The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
NEW YORK, United States — The five-floor Crosby Street building that will house the New York outpost of Totokaelo is not quite finished, but it's easy to see the potential in its soaring ceilings and generous outdoor space. Totokaelo founder and chief executive Jill Wenger, 38, who moved from Seattle to Manhattan last autumn in order to build this 8,400 square foot store and expand her business online and off, is overseeing workers quietly laying floorboards and building out shelving units, including friends who have flown in from the West Coast to help her make the deadline of September 10, when the store will be unveiled to the industry ahead of the public launch two days later.
“We had 70 days to pull this together,” Wenger says, walking a reporter from room to room, explaining the significance of each space. The ground floor, for instance, will house “directional vendors that aren’t terrifying,” such as The Row, Vetements, Issey Miyake and Boessert Schorn, while upstairs areas will be organised by color. There will be a white room and a black room, as well as a room where pieces that better resemble a rainbow might hang. “Dries, Marni, Haider if he’s doing lavender,” Wenger says, explaining that she has found customers in Totokaelo’s Seattle outpost often prefer to shop by shade rather than brand.
There are plenty of visual nuances that will certainly please those who walk into the finished space — from the chevron-wood floors to the stone walls carved by artist Arturo Di Modica, who lived there for many years — although Wenger seems to be most excited by the dressing rooms, which will leverage iPads to let salespeople attending to customers easily communicate with their counterparts out on the shop floor. “The worst thing, when you’re in the dressing room, is having to leave the client for five minutes to grab something else,” she says.
Totokaelo in New York | Source: Totokaelo
Wenger would know. For the first eight years of her business, she was often the only salesperson on the clock. It's just one reason why Totokaelo has maintained a profit of 14 to 24 percent since her third month in business and is on track to generate $17 million in sales in 2015. Wenger's track record has allowed her to secure a bank loan to open the New York store and develop Totokaelo's ready-to-wear collection, which is set to hit the sales floor on September 20. (The line is women's-only for now, but there are plans to expand into men's, jewellery and home.) But for Wenger, these two major milestones are only the beginning of her plan to achieve $90 million in annual sales in five years and a network of five brick-and-mortar stores across the globe. Tokyo or Seoul will likely be next; then Western Europe, either Paris or Amsterdam. "We want to go for it," she says, explaining that the final decision will be based on e-commerce activity in each region.
To be sure, Wenger did not set out with such big ambitions. At least not ones linked to fashion. Raised in Houston, Texas, she spent her childhood playing “office” — answering phones, filling out appointment books — rather than playing “house” or “school.” “I didn’t know what I wanted to do with my life outside of starting a company,” she says. “I like building things, and I like leading.”
After earning a business degree at university, she bounced around the globe, spending time in Ireland and studying graphic design in Australia. Eventually, she followed her brother to Seattle and wrote a business plan while working as a display coordinator at Anthropologie. In 2003, she asked her grandparents for $20,000 to open Impulse, a 700-square-foot space on a basement level of a building in Fremont, a then-fringe Seattle neighborhood that had begun gentrifying in the late 1990s. She took the loan seriously. “I don’t come from money or a trust fund, so this was my grandparents writing me a check out of their retirement. That was a really, really big deal to me,” Wenger says, parked in a chair in the library at the Mercer Hotel. “Failure was not an option. And that’s kind of the mentality I’ve taken into everything. When somebody takes that sort of risk on you, you just don’t let them down."
In the beginning, Wenger sold items often handmade by local designers and artists — makers of furniture, jewellery and clothes — on consignment. “That was when I started picking up the fundamentals of running a company,” she says. “At the end of the day, you buy something at 50 cents, sell it at a dollar. If it doesn’t sell for a dollar you have to mark it down to 75 cents. Retail is a clean business. You and your clients are moving in the same direction.”
Within six months, she was selling more clothes than the consignors could make on demand. “It wasn’t about the clothes, it was about helping customers dress in a way that made them feel more themselves. More confident, more empowered,” Wenger recalls. “That was what I loved, and I didn’t get that from furniture. So I kind of phased out the other stuff for a moment. That’s when I had to learn about fashion.”
To build inventory, Wenger attended Market Week in New York, where buyers convene to place orders for the next season. She zoned in on brands that were hard to find in Seattle — and on the still-nascent web — including Steven Alan, United Bamboo, A.P.C. and Mayle. “Those were my first four. I came to market and talked my way into the showroom by telling each of them that I was selling the others,” she says. “Having those four out of the gate really helped to establish us as something different.”
That “something different” is what Wenger sometimes calls the “young luxury” movement. Not the sorts of things one would find on the contemporary floor of a major department store per se, but not the designer labels that were only available in stuffy boutiques, either. These brands — and designer denim, she notes — were the gateway to young people buying designer clothes.
In the beginning, Wenger amassed a list of devoted clients by creating personality-driven looks instead pushing individual products. “I realized that if I only had three people in a day and sold one item per person, I’d be down in that basement forever,” she says. She recruited friends to model outfits, posting the resulting Polaroids in the dressing rooms, calling client feedback on those looks her first stream of data.
By 2005, Wenger knew she wanted to play in the ready-to-wear designer game, and began developing relationships with fashion houses. She bought Y's with the hope that someday she could also sell Yohji Yamamoto, and that MM6 might similarly lead to Margiela. Today, the store carries a diverse range of labels, from Berlin-based Anntian and Los Angeles-based Black Crane to Dries Van Noten, Rick Owens and Marni.
