Source: Indochino via Bloomberg

Custom Suit Startup Indochino Wants More Physical Stores

New CEO Drew Green plans to open dozens of new showrooms and take the brand global.

When custom-fitted menswear startup Indochino launched in 2007, it promised shoppers tailored suits and shirts without them ever having to leave the house. Just submit the measurements online and have your suit delivered in a few weeks. Send it back for alterations until it’s right.

Now the Vancouver-based company, which has received $17 million in venture capital funding, is doubling down on brick-and-mortar locations. After opening seven “showrooms” in the past year, Indochino announced it plans to open an additional 150 in the next five years and expand to the U.K. and Asia. It’s appointed a new chief executive officer, Drew Green, to take over for co-founder Kyle Vucko. Green formerly ran and Vucko will remain in an advisory role.

Unlike traditional retailers, Indochino’s locations don’t sell items to take home. Instead, customers book fitting appointments and select fabric and designs before the final product is picked up or mailed to the shopper. This means Indochino stores carry little inventory of their own. “We really felt that our ability to open stores efficiently is a tremendous benefit, because we don’t have the typical overhead of inventory that most retailers do,” said Green. “Anytime we open a store in a city, we see awareness and sales in that city grow four times compared to what it was previously, as online-only.” He insisted that online-only custom clothing is still viable, but “the opportunity is much bigger than that.”

“Customers have different ways they want to interact,” Green said.

The showroom model was pioneered in 2011 by Bonobos, a menswear seller known for its washed chinos and other private-label casual and formal wear. Executives there once vowed they would never branch out to physical stores but have since opened 20 “Guideshops” across the U.S., and the company has received $127.65 million in funding. Meanwhile, eyeglasses retailer Warby Parker, once online-only, has opened 15 stores, and men’s apparel seller Frank & Oak is testing offline retail with six yearlong pop-up shops in the U.S.

Opening physical stores, even if you’re a buzzy e-retailer, is crucial to attract customers and show them how your service works, said Sucharita Mulpuru, an analyst at Forrester Research. “Customer acquisition is really tough,” she said. “Once you get the customer in, they have your measurements, and then you can migrate them to the Web.”

Several online-centric custom menswear startups have sprung up since Indochino’s launch, including Alton Lane in 2009 and Trumaker in 2012, which both raised fresh rounds of funding this year. Alton Lane, which has received $8.22 million in total funding, has seven showrooms in the U.S.; Trumaker, which specializes in custom shirts, has two. In an industry long ruled by local tailors, department stores, and luxury labels, the online alternatives have found customers who are looking for lower prices on bespoke outfits and value the ease of shopping from home.

Indochino, which has 220 employees globally, declined to share revenue figures or say whether it’s profitable, but Green said it has passed its 2014 sales mark and is on pace for 40 percent sales growth this year. The company will also supplement its customization business with ready-to-wear apparel and accessories, which would mean customers would for the first time be able to carry items out of the store. But he said he’ll keep Indochino “true to its roots” and refrain from carrying millions of dollars of in-store inventory. Green also said he’s looking for retail partners that Indochino can help get into made-to-measure clothing. “It’s not about putting something on a department-store rack and letting it sell,” he said. “It’s about the experience.”

Before it's here, it's on the Bloomberg Terminal.