Stitch Fix Focuses on Retention as Revenues Fall

With revenues continuing to slide, Stitch Fix is looking to improve customer retention.

The artificial-intelligence-powered personal style site outlined a number of strategies to reverse its falling revenues during an earnings call Tuesday (Dec. 6) evening, including ways to deeper interaction and “listening” between the company and its clients.

“Given the criticality of these moments, we are testing multiple new ways for richer interaction and listening both before clients receive their fix, as well as when they share feedback if we haven’t hit the mark,” CEO Elizabeth Spaulding said.

One strategy now being tested includes having the company’s stylists contact first-time clients who “purchase zero items to get to know our clients better,” and suggest replacement items, Spaulding said.

Stitch Fix will also revamp its marketing strategy to focus on “engaging and reactivating the audiences that already know us while continuing to lean into new acquisition channels,” Spaulding said.

She told investors this is a crucial step in growing profitability, with the company reducing its spending on marketing, as its digital performance-based channels have become less efficient.

“We have a pool of over 10 million consumers that have already interacted with us, but have not recently or ever made a purchase that we can more directly target or bring back into our ecosystem,” she said.

Stitch Fix saw its revenues fall by 22% year over year during the quarter, continuing the decline from the company’s last quarter, when revenues fell 16%.

Active customer numbers are up, said CFO Dan Jedda, but the company is also seeing more customers delay spending, “partially due to the macro environment.”

He added that the company’s analysis suggests “clients are spending less across a broad set of cohorts, and we expect this to continue given the economic backdrop and the deep discounting we’re seeing in the retail industry.”

Recent research by PYMNTS and LendingClub shows how much consumers value this discounting, as shoppers tell us they will consider sales and prices when deciding where to shop during this year’s holiday season over every other factor.

We found that discounts and promotions will sway 6 out of 10 consumers, while 40% said getting a bargain was the most important factor.

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