Aritzia’s retail manufacturing operations expected to continue strong performance: Retail experts
During the first two years of the COVID-19 pandemic when businesses were forced to close their doors and global supply chains were snarled, e-commerce helped the company drive performance.
As Canadian retail darling Aritzia gears up to report its latest quarterly earnings on Oct. 12, it continues to stand out as a leader and trendsetter in a complex, rollercoaster retail environment.
The Vancouver-born fashion company founded by Brian Hill in 1984 and now run by long-time employee Jennifer Wong, has developed somewhat of a cult following, particularly over the last decade, successfully tapping into the social media, influencer generation.
And retail experts expect the momentum to continue.
In a recent note to clients, RBC Capital Markets analyst Irene Nattel said Aritzia “enjoys an exceptional runway as it continues to seed the U.S. market, grow its online presence and expand assortment into new categories, all backed by strong manufacturing and supply chain capabilities.”
Even celebrities like Jennifer Lopez, Kendall Jenner, Hailey Bieber, and Meghan Markle have been seen sporting Aritzia clothing within the last few years.
And after a pair of vegan leather pants went viral on TikTok in 2020, the company has further solidified itself as a one of the trendiest brands today, especially among Gen Z.
During the first two years of the COVID-19 pandemic when businesses were forced to close their doors and global supply chains were snarled, e-commerce helped the company drive performance, and when boutiques reopened, sales quickly surpassed pre-pandemic levels.
Retail watcher Liza Amlani attributes Aritzia’s success firstly to product assortment, which has allowed it to become a go-to spot for workwear, clothes to go out in and casual wear. The founder of Retail Strategy Group said the company’s use of consumer insights to inform both the items it stocks and its customer service strategy, has also given it an edge.
As a result, Aritzia has been able to carve out a unique spot for itself in the retail market between luxury fashion and fast-fashion, catering largely to the middle class and upper-middle class consumer.
“It has that element of aspirational. Even though it’s not considered luxury, I would say it’s still aspirational for many, many people,” Amlani said.
“If you look at the competitors in the marketplace, especially for Gen Z, there aren’t many players. I can’t see inflation being a barrier for Aritzia on consumer demand and spend, because they don’t have a lot of competition.”
Much of the company’s recent growth has been powered by its continued expansion south of the border.
Aritzia currently has 112 stores, 68 in Canada and 44 in the U.S., with plans to open eight to 10 new locations within the fiscal year. All but one will be in the U.S.
The company is also in the process of expanding some of its already-existing stores, like its Yorkdale Mall location in Toronto. It is adding more space and its A-OK cafe as it looks to enhance the in-store shopping experience.
“It is an attempt to sell the brand, not just sell the products. Being top of mind drives sales both online and offline after they’ve curated this desirable lifestyle,” said Jenna Jacobson, assistant professor at Toronto Metropolitan University’s Ted Rogers School of Retail Management.
She believes Aritzia has established itself as a brand people can relate to, thanks in part to its digital and influencer strategy, something that has significantly boosted its reach in the U.S.
