ModCloth's Next Step: Private-Label Line, Physical Retail Store

San Francisco–headquartered ModCloth has been one of the innovators in the pure-play e-commerce space, but the women’s clothing retailer announced new angles to its way of doing business.

Matt Kaness, who was named chief executive officer of ModCloth in January, announced that the company opened a physical shop near its offices in San Francisco’s Union Square on July 30. Called the Fit Shop, the temporary space will be open until Aug. 17. ModCloth is testing the physical shop with an eye on opening permanent shops.

The retailer also announced the debut of its first house brand, which will be called ModCloth. It will represent something of a change for the retailer’s look. “We have our core retro look,” Kaness said. “But we will have a more classic occasion wear, items for a modern silhouette to wear for work. We are introducing more feminine and casual along with our bohemian looks,” Kaness said. Retail price points will range from $35 to $150. It will not be wholesaled.

Kaness, who worked as chief strategy officer for Urban Outfitters Inc., joined ModCloth after a turbulent time for the company. It suffered through two rounds of layoffs in 2014. Cofounder Eric Koger resigned from his position as CEO. ModCloth also announced a Series C round of funding in June when $15 million was raised. Kaness talked to California Apparel News on what is next for ModCloth.

You’ve helmed ModCloth for seven months now. How has it changed? What are your goals for it?

MATT KANESS: I started in January. I spent a lot of time asking questions and listening to our customers and our community. The team has been receptive and responsive to my leadership style. It’s not so much of how it will change. It’s how quickly we’ve come together to find the potential for ModCloth to come to fruition.

The internal dialog at ModCloth reflects our view that we are a “digital-first” multi-channel, lifestyle retailer as well as a fashion brand. As we evolve, we want to realize the potential of both of those areas. Our customer is voting yes to the changes we are making in the assortment, both from a design perspective to a merchandise perspective. Our customer wants us to be offline. We are going faster with opening Fit Shops.

As a company that grew up with technology, there are immense opportunities to innovate the customer experience. ModCloth has been a leader in social-commerce. We plan to invest and innovate in the social-commerce arena but also in multi-channel and three-dimensional venues. There is a broader audience that has not heard of ModCloth. There are those who have not found it as easy to shop at ModCloth. We want to broaden the appeal of the business and reach more customers and become a more significant business. We’re not nearly close to penetrating the total market opportunity for ModCloth.

Where do you see growth?

MK: Growth always starts with concept in customer. We see a lot of growth in apparel and non-apparel merchandise and things we can do as a lifestyle retailer. We will build our casual and workwear offerings across all categories; shoes, accessories, bags are big opportunities for us. We think about expanding our offerings beyond the Web, not just in Fit Shops but in other offline formats, as we think about new distribution and new customers. International is a big opportunity for us; it is one that we are underserving. This is an interesting moment of time to innovate in social commerce where we can unlock some value through the customer experience. It includes our Style Gallery, mobile apps and digital community to bridge offline into a multi-channel experience to create a unique user experience.

Last year there were two rounds of layoffs at Mod Cloth. What’s next? How will you make the company grow?

MK: We have an amazing team here, one that is unbelievably passionate about the brand. We have about 350 employees today. We’re in a hiring phase now. We are looking for people who have an empathy for the culture and want to be part of it. Our success is predicated on making our employees successful and will lay a foundation for future growth and success.

ModCloth has been a leader in delivering a unique point of view in fashion and ethics with its anti-Photoshopping pledge. What will ModCloth bring to fashion and retail that is unique?

MK: It is part of what brought me to the brand. ModCloth has been a leader in inclusivity and body positivity. It is unique in the industry. We use our customers as models. It is something that we love to do. It celebrates our community. For a swim shoot, [ModCloth founder] Susan Koger modeled the swim line. It was celebrated for how raw and honest it was.

We recently highlighted a transgender individual for ModCloth’s fashion gallery. It was because the individual is a celebrated member of the community. It is part of our culture and DNA. We plan to be louder and prouder and be a leader in delivering those messages of celebrating all body types and celebrating all women, as we endeaver to make her feel like the best version of herself.