Taking risks online seems to pay off for Lands' End Inc., the $1.9 billion apparel cataloger that is now part of Sears, Roebuck and Co.
Seven years ago, it was the first retailer to have an e-commerce site. Three years ago it introduced real-time human help round-the-clock on landsend.com for customer service. And last year it debuted custom-made jeans and chinos, which now account for 40 percent of online sales in those segments.
“Custom is really exceeding our expectations, and we think it's going to change the way people shop,” said Anna Schryver, e-marketing project manager for Lands' End in Dodgeville, WI.
Landsend.com visitors who want to design their pants type in measurements like height and weight. They enter other variables like the proportions of thighs and hips. Algorithms created by Archetype Solutions, Emeryville, CA, then analyze and calculate that data and send the information to a plant. Consumers always can tweak their measurements once registered online.
Once received, orders are tailored to individual specifications. The clothes are shipped to the customer in up to four weeks. Each custom-made pair of pants costs $54, plus $6 in shipping fees.
Custom clothing on such a mass scale brings several benefits.
One, custom items are priced higher than the readymade variants, yielding more per sale.
Next, idle inventory levels are lower in Lands' End warehouses at season's end. This lowers carrying costs and raises the average profit margin per product as fewer items are sold at clearance prices.
Finally, this affects repeat orders and contextual sales.
“If you've submitted your measurements and you've tried out a pair of jeans, it's very easy for you to also buy a pair of chinos because your measurements are there, you've already answered the questionnaire,” Schryver said. “So it's simply a matter of time before you order another pair.”
Emboldened by the success in jeans and chinos, Lands' End next month will offer custom dress shirts and men's tailored twill pants. It is also looking into custom suits, where a tailored fit has a more perceived value.
It is too early to see how the Lands' End foray into custom clothing at affordable prices will affect the competition. But it is influencing shopping habits online, raising the bar in terms of customer requirements.
“I think the customer will get pickier and will look for custom in more areas, and we do think retailers are going to hop onboard,” Schryver said. “We've seen it time and time again. The demand is there.”
However, a previous attempt by Lands' End to gauge customer sizes for tailored apparel flopped. A body-scanning feature was discontinued online after only 3,000 people registered to have their measurements recorded offline in scanning centers. About 100,000 people visit landsend.com each day.
Lands' End is not the only one challenged with this custom issue. Even Levi Strauss & Co. tried to answer consumer whims by a level of customization. The San Francisco jeans maker let consumers try on an extensive number of SKUs. But it did not make jeans one by one as Lands' End is.
The company last year got 242,000 e-mails from consumers. Most recent feedback supported Lands' End decision to offer a custom line.
Of course, Lands' End is alert to the downside of custom clothes for a mass line of apparel. For one, labor costs shoot up as the economies of scale slide. But this issue will be settled as consumers convert from the costlier telephone ordering to online while also increasing average order size with custom clothes.
“The fact is that in many cases they're converting to become Internet shoppers,” Schryver said. “We are promoting it in our catalogs. Many people reacted to that, and many people who have not ever shopped online with Lands' End have chosen to. So there's some savings to be gained there.”
Then there is design. Lands' End Custom is ceding some ground to customers as a better arbiter of taste and style than the retailer. For instance, customers can request pockets to be any style or pant seat to be any shape. And that concoction will carry the Lands' End label.
“I think a customer knows his or her choices better than anyone,” Schryver said.
Besides, the retailer sees no obvious trend in sizes to influence standard fits it carries. The same sizes that sell well in the catalog or online are being selected for custom fit, albeit with a tweak or two.
And where there is apparel, can returns be far behind? Lands' End reimburses the cost of shipping, offering a discount on the next pair bought online.
“The return rate is running slightly higher for custom jeans and chinos,” Schryver said. “If you think about it, your expectations are going to be higher. So we anticipated that. As we continue to improve the algorithms, we continue to see that diminish.” She would not disclose the typical return rate at Lands' End or the one for the custom apparel.
Like many retailers, Lands' End uses its outlet stores to liquidate overstock merchandise. It also has an overstock catalog. But returns of custom apparel will go only to the outlet stores. Consumers pay $10 for each pair. They are informed that the item was made for someone else.
Again, Lands' End has few fears that sales of returned custom merchandise at outlet stores will tarnish its brand.
“Online sales account for 20 percent of our overall sales,” Schryver said. “Outlet stores account for less than 5 percent of our overall sales.”