13 minute read
“Let Humans Do What Humans Do Best”
Elizabeth Spaulding “We Are the Intersection of Technology and Humans”
A swap of positions at the top. In the US, Elizabeth Spaulding’s name has long been associated with the fusion of technology, innovation, and classic market mechanisms, and since summer 2021, with the gigantic leap forward in the development of US online provider Stitch Fix, whose management she took over from founder Katrina Lake – in the midst of the pandemic, no less. The top priority on the agenda of the congenial top manager is to further enhance the company’s major USP, the Perfect Fix, by harnessing AI technologies and optimised data management. This Fix refers to five products in a box, sent by Stitch Fix to its customers, and it contains the secret of success, namely the combination of dataoptimised base information paired with the personal advice provided by a stylist. A distinguishing feature in the market that deserves to be further developed.
Interview: Stephan Huber. Text: Isabel Faiss. Photos: Stitch Fix
ou took over as the new CEO of Stitch Fix in August 2021, at the dawn of a new age. How did that feel? Y Elizabeth Spaulding: It was really exciting. Ever since the beginning of the COVID pandemic, we started to acknowledge what a massive shift is happening in the industry. My vision was to show how Stitch Fix can play its role in the future of retail, especially given its really unique focus on personalisation, human touch, and algorithms. For the last year and a half, trying on clothes in the comfort of your own home has never been more popular. What has been so exciting is embracing leadership for this exciting vision that we have in front of us. Everything has changed in terms of consumer behaviour. We have seen it with our active clients and with new consumers, and now we are broadening the platform that we have. My vision is to become the global destination for personalised shopping, styling, and inspiration.
Almost two years of a pandemic-induced state of emergency have not only put our society and its resilience to the test, but have also redefined consumer habits, accelerated innovations, and finally made clear that the future is all about data. Good for you and Stitch Fix?
In a way definitely. It is part of my job to realise that a lot of things follow a nonlinear path. Part of why I joined the company was a very deliberate decision with Katrina Lake to really chart the future of the business. My background is in innovation, working at the intersection of consumer technology and traditional consumer arenas such as retail and restaurants – businesses that have a real touch and feel. Beloved brands, that value this background, are like the nexus of where Stitch Fix really sits. What I observed during that experience is that pure tech platforms are trying to move from content into commerce, but probably without the human touch, the personality, and the relationship. So, the pattern I recognised based on having worked with all those kinds of businesses is that Stitch Fix is in this unique position to really bring the power of relationships and human touch together with its core DNA of data science and machine learning. My starting point was to ask: well, what could the next 10 years look like? And that actually flipped a switch of sorts. I kicked off these six or seven territories for the future of Stitch Fix that we have begun working on.
The massive shift of commerce to online platforms must have been a real boost for Stitch Fix…
First of all, as for every business, it was incredibly hard, because we were managing through a crisis. When people are going through turbulent times, their brains are the most adaptive, eager to look forward and ask how to get through whatever is happening. We started with questions like: how do we re-innovate our amazing experience? How do we expand and innovate into new territories? How do we disrupt even the economic model of inventory? What are all the options to reach many more consumers, both in the US and globally, to really become a global destination? What we saw by June was that the category US Apparel had been inching up one or two points a year and shifting to online, 25 percent plus compared to pre-COVID times. The market reached this new water mark that now constitutes a permanent shift and will continue with 40 percent of commerce happening online. This really allowed us to go on the offensive in terms of envisioning our future. We have access to trend data on what consumers want. And we saw this tenfold increase and casual “un-comfort” with traditional online shopping. So, we immediately pivoted our inventory and incubated things like Fix Preview, which is now our standard experience, both in the UK and the US, where you can preview your fix and select 10 items to view before choosing. It is like Netflix shifting from the DVD era to the streaming era. We had five items of clothing that we sent out in a box, which is still a very compelling model. And now we have your entire personal wardrobe to shop from in your online store and our freestyle model, the latter currently only in the US. All of that was very much ushered in by this new period that I think COVID accelerated for us and has allowed us to evolve even faster than we may have initially.
Stitch Fix was one of the first to recognise personalisation as a key value. Today, significantly expanded technological options enable a completely different level. What will the customer journey look like in the near future?
What we embarked on in the US earlier this year is the ability for customers to open the door of their own personalised store - a new service called Freestyle. The customer gives us information on their style preferences and choices, and we then essentially personalise their own store, showcasing trending outfits based on what they have told us about their style. We also gather data through our in-app game, “Style Shuffle” - a “thumb up, thumb down” rating system of items that you swipe upon sight. A million customers play that monthly. We have generated over 9 billion ratings via “Style Shuffle” – and counting. This rich behind-the-scenes tool is honing our understanding of customer needs. Like social network graphs,
we have a style graph that helps us extract feature and style preferences from consumers. But what it means for consumers when it comes to shopping with us, is that they can experience walking through their own personalised store of products. They can also walk into their own branded stores based on labels they prefer. So, it is really bringing a curated discovery based on your product preferences to life, demonstrating how to use items and how to wear them as outfits. At any moment, clients can also engage with a Fix, enjoy the human touch and the surprise and delight element of receiving a box of fix items, hand-selected by their stylist. In the future, there will be even more real-time interaction with our stylists who have been at the heart of our business for over a decade. Those are things that we are thinking about in the coming years. That really makes it a destination that you can engage with, hopefully multiple times a day – for either inspiration or shopping.
Experience and surprise are essential to fashion and shopping. Can an AI-driven system surprise customers even though it is based on algorithms?
