Aritzia is having a moment in the U.S. — but can it live up to the hype?

Christine Collet hadn’t heard of Aritzia until about a year ago, when she started seeing videos about the brand popping up on her TikTok feed.

Today, Aritzia makes more than half of their wardrobes.

“I ordered online, and from then on I was obsessed,” said Collet, 23, a marketing coordinator and graduate student at Vanderbilt University in Nashville, Tenn.

Founded in Vancouver in 1984, Aritzia has long been a mainstay for Canadian shoppers, and has continued to expand in the US since opening two stores in Seattle and Santa Clara in 2007.

The brand has recently done well on this side of the border, but its popularity in the US has exploded, partly fueled by TikTok, where a video about Aritzia’s #effortlesspant, for example, has more than 20 million views. This month, Bloomberg called Aritzia “the hottest fashion chain in the US,” and in the last quarter of US net revenue grew by 58 percent compared to the previous year.

“It’s surprising to see a new fashion brand coming out of Canada, but it seems to be working,” said Tim Calkins, clinical marketing professor at Northwestern University’s Kellogg School of Management in Evanston, Ill., who compared the American invasion to Aritzia. to Lululemon in the mid-2000s.

The sales bump wasn’t just a one-off. In the past two years, Aritzia’s US customers have tripled, the executive said to investors last falland today about half of the business comes from the US. .

But experts say being crowned the store’s hot new item can be both a blessing and a curse. That means the pressure is on for the business to grow faster without biting off more than it can chew, or becoming overexposed and losing its intrigue.

Pressure is mounting amid a sluggish economy, US retail is hot environment and unpredictable social media landscape, where consumers can tire of the brand as quickly as they jump on its bandwagon.

“The growth challenge is very simple,” Calkins said. “How fast can you grow and how much does it hold up while you do it?”

What caused the hype

Aritzia describes itself as “Everyday Luxury,” a category that falls somewhere between fast fashion and full luxury brands. A popular bodysuit, for example, is priced at $58when the wool turtleneck sounds on $168.

It is a retail genre that has become more attractive in recent years, said fashion industry analyst Tamara Szames, as customers are willing to spend more to get better, longer-lasting clothes.

Part of what makes Aritzia unusual is that it’s not just Aritzia. Beneath the brand name is a stable of in-house labels, each aimed at a slightly different customer.

Anyone who shops at Aritzia can wear Babaton to the office, TNAction to the gym and Sunday Best if they’re a stylish Gen-Zer. Two categories – Denim Forum and Super Puff – dedicated to jeans and a especially the ubiquitous puffer coat. Aritzia has even gotten into menswear with acquired from the Reigning Champ brand.

With this variety, Aritzia can appeal to different customers, or different aspects of a single customer’s life, Szames said, and diversify in response to changing consumer demands – such as casual wear during the pandemic and clothing come out more recently.

“They can be flexible and agile — that’s an advantage, because we know that consumers are very quick about what they need and what they want,” said Szames, executive director and industry advisor for Canadian retail at the Toronto-based NPD group.

AritziaTok

Like Collet, Lindsay Mosca of Montvale, NJ, says most of her wardrobe these days is from Aritzia – a store she never shopped at until a few years ago, when it started popping up on her social media feed.

“Effortless pants are definitely something that catches my eye,” said Masco, 29, showing off a pair of high-waisted crepe pants that are trending on TikTok.

Aritzia did not make its CEO available for an interview with CBC News. But in its 2022 presentation to investors, the company described its customers as “primary marketing vehicle“- and notes that their online conversations are more powerful.

On Reddit, group members of 26,000 people debate product styles and share photos of outfits. On TikTok, customers post online shopping, style tips and try-ons – although not all are positive. Customers also criticize aspects of the retailer, such as its shortcomings individual dressing room mirror and customers service.

While word-of-mouth marketing is powerful, it is also difficult to wrangle, said Northwestern University’s Calkins. Customers love to talk about what’s new and interesting, and as brands become more well-known, it’s harder to keep the conversation going.

“In the beginning, you’re new, and you’re fun, and it’s good and everyone wants to talk about it [you]”said Calkins. “The longer you’ve been there, the less fun you’ve had.”

Doug Stephens, founder of Nabi Retail, said that growth in the physical realm also poses risks.

The more stores a retailer has, the harder it is to replicate the same experience for everyone (especially in a very different labor market), he said.

The bigger the company, the harder it is to respond to changing customer preferences. And the more attention a brand gets, the more likely it is to reach a point of exhaustion.

“When we look at brands, like Lululemon, for example, [that] have experienced this meteoric rate of growth, very often that growth conspires against future success,” Stephens said.

growth plan

In the near term, Aritzia is also under pressure from inflation, executives said during its latest earnings call, as well as higher warehousing costs after receiving a backlog of ordered merchandise amid COVID-19 supply chain issues. (During the call, the company’s CEO, Jennifer Wong, said she wasn’t worried about this leading to a bigger price drop.)

The rising cost of living is also taking a toll on consumers’ wallets. The Wall Street Journal reports overall US retail sales dipped a little in the month of December which is usually busy with shopping.

While consumers of higher-end products tend to be more insulated from economic pressures than those who shop at budget retailers, retail consultant Sonia Lapinsky says there is a point where shoppers may be able to cut back.

“There’s definitely some security, having more of a premium product and a luxury customer,” said Lapinsky, managing director of the retail practice with New York-based consulting firm AlixPartners.

“But I don’t think that’s what it means [higher-end brands] not up to the challenges that many retailers foresee.

In the long-term, Aritzia has set the goal of opening between eight and 10 stores year in the US through 2027, according to the latest investor presentation – a pace that Stephens said is not unreasonable, if the brand can keep its eye on the ball.

“It is down to the level of responsibility of growth and not just reckless sort of bending to the whims of investors to grow in a way that is not responsible,” he said.

While most of Aritzia’s immediate expansion plans are focused on the U.S. market, Wong told investors last fall it was just a sign of things to come.

“We believe that in order to be a successful and well-known brand internationally, you must be famous in the US,” Wong said. “We will build a critical mass in the US that makes us successful internationally beyond 2027.”