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How Vuori Balances DTC, Wholesale And Brick-And-Mortar Amid Triple-Digit Growth Featured

  • Written by  Bryan Wassel
How Vuori Balances DTC, Wholesale And Brick-And-Mortar Amid Triple-Digit Growth

0aaavuori22Retailers that find major mainstream success in their early years face a challenge: how do you harness growth that can reach the triple digits without sacrificing your quality or identity? Expanding inventory, adding new product lines and keeping up with orders can all become a delicate balancing act.

Activewear retailer Vuori is experiencing this kind of transformational growth. In 2015, the company started with two employees; it has 52 today. Vuori also has expanded its product portfolio, from a small selection of men’s shorts to a wide variety of clothing and accessories, including a recently launched women’s business.

In this exclusive interview, Vuori Founder and CEO Joe Kudla discusses how the brand has successfully kept up with the demands of growth, expanded its selection and balanced its wholesale, brick-and-mortar and e-Commerce businesses without losing sight of its core objectives.

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RTP: Vuori experienced 180% revenue growth in 2018. What sort of challenges did this rapid expansion create, and how did you rise to meet them?

Joe Kudla: Number one would be maintaining your quality standards. We're laser focused on quality, and we refuse to put a substandard product in the market. When you're working with factories and you're doubling or tripling their production volume each year, you have to be in extremely close contact with them. You have to be working on capacity planning, really understanding and getting transparency into how they operate and establishing trust to ensure that the product that gets delivered is very high quality. That, to me, is the single most important part when you're growing that fast.

After you can establish that you'll be able to deliver great quality at that volume, the second challenge becomes buying the right quantity. In a wholesale environment, you're working with retailers to pre-plan your business and you have a pretty good idea of how much they're going to buy. There's always the risk of the product not selling at wholesale, but you're working in partnership with a buyer.

When you’re a direct-to-consumer business, that decision is on your own shoulders, so you need to estimate how much inventory you're going to sell of all of these different styles, and that can become really challenging when you're growing close to 200% per year.

Balancing risk versus opportunity is very delicate in consumer goods — you want to make sure you can meet demand, and the worst thing is you sell out midway through the season and all of a sudden customers can’t find it at all. But on the other hand, if you buy too much inventory that can really kill your business. Planning becomes really critical.

Then it comes to task flow management and really sound financial management. You can think you're doing very well because the business is growing really profitable, but then you run out of money. So understanding your long term cash management is number three.

The last thing I would say, for a value-based organization like Vuori that really cares about culture, is that it's really important to maintain a healthy culture so you don't burn out your team. That's something that every fast growth business strives for, but it can be hard to do in real life.

RTP: Your product selection has expanded from a small selection of men’s shorts to a complete line of active apparel and accessories. What are some of the best practices you learned for expanding from such a tight focus to a broader product portfolio?

Kudla: I think that staying true to the brand vision is of the utmost importance, because when you get a little bit of success within one category, it's very easy to want to extend into a lot of different categories, and you risk losing focus and discipline. I think you have to have a lot of awareness, and you've got to make sure you're staying true to your brand vision and leveraging what you're really good at so that you maintain authenticity while expanding into a new category.

You never want to lose sight of what you're great at. You want to make sure you do everything with that authenticity. If we feel there's an opportunity to enter a category within the lens of Vuori, so that it feels differentiated but we can sprinkle that Vuori DNA into it, then we move forward. And if not, then we simply don't.

RTP: Your business includes brick-and-mortar stores, an e-Commerce site and sales through retail partners. What logistical challenges have you faced as you work to meet demand in three channels? What have the benefits been?

Kudla: Selling in different channels helps with brand awareness and product awareness because your customer might find you online, or they might find you at an REI or a Nordstrom. That’s the ultimate benefit.

The challenges of running an omnichannel business are really about conflicting product development timelines and lifecycles. The wholesale business operates on a wholesale commercial calendar, so you need to be working much farther in advance of when that product goes to market. With a direct-to-consumer brand, the whole advantage is that you're working closer with your customers, and you're working closer to delivery, so you might be slightly more on trend.

So what you have to do is really work with your merchandise development queue to offer almost two different commercial calendars. You want to make sure that you're staying on track from a wholesale standpoint, so you don't miss the market, while also making sure you're developing and designing with enough newness and freshness to keep your direct customers interested and coming back. You also have to be a little bit closer to market in terms of seeing different opportunities present themselves — just being able to react and respond. It's very doable, it just requires a little bit more coordination and planning through the commercialization process.

Then the last thing I would say is just make sure that you have really sound cross-channel communication. When you are a retail brand, as well as a wholesale brand, your marketing efforts really get split. It's almost like you're operating two different businesses. So you need to make sure that you have a really strong go-to-market strategy — one that all of your key players across the business are aligned with and work towards together.

RTP: Your Encinitas, Calif., flagship store features events such as free weekly yoga, monthly art shows and local fundraisers. How do these experiences tie into the larger Vuori brand and shopping experience?

Kudla: When we launched the business back in 2015, we almost immediately got a pop-up location in downtown Encinitas, which really became the physical manifestation of the brand. We started hosting art shows where we were merging creative expression and fitness together under one roof, and before you know it we realized the community saw the brand, loved what we were up to and it just really snowballed from there.

From day one our investment in happiness, which is one of our primary brand values, has been really all about investing in the well-being of our team and the well-being of our community. Standing for community in and around our stores has always been of the utmost importance to us: in 2019 alone, we've had over 50 community engagements through our three stores in California.

RTP: Which mentors or influencers have been important to you in your career?

Kudla: Oh, man, so many, but I think that the most important one would probably be my stepfather. My stepdad came into my life a little bit later, when I was in high school, but he really taught me the importance of tending to things with a lot of care, working really hard and living a really balanced life in the process. I think I've really taken that and incorporated it into the way that we think about values and the way we think about culture at Vuori.

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