We like to say: let humans do what humans do best. And let us look at the algorithms the machines do best. We are always testing the boundaries of that. The cockpit-style tool that our stylists use is always pushing the frontier of how we can make their job as highly leveraged as possible. Our behind-the-scenes tools are leveraging all the information that we have on a certain client, but also extracting parallels from our broader client base. It harnesses the power of 4 million-plus clients on behalf of just one client to help generate an understanding of what items will work for them. In terms of shopping experience, we are always experimenting with things like new arrivals that are displayed in a merchant’s tab. We actually just launched curated shops where influencers pick pieces they love from our catalogue in October. It is entirely human based. But when you open those items, our machines immediately generate outfits that would go well with that item based on what we know from features that go with those looks. Pushing the boundaries of consumers is the risk of machine learning. If machine learning is done well, it gravitates towards optimisation. We must work hard to provide that surprise, that delight, or find creative ways to achieve that and build our models. But this is where stylists (and humans) will always be part of the equation. Since day one, that is what Stitch Fix does best, and I think it sets us apart from other tech-only companies and is going to help us bring that intersection to life.
So the human touch will remain crucial in the future?
We have incubated and executed different experiments like live video calls with our stylists to find out what is the best interaction we could scale. We are learning from that right now. It is a highly mature customer journey question. Maybe once or twice a year, that would be an amazing experience, because you could feel that sense of really articulating what you are looking for. It would gather a lot of different data that we would not necessarily know yet, and you have a chance to interact with a person with whom you can really reflect on all those comments and maybe even ask some advice. I mean, imagine the future: our stylists might do even more in that direction, or have a content feed suggesting ways to find certain looks. Live video is not in our media product roadmap, but you could imagine that just becoming a richer part of the experience. This a form of guided advice, in addition to pushing the boundaries of fashion. Those are things that are not going to be replaced by algorithms in the foreseeable future, but they will greatly contribute to the relationship nature of our business.
That means that Stitch Fix is taking the very old value of personalised retail into the digital area.
That is how I like to think about it. That feeling of human connection, advice, and a type of validation, but coupled with discovery. For me it remains crucial how we take those special moments and bring them to life for every consumer at the click of a finger. And how can we do that in a way that is incredibly relevant, incredibly personal? The service and advice, I think that is where the big difference lies. If you think about e-commerce, it is highly search and filter based. It is not personal, involves no discovery or relationship. We have basically identified these characteristics that we think are the most crucial for the future of shopping – and that is the blueprint that we are using for the future.
Most e-commerce platforms are desperately searching for ways to add human touch. Because that is missing when you are tech-only…
Yeah, absolutely. A huge indicator of the relationship and personal nature of Stitch Fix is reflected in how much information our clients proactively share with us. For 85 percent of the items we ship, we get multiple points of feedback. When you get your Fix, you try it on at home, and every item generates five points
of feedback. The fact that people engage so deeply with “Style Shuffle”, the fact that a huge percentage write notes to their stylist, which provides us with trending information, is a sign of tremendous trust. But it is also an incredible data asset for us to understand, and thus to build better products and provide better experiences. We have an inherent understanding of the likely success rate of an item before we even send it. For example, our stylists send a few things that have a 15 percent likelihood of success, and then a few items that are 80 percent likely to be appreciated. Maybe that wildcard item with 15 percent is going to be a massive hit, maybe not. But it shows that we are willing to push our own boundaries, too.
There is an ever more intense discussion about whether or how our consumer behaviour can still be justified in view of the challenges of climate protection. On the other hand, consumption is the foundation of innovation and development. Is a balance between these two positions possible? Can the conundrum be solved by tech?
I think what is amazing about our model is that it is great for consumers. And it has the potential to be disruptive in our field for all of those topics. We use the richness of client data to build better products. At the source, let us produce products people are actually going to want and the right amount of those goods. We produce a lot of our own brands, and they outperform on every score rating. That is because we are using data to determine exactly what we produce in terms of fit, fabric, and quality. We also use a tool called “design the line” to test items on consumers before we produce, meaning we have great confidence in what we manufacture. We actually share a lot of data with all of our vendors already, but imagine a world where vendors produce far less, based on what consumers want. We have a goal for all of our exclusive brands to be as sustainably sourced as possible by 2025. Actually, we have our own cut and sewing facility in Pennsylvania. Just the other week, we launched a line in which all the pieces are sustainably manufactured and sourced. So, I think there is so much about our model that is win-win for client and consumer, not to mention the positive impact we can have on the climate.
Parallel to personalisation, we are currently experiencing how gamification – and the gaming tech behind it – is gaining enormous influence. Are there completely new, super strong, and influential players emerging in the fashion business?
That is a great question. If you think about Fortnite or Roblox, there’s this sense of creator community that feels like a very exciting environment. We are definitely seeing more opportunities to create more engaging ways to gather our customers’ point of view, feedback and preferences and gamification is one way that we do this. At Stitch Fix, our “Style Shuffle” feature does this for us. In the future, this gamification could extend to having consumers help co-create brands or give live feedback on products. Ultimately, people want to be part of a broader conversation and I think it’s going to be fascinating to see how the fashion industry creates more opportunities for this.
The business model may be based on cutting-edge technology and smart data management, but style competence is and remains the sweet spot at Stitch Fix – and in its high-profile image campaigns (see above). Personal advice and service are the essential elements that Elizabeth Spaulding, in her capacity as the new CEO, intends to reinforce even further.
