Dive Brief:
- Stitch Fix expects its revamped customer experience to play a role in retaining customers as the company aims for a return to sequential active client growth by the third quarter, executives said on a Q1 earnings call last week.
- The apparel box retailer has “fundamentally reimagined our client experience,” CEO Matt Baer said. Recent updates include Stitch Fix Vision, which creates a shoppable image of a customer, and Stylist Connect, which lets users communicate with stylists for advice between orders.
- “The new features that we’ve launched are driving incremental engagement,” Baer said on the call. “And then those new clients that have joined, we’re also seeing them stay longer and spend more. So we’re really proud of the overall widespread and holistic impact with everything that we’ve done.”
Dive Insight:
The work Stitch Fix’s team is doing to improve its customer experience is helping the company take market share from competitors, according to Baer.
“With regards to who we’re taking market share from, what we’re doing is we’re focused on delivering the most client-centric and personalized shopping experience,” Baer said. “And in doing so, we’re picking up share from where other retailers aren’t delivering.”
Net revenue rose 7.3% year over year to $342.1 million in the first quarter, according to an earnings report. Active clients remained steady from last quarter at 2.3 million, but represented a 5.2% year-over-year decrease. However, this was an improvement over the fourth quarter when active clients fell 7.9% year over year.
The retailer is beginning to stem its active client losses. The first quarter marked the sixth consecutive quarter of active client growth rate improvements, according to Baer. The men’s business in particular saw positive quarter-over-quarter active client growth.
Stitch Fix’s customer-driven approach helped boost average order values by nearly 10% year over year in the quarter, according to Baer. This marks the ninth consecutive quarter in which average order values have increased year over year.
Stitch Fix will lean into AI to ensure it can maintain its momentum and achieve client growth, according to Baer. Tools like Vision support customers directly, while AI Style Assistant helps customers articulate their needs to stylists.