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Can Reformation Become the Global Go-To For Cool Girls?

The LA-based label known for floral dresses and cheeky marketing wants to expand into Europe, Asia and Australia under new majority owner Permira Advisers. But will its winning US strategy play overseas?
Reformation campaign imagery | Source: Courtesy
By
  • Cathaleen Chen

NEW YORK, United States — Reformation is preparing to take on the world, with a formidable brigade of #RefBabes as its advance team.

The hashtag appears on over 13,000 Instagram posts, from a castle in Ireland to the cobblestone streets of Old Montreal. If all goes as planned for the brand known for its floral dresses, sustainability mission and cheeky marketing, where the hashtags go, stores will soon follow.

Flush with cash after selling a majority stake to private equity firm Permira Advisers in July, Reformation wants to open stores in the UK, Australia and beyond at a rate of about five to eight locations a year. The goal is to replicate the same strategy that’s worked so well in the US, where Reformation grew in the span of 10 years from a single repurposed vintage shop in Los Angeles to a $150 million-a-year business.

The assumption is that a woman in Dublin or Sydney will be just as likely to buy a $218 ethically made linen wrap dress as her counterpart in New York or Minneapolis.

“I think the world is pretty flat,” Reformation founder Yael Aflalo told BoF. “Women have a very emotional connection to our brand, in the sense that they love our clothes and they love what the brand stands for and they feel the brand represents them well.”

Reformation helped pioneer the strategy of converting customers into members of a viscose-donning community using hashtags and Millennial-friendly language. That playful tone — “carbon is cancelled" is one slogan — is now ubiquitous on Instagram. Plenty of other cool-girl brands have since emerged, but Reformation remains among the biggest by sales and social media traffic, analysts say.

But exporting that model is another matter. About 17 percent of Reformation’s sales are overseas currently, according to Aflalo. Many digital-first start-ups are opening stores overseas, including Glossier and Allbirds, but few have become truly global brands. Expansion abroad comes with its own set of risks at home.

People tend to go international when they see that they're close to saturation in their home market

“People tend to go international when they see that they’re close to saturation in their home market,” said Ari Bloom, CEO of fashion tech company Avametric. “And when it fails, it can be pretty disastrous for the home market because you’re splitting resources.”

But Reformation hasn’t run into any roadblocks yet.

Aflalo founded Reformation in 2009 as a storefront that sold repurposed vintage clothes in LA. Three years later, she launched the brand’s online shop, with clothes made at the company's own factory in California. In 2015, it raised $12 million in a funding round led by 14W and Stripes Group, and then an additional $25 million two years later.

From the beginning, its defining attribute was sustainability, using clean manufacturing processes to minimise clothes' carbon footprint and water usage. Online, each product page discloses the impact the garment has had on the environment.

Today, with a projected 2019 revenue north of $150 million, the company employs 500 people. Sales has grown at a rate of 60 percent year-over-year. Last year, Reformation outsourced about 20 percent of its production to third-party factories in China, Turkey, India, Italy, Morocco and Portugal and by the end of this year, 40 percent of manufacturing will be outsourced, the company said.

According to Edited, a retail data company, Reformation operates like a fast-fashion retailer, but at a much higher price point. Dresses sell out in 38 days on average, on par with Fashion Nova, an online-only brand. But while a typical Fashion Nova dress costs around $40, Reformation’s can sell for five times as much.

Last year, Reformation entered a wholesale arrangement with Nordstrom, and this summer began selling through Selfridges and Shopbop, partnerships meant to expand the brand's customer base beyond New York and LA.

Aflalo said building a mass-market brand has always been her ambition.

"It was always our goal to bring sustainable fashion to everyone and to be a large company that appealed to lots of women,” she said. “I think [we are] on the way to that goal.”

With Permira as an investor, Reformation now has the resources to expand both its store networks and online sales. The company is opening new locations in Chicago, London, Manhattan and Austin, Texas this year, in addition to its current 15 stores.

Reformation’s enduring success on social media also gives it a leg up, as many potential customers outside the US will already be familiar with the brand. Its earned media value, a measure of engagement on social media, was up 21 percent in June compared with a year earlier, while overall engagement with non-luxury fashion was down 14 percent, according to Tribe Dynamics, a social media marketing data firm. Reformation regularly tops competitors like Sézane, Réalisation Par and Staud.

The company has a real opportunity to take a model that has worked really well for them here and apply to a new market

“The company has a real opportunity to take a model that has worked really well for them here and apply to a new market … leveraging how borderless social media can be,” said Brit McCorquodale, senior vice president, revenue, at Tribe Dynamics. “Influence can span countries and continents.”

Expanding overseas is still risky, even for a company the size of Reformation. To start: many countries already have successful, home-grown cool-girl brands, often inspired by Reformation’s success in America. In France, influencer Jeanne Damas popularised her direct-to-consumer brand Rouje with Parisian staples such as high-waisted jeans and feminine silhouettes — a familiar aesthetic for any Reformation fan. In the UK, Kitri’s pink gingham midi dress made headlines this summer after selling out in a day.

Brands can sometimes lose their way at home when they focus too heavily on entering international markets. For example, J.Crew opened stores in London and Paris a few years ago, even as its core US business was beginning to decline.

But when it comes to expanding overseas, Aflalo maintains that the company’s biggest challenges are internal.

“We’re just really focused on a lot of non-sexy stuff,” Aflalo said. That means updating operations, from new systems to manage the company’s finances and inventory to growing warehouse space and logistics capabilities.

“All of that kind of backend stuff is becoming really important,” she said. “It’s our number one priority.”

Reformation also plans to add new product categories. It unveiled a shoe collection this summer, and will offer a greater footwear assortment this fall. Down the line, the brand has its sight set on Asia. China is its biggest growing market online, according to Aflalo, but the company will take its time getting there because of the cultural and language barrier.

For now, Reformation hasn’t strayed too far from its bicoastal roots. One recent #RefBabe post features a woman posing in front of a halal cart — instantly recognisable to New Yorkers.

“When your outfit matches the food cart,” the post read, followed by a laughing emoji and shrug emoji.

Editor's note: This article was revised on 22 August, 2019. A previous version of this story stated Reformation had stores. This is incorrect. The brand has 15 stores currently.

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