Aritzia is having a moment in the U.S. — but can it live up to the hype?
Vancouver-based retailer has exploded in popularity south of the border, thanks in part to TikTok
Christine Collet hadn't heard of Aritzia until about a year ago, when she started to notice videos about the brand pop up in her TikTok feed.
Now, Aritzia makes up more than half her wardrobe.
"I ordered online, and ever since then I became obsessed," said Collet, 23, a marketing co-ordinator and graduate student at Vanderbilt University in Nashville, Tenn.
Founded in Vancouver in 1984, Aritzia has long been a mainstay for Canadian shoppers, and has steadily grown its U.S. presence since opening two stores in Seattle and Santa Clara in 2007.
The brand has lately been doing well on both sides of the border, but its popularity in the U.S. has exploded, driven in part by TikTok, where videos about Aritzia's #effortlesspant, for instance, have more than 20 million views. This month, Bloomberg called Aritzia "the hottest fashion chain in the U.S.," and in the latest quarter its U.S. net revenue grew by 58 per cent compared to the previous year.
"It's surprising to see a new fashion brand coming out of Canada, but it seems to be really working," said Tim Calkins, a clinical professor of marketing at Northwestern University's Kellogg School of Management in Evanston, Ill., who likened Aritzia's American invasion to Lululemon's in the mid-2000s.
That sales bump wasn't a one-time fluke. In the last two years, Aritzia's U.S. customers have tripled, executives told investors last fall, and today about half its business comes from the U.S. The brand has big plans to build on that success in the years ahead, according to those executives, and expects that its U.S. stores will outnumber its Canadian ones by the end of the 2027 fiscal year.
But experts say being crowned the hot new thing in retail can be a blessing and a curse. It means pressure for a business to grow ever more quickly without biting off more than it can chew, or becoming overexposed and losing its intrigue.
The pressure is heightened amid a slowing economy, tepid U.S. retail environment and unpredictable social media landscape, where consumers can tire of a brand as quickly as they jumped on its bandwagon.
"The challenge of growth is very simple," said Calkins. "How fast can you grow and how do the numbers hold up as you do it?"
What's driving the hype
Aritzia describes itself as "Everyday Luxury," a category that sits somewhere between fast fashion and a full-on luxury brand. A popular bodysuit, for example, is priced at $58, while a wool turtleneck rings in at $168.
It's a genre of retail that's become more attractive in recent years, said fashion industry analyst Tamara Szames, as customers become willing to spend more to get a better, longer-lasting garment.
Part of what makes Aritzia unusual is that it isn't just Aritzia. Underneath the brand name is a stable of in-house labels, each geared toward a slightly different customer.
Someone who shops at Aritzia might wear Babaton into the office, TNAction to the gym and Sunday Best if they happen to be a stylish Gen-Zer. Two categories — Denim Forum and Super Puff — are dedicated to jeans and a particularly ubiquitous puffer coat. Aritzia has even gotten into menswear with the acquisition of the brand Reigning Champ.
By having such a wide range, Aritzia can appeal to different customers, or different aspects of a single customer's life, said Szames, and tailor their assortment to shifting consumer demands — such as loungewear during the pandemic and going-out clothes more recently.
"They're able to pivot and be agile — that's to their advantage, because we know the consumer's shifting quite fast in terms of what they need and what they want," said Szames, who is executive director and industry advisor for Canadian retail at the Toronto-based NPD group.
Like Collet, Lindsay Mosca of Montvale, N.J., says most of her wardrobe these days is from Aritzia — a store she'd never shopped at until a few years ago, when it started to pop up on her social media feed.
"The Effortless pants definitely were the thing that caught my eye," said Masco, 29, referring to a pair of high-waisted crepe trousers trending in a big way on TikTok.
Aritzia didn't make its CEO available for an interview with CBC News. But in a 2022 presentation to investors, the company describes customers as its "main marketing vehicle" — and notes their online conversations have been especially powerful.
On Reddit, members of a 26,000-person group debate product styles and share outfit photos. On TikTok, customers post online shopping hauls, styling tips and try-ons — though it's not all positive. Customers also critique aspects of the retailer, such as its lack of individual change room mirrors and customer service.
While word-of-mouth marketing is powerful, it's also tough to wrangle, said Northwestern University's Calkins. Customers like to talk about what's new and interesting, and as a brand becomes more well-known it's more difficult to keep the conversation going.
"Early on, you're new, and you're exciting, and that's great and everybody wants to talk about [you]," said Calkins. "The longer you've been around, the less exciting you are."
Doug Stephens, founder of the Retail Prophet, said growth in the physical realm can also pose a risk.
The more stores a retailer has, the more difficult it can be to replicate the same experience in each one (especially in vastly different labour markets), he said.
The larger the corporation is, the tougher it can be to respond to shifting customer preferences. And the more attention a brand gets, the more likely it is to reach a point of fatigue.
"When we look at brands, like Lululemon, for example, [that] have had sort of this meteoric level of growth, oftentimes it's that very growth that conspires against their future success," said Stephens.
In the near-term, Aritzia also faces pressure from inflation, executives said during its latest earnings call, along with higher warehousing costs after receiving an influx of merchandise ordered in the midst of COVID-19 supply chain issues. (During the call, the company's CEO, Jennifer Wong, said she wasn't concerned about this leading to greater markdowns.)
The rising cost of living has also squeezed consumers' wallets. The Wall Street Journal reporting overall U.S. retail sales dipped slightly during the normally-busy shopping month of December.
While consumers of higher-end products tend to be more insulated from economic pressures than those who shop at budget retailers, retail consultant Sonia Lapinsky says there comes a point where even those shoppers may start to cut back.
"There's definitely some security, having more of a premium product and luxury customer," said Lapinsky, managing director of retail practice with the New York-based consulting firm AlixPartners.
"But I don't think that means that [higher-end brands] are completely impervious to the challenges that many retailers are foreseeing ahead."
In the longer-term, Aritzia has set a goal of opening between eight and 10 stores a year in the U.S. through 2027, according to its latest investor presentation — a pace that Stephens said isn't unreasonable, if the brand can keep its eye on the ball.
"It comes down to responsible levels of growth and not just recklessly sort of bending to the whims of investors to grow in a way that is not responsible," he said.
While most of Aritzia's immediate expansion plans are focused on the U.S. market, Wong told investors last fall it's just a sign of things to come.
"We believe in order to be a wildly successful and internationally-known brand, you have to be famous in the U.S.," Wong said. "We will build a critical mass in the U.S. that sets us up for success internationally beyond 2027."
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