It’s a beautiful afternoon at the Beverly Hills Hotel and Kate Hudson is walking the red carpet. There are the usual celebs, hangers on, and paparazzi that you’d expect to find at any Hollywood event, but this party is a little different. Instead of promoting a movie or TV show, everyone is there to celebrate the launch of Fabletics’ first ever collaboration, with pop superstar Demi Lovato.
“I love Fabletics. The clothes are so cute, but most importantly I love what they stand for,” said Demi Lovato. “The company is all about inspiring women and empowering them to be the best version of themselves, to be strong, and it doesn’t matter what shape, or size, or age. It’s just about empowering women and I love that.”
Since their founding in 2013, Fabletics has been just that: A fashion-forward athleisure brand, designed to be inclusive and empowering. In just three and a half short years, Kate and her team have grown their little startup into a $250 million company.
Not bad for an actress with no business background.
In 2013, the founders of the TechStyle Fashion Group, Don Ressler and Adam Goldenberg, had an idea about starting an athleisure brand. At the time there wasn’t a stylish, reasonably priced, quality athleisure brand out there. It was a sea of black and grey overpriced workout gear for women.
They wanted to change that but they needed a partner.
Kate Hudson was the first person that they thought of. “Kate truly represented what they wanted Fabletics to be. She’s approachable, doesn’t take herself too seriously, and has a very active lifestyle,” said Fabletics president Gregg Throgmartin.
Kate was heavily involved from day one: Whether it was reviewing budgets or picking a social media strategy, Kate was hands-on. She continues to be extremely involved in the design process and works closely with the team to ensure that the styles stay fresh. She looks at the sales numbers every week and knows exactly which clothes are selling and which aren’t.
While it’s hard to imagine many celebrities actually using the products they endorse (I doubt LeBron James actually drives a Kia), it’s not hard to picture Kate running around with her kids or going to the gym in her Fabletics gear.
Throgmartin said, “If there’s one thing that I learned about Kate, it’s that she will not do it if it’s not authentic to her. I think that’s why she’s had such longevity. If she doesn’t believe it in her core, she’s not doing it.”
Although they had a good idea, experienced investors and a celebrity founder, success didn’t come quickly or easily. The company experienced several hurdles early on.
“Our goal was to have the best product in the industry for about half the price," Throgmartin said. "It didn’t start out so great. Our first order was for $300k in inventory, which we had to trash because of poor quality. We had to delay our launch six months in order to make a better quality product. But it was worth it. We’re fanatical about quality.”
Kate also faced negative press, from celebrities like Cher and others on social media, who felt that the Fabletics membership model was a scam. There were also concerns that their most popular items often were sold out.
Hudson spearheaded an effort to make clear communication a priority. Fabletics upgraded their customer service department and implemented a new data system to ensure they’d have the proper inventory levels. In 18 months, Fabletics had a top rating from the Better Business Bureau and a much-improved customer satisfaction score.
Because of this commitment to quality and customer service, Fabletics grew quickly: In 2014 they experienced triple-digit growth. From 2015 to 2016, they grew 43%. In 2017 they’re projected to reach $250 million in sales. They have 1.2 million members and while a lot of businesses are getting out of retail, Fabletics saw a retail growth of 644% last year.
Their partnership with their parent company, TechStyle Fashion Group, has helped to fuel this growth. Rather than go at it alone, Kate hooked up with a company that had funding, experience in the online fashion world and most importantly resources. Instead of having to hire their own Facebook expert, design staff, marketing team, etc. they can share these resources with their parent company. Seventy percent of Fabletics is now a shared service.
Another reason for their rapid growth is their data-driven approach to business. Throgmartin said, “Data runs our business. It tells us what customers are responding to on social, the quantity of product we need to make, and the type of inventory that we're going to design. We're using technology that allows us to collect data at multiple points and send it upstream.”
This data allows Fabletics to serve the customer by matching them with the perfect outfit, remembering their personalized information at the retail store level, and producing clothing that they’ll like. It also allows the company to better streamline their production schedule. The predictive data synchs perfectly with Fabletics’ back-end integration, which allows them to go from design to production in only eight weeks.
Despite the crowded marketplace and industry experts who are calling the athleisure fad dead, the future looks bright for Fabletics. The company, which has 22 retail stores currently, plans on opening a dozen more in 2017 and growing rapidly in the next three years. Along with their growing membership base, their data-driven approach to manufacturing and their successful partnerships with celebs like Demi Lovato, the business is poised to grow rapidly over the next several years.
Even with all this success, don’t expect Hudson to quit her day job just yet. When I asked her if she wanted to be remembered as a businesswoman or an actor, she laughed and replied, “I'm an actor through and through. I'm really proud of the things that I'm doing in business, which we’ll continue and expand, but being an artist is where my heart is at."