- Richer Poorer, a brand known for its comfortable basics like t-shirts and socks, provides a blueprint for how businesses can survive the next phase of the pandemic.
- The company sold three times as many sweatpants and sweatshirts in March compared to all of last year. Today, sales are up more than 400% year-over-year, according to the brand.
- CEO and cofounder Iva Pawling told Business Insider how the brand identified its most profitable offerings and shifted its wholesale approach to focus on what customers really want right now.
- She advises founders to figure out the core of their business and cut out anything that doesn’t further that mission.
- Visit Business Insider’s homepage for more stories.
If business owners want to survive the next phase of the coronavirus pandemic, which indicates no end in sight, they’ll need to home in on their core products and customers.
In a recent article, Harvard Business School senior fellow Karen Mills advised entrepreneurs to identify their most valuable products with the strongest profit margins and eliminate everything else. Then, she said it’s equally important to identify your company’s most loyal and profitable customers.
Richer Poorer, a brand known for its comfortable basics like t-shirts and socks, provides a blueprint for that exact strategy. The company sold three times as many sweatpants and sweatshirts in March compared to all of last year. CEO and cofounder Iva Pawling said this sales surge propelled the brand to shift the bulk of its inventory from wholesale to focus on direct-to-consumer ecommerce. It also sent Pawling a clear business message.
“The customer wants to be comfortable,” she told Business Insider. “If you don’t currently have something in your collection that makes people feel comfortable, you need to find a way to do so.”
Her analysis is in line with a larger fashion trend of people dressing more casually to work remotely — and many want to purchase their new attire from the comfort of their homes. High-end designers have capitalized on an 80% spike in sweatpants sales, like Thakoon Panichgul who released a pair for $95.
Pawling told Business Insider how the brand identified its most profitable offerings and shifted its wholesale approach to focus on what customers really want right now.
Reimagining the wholesale model and supply chain
Richer Poorer relied on wholesale for the nine and a half years since it was founded. But within weeks of the coronavirus pandemic outbreak in the US, revenue slowed and the company had to shift its model to favor ecommerce. This included cutting down on some wholesale staff and repositioning others to focus on digital.
The company moved all of its inventory from cancelled wholesale orders to its online store, which helped the company recover initial lost sales from supply chain delays. “We doubled our February number in March and then we doubled our March number in April,” Pawling said.
The company manufactures its products in countries like Vietnam, Guatemala, China, and Indonesia. This made sense for the quantities it needed for wholesale, but then worldwide quarantines and shutdowns held up production. Richer Poorer began selling out of products as it shifted more online and the company connected with a new supplier in Los Angeles to produce its latest robe styles.
“What e-comm has allowed us to do is to really start looking at some of those factories and partnerships that we have turned away from historically, because we didn’t have enough margin,” Pawling said.
Customer retention is a key indicator of success
Richer Poorer’s Instagram account has more than 115,000 followers, but branding isn’t everything. Customer retention, or tracking repeat purchasers, is the number one metric the company focuses on. This slightly differs from the retail industry’s standard of measuring customer acquisition.
As Pawling sees it, great photography and copy can attract a first-time customer to the brand, but the number of customers who come back for more indicates whether the product is resonating at large.
“Branding can only get you so far and we can do a great job of convincing somebody to make the first purchase,” she said. “Unless we are putting out the absolute best products in the market at the best price point, they’re not going to come back because they have too many options.”
That focus on quality over branding is what Pawling believes will usher in the companies that last. “Brands have been very convinced that your brand is the most important part of the company and we haven’t really been living in a product-centric world,” she said.
Pawling said she was afraid the success of the sweats category would be short lived, but the brand has maintained customer interest and all of its categories have performed well, from t-shirts to intimates. “Everyone has kind of chewed through our inventory and as we go we’re just getting stockouts in more and more categories,” she said.
Identifying the core of your business
In April, Richer Poorer was profitable for the first time in four and a half years, Pawling said. A spokesperson for the company shared documentation with Business Insider that shows today sales are up more than 400% year-over-year. “We spent years selling to channels that we really should not have been in order to capture revenue, which just diluted the brand. From a long term perspective, it didn’t benefit anything,” she said.
That’s why she advises founders to figure out the core of their business — whether that’s a particular product or a way of messaging — and stay on that track. Cut out anything that doesn’t further that mission, such as low-performing styles or partners that don’t align with the direction of your brand.
“If there’s something that we feel really strongly about and can stand behind and I think it’s really going to perform, we’re leaning into it super heavy right now,” she said.
Being the next direct-to-consumer VC darling is not the only path to success, she said. “The most important thing today is to build a business that can sustain itself and not be dependent on VCs, investors, outside capital, any of the outside things. And that means slower growth. And that’s okay.”