Finding new ways of doing business is one of Covid-19’s lasting legacies. Losing 70% of revenue overnight when the pandemic first hit made Canadian apparel brand Duer think hard about how to pivot—and it created a new business channel in the process: the pre-sell.
The Vancouver-based company had been doing very nicely thank you since launching in 2013 selling performance denim “for doers”, but with a bit of fashion as well as function. Duer opened its first retail pop-up in Vancouver—in reality a changing room at the front of the company office—in July 2015. But within a year a smart, permanent store appeared in the city’s trendy Gastown district
Three rounds of crowdfunding via Kickstarter and $600,000 later, the company had hit a sweet spot, doubling in size by between 80% and 110% annually and selling 200,000 pants in 2019. “Despite how fast we were growing, we made money within two years of launching operations. It’s hard to balance dramatic growth and profitability, but we did it,” Duer co-founder and president, Gary Lenett tells Forbes.com.
At the start of the year, Duer’s business was split 50% direct-to-consumer through the two Vancouver stores—though a third one opened in Calgary in July—and online; and the other 50% was wholesale to retailers ranging from outdoor player REI to Nordstrom
Then along came novel coronavirus. “The wholesale business shut down overnight. Thank goodness our e-commerce was strong—it allowed us to get through March and April,” Lenett recalls. Like everyone else, the company was suddenly trying to preserve cash just to keep going.
For the 62-year-old veteran of the denim industry, the pandemic was an enabler. An idea Lenett had six year ago while he and his business partner in Asia, Abid Hafeez, were bootstrapping and then crowdfunding to get Duer properly off the ground, was about to come to life.
Pre-selling to consumers is not new, but fusing the manufacturing, technology, logistics, process, and speed-to-market successfully is not easy to get right. “It was the crowdfunding experience—the pre-sell to launch our products—that got me to think about how efficient that could be,” explains Lenett. “I could see there was a niche, but I didn’t know how big it was.”
As a serial entrepreneur, Lenett saw the gap in the market and the pre-sale program Next was born mid-pandemic, adding a fourth channel to the business. Duer describes it as “a low-waste approach to retail” that cuts inventories, a headache for many in the fashion business today. The brand offers new products, washes or styles, direct to consumers online who pre-order at a 15% discount. As long as there are enough orders to make it viable, the lines go into production with a delivery time of four to six weeks.
Going narrow and deep cuts waste
It was what Duer was already doing to some extent. “Our brand philosophy is narrow and deep. So we don’t do a ton of product anyway, but we go wide in market and distribution with an omnichannel approach,” says Lenett.
Back in 2013, Lenett got tired of selling reworked fashion trends every few years. He also changed his lifestyle for something simpler and healthier. “As I started riding to meetings by bike I couldn’t find anything that I could wear. I had a long commute but the technical stuff was too après gym that couldn’t be dressed up for an important meeting, and the fashion stuff was too uncomfortable for an hour’s commute,” he says.
So Lenett and Hafeez, who is a performance fabric expert and manufacturer, created their own proprietary fabrics—not synthetic-heavy athleisure-style materials, but cotton-rich weaves with a lot of stretch. The three fabrics created seven years ago are still the backbone of the brand’s collections today.
Over 50% of the fibers come from wood chips, plants and recycled bottles and the Tencel cotton that is used has a closed-loop production process. Pricing reflects that. It is at the lower end of the premium business but a little higher than outdoors/technical with pants at $120 to $150, and t-shirts selling for $38.
“We sell comfort and style—moisture wicking and enough give to ride for an hour. People who had tried to do this before didn’t come from a fashion background so the style quotient was a little weak,” notes Lenett.
Excluding the Kickstarter projects, Next is into its third program this year: the No Sweat Pant priced at $109. At the time of writing it was 9% funded with 19 days left for shoppers to place an order. “It’s the next way of doing business in this industry, post-Covid,” says Lenett.
The latest State of Fashion study from The Business of Fashion and McKinsey agrees. “Fashion is seeing the start of a seismic shift where products are ‘pulled’ into the market based on actual demand rather than ‘pushed’ based on best-guesses and forecasts,” it states. This change will be significant, resulting in more just-in-time production, small-batch cycles, and reduced overstocking.
Duer is riding that wave. Many start-ups already pre-sell because they can’t afford to hold inventory. On a larger scale Amazon’s The Drop is based on quick-turnaround fashion collections from influencers. Speed-to-market is an essential part of the mix and a long-time staple of fast fashion players like Zara (Inditex) and H&M. “Part of our DNA is anti fast fashion but we are taking some processes developed from that model. We can pre-sell all we want but if we can’t deliver the product in a reasonable time people won’t wait,” admits Lenett.
He adds: “We’re not doing custom manufacturing in any traditional sense, but we are producing to demand—it’s a hybrid.” The system of mass manufacturing, shipping and marketing huge collections in the hope they will sell is increasingly under fire as an uneconomical and unsustainable model.
“Trying to guess what people want is the major cost in our industry. It is ridiculous and makes no sense,” believes Lenett. In the U.S. more than 11 million tons of textiles also end up in landfill, almost double the amount in 2000.
Next is shipping its first program, The Only Tee t-shirt, this month. Duer is likely to use that as a test to fine-tune or even re-engineer the back-end process. Having a co-founder who is a performance apparel manufacturer and supplier in south-east Asia helps. “He has a factory that is dedicated to our product, so when Covid hit I didn’t have to go to a third-party supplier,” says Lenett. “We’re completely vertical.” Not many niche brands can claim that.
While Duer’s core lines can be ordered and delivered the next day, Next products can take from two to 12 weeks due to fabric minimum orders and lead times. So far the Next program has helped lift returning customers by 50% and new customers by 20%. Duer is also projected to reduce overall inventory by at least 35% as it expands this fourth channel.
American store debut
Despite the sales trough at the peak of the pandemic, Duer has been aggressively expanding its retail footprint. The company stuck to its plans to open a store in Calgary, Alberta and entered the American brick-and-mortar market this month with a pop-up in Mountain Standard in Boulder Colorado. First weekend sales are said to have exceeded expectations by 40%, a strong start.
Further U.S. retail locations being considered include Denver, New York, Los Angeles, Seattle and Chicago. “Our product is somewhat recession and pandemic proof in that we’re not a status brand, but it’s well made and we sell at accessible pricing. Also the brand is about active lifestyles, and during the pandemic sales of surfboards and bikes have boomed,” says Lenett.
No doubt Duer has an eye on expanding that quite narrow consumer target given that it is forecasting a five-year CAGR of 76%. The goal is to remain a boutique company that can produce $100 million in sales by then, based on current revenue and growth projections.
“This is my last career gig,” Lenett says. “A boutique global business used to be an oxymoron. But we have a small team and we’re selling all over the world. We’re doing it and it’s a lot of fun.”
