Revolve Group’s tapped into Aspen’s fashionable set with a pop-up that’s proven there’s still plenty more market share for the digital retailer to claim.
The company’s co-CEOs and co-founders Mike Karanikolas and Michael Mente offered initial insights two months into the temporary Colorado shop’s operation during a quarterly earnings call Tuesday.
Aspen, which is co-branded as a Revolve and FWRD store, has so far drawn Rihanna, Mariah Carey, Lori Harvey, Alessandra Ambrosio and more. That’s in addition to brand partnerships with Charlotte Tilbury, Jonathan Simkhai, Rhude and others.
“Also exciting is that the pop-up is our first true integration of our highly complementary segments Revolve and FWRD under the same roof,” Mente said. “In addition to the brand integration that is consistent with our growth strategy, consumer demand at the pop-up is highlighting an opportunity to further expand into adjacent seasonal categories for our brands, such as outerwear and across a broader range of price points.”
The door proves there’s still more customers to expose the brands to, with more than half of its shoppers new to Revolve and FWRD, Mente said.
Aspen shoppers are spending more in person than they typically do with the Revolve Group brands online. The location has also helped reduce return rates.
Revolve Retail Aspirations
Although Revolve and FWRD were born online and continue to remain digital-first businesses, the brands are not new to brick-and-mortar.
Revolve has tested in-person experiences in the past, ranging from its Melrose Social Club to the Revolve Festival and a hotel during the Coachella Valley Music and Arts Festival.
FWRD last year partnered with Kendall Jenner for its first-ever pop-up shop on Melrose Avenue. The store’s assortment was curated by Jenner.
Aspen offers another data point further justifying additional physical retail experiences.
“As a result of the traction that we’re seeing, we do anticipate testing out the Aspen location a bit longer than we originally anticipated,” Karanikolas said during Tuesday’s earnings call. “Whereas originally anticipated just as a pure pop-up event, we think it’s interesting to consider the potential further than that.”
The comments came as the co-CEOs were asked about future plans for permanent stores in Revolve and FWRD’s futures. Karanikolas was measured in his response to the question saying brick-and-mortar presents a growth opportunity with a “huge” potential.
“Physical stores aren’t going anywhere,” he said. “We’ll have to see where the ultimate balance of physical versus digital ends up. But physical, in our view, will always be an important channel and so I think that is an exciting opportunity for us. We’re not going to go after it just to chase share.”
If permanent doors are opened, they have to be profitable, Karanikolas added.
Market Opportunities
The more upbeat perspective on retail came the same day Macy’s Inc. said it planned to close about 150 underperforming doors of its namesake banner over the next few years amid activist pressures. The focus now to get the retailer back to growth is on luxury and the company’s Bloomingdale’s and Bluemercury brands.
Karanikolas and the Revolve Group see the latest news out of the department store retailer as just another signpost of a slow erosion in that segment.
“I think its reflective of the broader department store businesses conceding share for years,” Karanikolas said of Macy’s. “For us, I think this is just another data point in an ongoing, multi-year trend that, should we execute well, should mean very good things for us.”
That’s not to say Revolve Group has not been immune from 2023’s challenges.
Revolve ended 2023 with net sales down 3 percent to $1.07 billion, with both the company’s divisions and domestic market off for the year. Full-year net income tumbled 52 percent to $28.15 million.
Even still, Mente was similarly upbeat in speaking to the opportunities for Revolve Group as some luxury e-commerce companies struggle in the current environment. He also pointed to recent reports of luxury retailers that have struggled to pay vendors. Saks Fifth Avenue is reportedly one such chain said to have missed payments to vendors.
“We believe we are well positioned to emerge as an even stronger player,” Mente said of the current market turmoil. “Our 20-year history has taught us that periods of market disruption can be a great time for us to invest, while some others in the space are forced to retrench.”
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