In 2008, she opened the first Totokaelo boutique, a 1,000 square foot space for the higher-end brands she was carrying. A client, who was initially in the store shopping, mentioned wanting to learn Ruby on Rails, an application framework, and offered to build a custom website for Totokaelo. Wenger closed the original Impulse boutique in 2010 and spent the next three years focused on e-commerce, which quickly attracted a significant following abroad, particularly in Asia. Today, 30 percent of Totokaelo’s online customers are international, with top-performing cities including Tokyo, Seoul and Hong Kong. (Currently, e-commerce makes up about 60 percent of the company’s annual sales.)
In the beginning, it was a challenge to drive traffic to the site without the kind of marketing budget deployed by larger retailers. (Wenger says that the company only began online marketing efforts a year ago.) Instead, she began blogging and building online editorials to showcase her selection of clothes and accessories, and created beautiful packaging — often commissioning artists to design wrapping paper — that conveyed a sense of specialness to the client.
“To me, packaging is vital to showing somebody who you are. That’s the challenge of e-commerce,” Wenger says. “How do you put the people back into it? How do you put the artistry into it?” This summer, for instance, clothing shipments were carefully wrapped in space-print paper, sealed with a pink-metallic geometric sticker. At the New York store, the packaging will initially be clean, with garment bags fashioned after varsity-sweatshirt lettering.
As Totokaelo’s web presence grew, Wenger strengthened her roster of designers. Securing both Marni and Dries Van Noten accounts in the same season was a pivotal move. Dries Van Noten, which can be a challenge for retailers to stock, was particularly satisfying. “It took me a year,” Wenger says. Today, she’s focused on nurturing already-established relationships instead of chasing every hot new label, and believes the New York store will distinguish itself from competitors not only through its visual presence, but also by the selection of product. “We buy The Row very differently than Barneys or Bergdorf, and we’re the only other specialty retailer in Manhattan, as far as I know, that sells it,” she says. “I just pick stuff that I love and I know will resonate with clients. I’m not interested in playing what I call the ‘price and breadth of product game.’ I’m not going to keep gobbling up and launching five new vendors a season. We’re picking up one, maybe two. And it is the best stuff we see in the market. From here on out, it’s more about refining a vision, and about Totokaelo’s point of view becoming stronger.”
That point of view now ecompasses a ready-to-wear collection, which Wenger hopes will constitute 55 percent of the product mix within five years. While many multi-brand retailers have built in-house lines filled with margin drivers, Wenger says that Totokaelo's initial 25-style effort — priced in line with advanced contemporary labels like Acne Studios — includes pieces that reflect Totokaelo's specific flavor in a monochromatic color palette that is largely black, white and navy.
"We're getting more and more clear on what we stand for as a fashion company," she says. "The stuff that I love right now is not in style. Two years ago, it became really obvious that what we considered as store basics were not things we could provide for our clients." Paper-bag waist trousers, overalls and suspender pants are all a part of the collection, which is inspired, in part, by 1990s Comme des Garçons, Jil Sander and Yohji Yamamoto. "At the simplest level, they're directional styles made to be paired with the best of the designer collections. Our clients don't want to look like they walked off the runway. She is rebellious toward that. And right now, it's hard to find a black pant that you can tie back to a Dries blouse."
While the New York store is a major focus for the brand, Wenger is equally as concerned with what is next. Although the company has been largely self-funded since that $20,000 she borrowed from her grandparents (with the exception of the bank loan she took to help finance the New York store), Wenger is now aiming to raising money to expand to Asia and Europe and to strengthen her presence online. Even with the brick-and-mortar expansion, she would like e-commerce to continue to make up more than 60 percent of the company’s revenue, eventually increasing to 70 percent.
Wenger plans on doing that by using technology to get closer to the online consumer and develop a more joined up multi-channel offering. For instance, Totokaelo has a significant “on approval” business in store, which means that salespeople — or, as Wenger prefers calling them, stylists — send clients a box of products each week with customers paying only for what they keep. “I need to use technology to automate and scale the process,” she says. The goal is to develop a fluid online system — that goes beyond email and printing out mailing labels — that allows e-commerce and local customers alike to work with stylists on a regular basis. “Relationships are the backbone of our company. I want to bring that to e-commerce,” she says. “We’re not the best at SEO or re-targeting, that’s not our jam. But we are going to create the best looks, and help people evolve and find their style.”
Totokaelo is now a 70-person company, which includes a 25-person sales team at the Seattle store, 25 salespeople in New York, 10 back-of-the-house managers, as well as 10 merchants and creatives. Two years ago, Wenger brought on Nordstrom vet Philip Atkins as her first senior director of merchandising. Other key hires include Christine Tran, one of the store's Seattle-based stylists, who managed to win over Wenger's personal clients when she finally stepped away from the sales floor in 2011. Tran will make frequent trips between the coasts in order to maintain relationships with existing New York-based customers.
In recent cycles, Wenger has implemented elements of the agile method — often used in software development — so that her team thinks and acts with the speed and adaptiveness of a tech start-up. "I have really amazing people around me, and I'm also super collaborative," Wenger says. "We move fast."