitch Fix, said businesses relying on paid media to drive new customers were set to fail.

“Who’s influencing purchase behaviours has moved away from magazines and moved more towards these trusted influencers,” said Lake.

“Traditional stores’ over dependence on paid marketing led to them not focussing on the customer experience.  We’re focussing on delivering a great experience – it generates an organic word of mouth which is translated through digital mediums.”

Hyman agreed saying she did not believe that paid media channels are scalable for audiences any more, adding: “We shouldn’t think spending money on Google is the only scalable channel.

“There have been tens of millions of venture capital dollars lost in fashion startups over the last few years because they spent too much on Google, and 500,000 customers later that channel didn’t work for you any more and you had no underlying brand or customer service to fall back on. There are no more scalable paid channels.”

On the future of bricks and mortar stores Hyman said she thought they will still be around in ten years, but stressed they need to change their customer experience models, as teenagers were no longer hanging out at malls like they used to.

“They need a different service or entertainment or something that gets me having an experience I could not have via a mobile or online channel,” she said.

“It has to be fun, almost creating an experiential way to experience a mall in the future.

“Teenagers aren’t going to the mall, its not the place to hangout at all. Bringing people back not going to be done by having a lot of big box stores but having a place where they can get the right food and entertainment.”

Talking about the challenges of their business Hyman, whose company rents out clothing to women for special occasions, quipped she had unexpectedly “become the biggest dry cleaner in the country”.

Alex Hayes in Austin

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