Kit and Ace, the technical apparel brand owned by Lululemon founder Chip Wilson, announced Wednesday that it will close all of its stores in the U.S., the U.K. and Australia. The Vancouver-based company will focus instead on boosting e-commerce and maintaining its nine locations in Canada.
“We recognize the traditional world of bricks-and-mortar retailing is changing, which is why we’re shifting strategies,” said Wilson, in a widely-circulated statement. “We believe in the business model for Kit and Ace. Going forward, we will be a stronger company.”
The company has also laid off an undisclosed number of employees at its Vancouver headquarters. The number of store employees the closings will affect has not been disclosed.
It’s not a completely unexpected move, as the brand has been in trouble for some time. It announced in September that it would close a quarter of its stores and lay off 20 percent of its employees.
Inside Kit and Ace’s Toronto store
However, this is a more significant shift and one that highlights the potential downsides to growing too fast, as some believe Kit and Ace did. By 2016, only two years after its launch, the company had grown to 61 stores in five countries and employed 700 people — a steep rise for an upstart brand in an uncertain retail environment.
“It’s imperative as a ‘startup brand’ to avoid the weight of bricks and mortar, which are highly risky in an ever-changing market of consumer taste,” said Thomas Rankin, the co-founder and CEO of the visual intelligence platform Dash Hudson. “Sometimes sacrificing rapid growth for staying lean (i.e., e-commerce-only) is the best path toward long-term success.”
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Known for using technical fabrics, like proprietary qemir — a washable cashmere blend — to make everything from T-shirts to outerwear, the company bills itself as selling more than athleisure, though that’s essentially what it sells. “Streetwear that performs the exact same way as our activewear” is how co-founder J.J. Wilson, son of Chip, described it to the L.A. Times in February.
This approach is particularly trendy right now, with companies like Aday and P.E. Nation trying to bridge the two worlds. As with those brands, Kit and Ace’s fairly simple product offering doesn’t come cheap, ranging from $98 to $428 — an investment compared to similar offerings from fast-fashion stores like Zara and H&M.
A Kit and Ace ad
“As a relatively new category, it’s still maturing,” said Rankin, of the space. And investing more in e-commerce may be a safer bet for these higher-priced athleisure brands, especially given their target consumers: millennials. That cohort is “more comfortable with the [online] direct-to-consumer model,” he said.
But there’s a lesson here for those outside of the athleisure space, too — especially any company that’s keen to jump on fashion’s latest trend or, as RSR retail analyst Paula Rosenblum put it, “grab the tail of a tiger.”
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“Athleisure has been very hot, and when a market is hot, there aren’t many barriers to entry,” she said, adding that with that comes certain risks: assuming that the core market is bigger than it really is and presuming the trend will last forever, allowing for perpetual growth. “Think about Pac Sun, which rode the wave of surfer gear until it fell out of vogue and was left with real surfers,” she said.
Her advice? “Study history,” she said. “Along with thinking of the market’s upside potential, think about where the floor of that market might be, and [whether or not] there will be room for you when the market returns to that floor.”
