Fruit of the Loom, bastion of stag do t-shirts and school sports kits, counts Warren Buffet as its largest shareholder (what doesn’t the man have a stake in?). Buffett is actually credited with rescuing the 166-year-old clothing brand from the grave in 2002 when he acquired it out of bankruptcy for $835m to join the lengthy list of Berkshire Hathaway subsidiaries. Fast forward to 2017, and the company has announced it will be moving into the underwear subscription market (yes, it exists…).
Fruit of the Loom has recently hit a bit of a soggy bottom. Three straight quarters of losses have led to a slightly saggy outlook. Owner Berkshire Hathaway as a whole has had a pretty rough year, thanks to a bout of claims from hurricanes Irma, Harvey and Maria hitting the insurance-focussed conglomerate hard, putting it on course for an annual loss for the first time since 2002. The outlook wasn’t entirely negative - after all Berkshire Hathaway has holdings in almost every sector - but Fruit of the Loom was among the businesses that posted flat figures.
The reality that Fruit of the Loom has had to contend with is that fewer Americans are getting their clothes in store, with more retailers focussing on online shopping to entice customers, particularly millennials.
‘Retail is finally meeting millennial demands,’ said Marshal Cohen, chief industry analyst at research firm The NPD Group. ‘Retailers that transform the shopping experience to deliver a more personalised approach, whether online or in-store, will be better equipped to compete for this generation’s dollars.’
Fruit of the Looms answer: fruit to your door. Underwear enthusiasts (they also exist…) can order from a range of items and have them re-ordered every month at a 30% discount. ‘You might see a lot of mums doing this for their kids in college,’ Fruit of the loom spokesperson Bryse Yonts told Bloomberg.
This undie undertaking is the result of a deal with New-York based start up Ordergroove, which this year received $20m in its latest funding round. Ordergroove provides data and analysis for retailers on ‘frequency ambiguity’, how often a customer needs a product delivered. It monitors other factors such as shipping that bear on profitability, which it integrates into different channels that test and refine the consumer experience.
‘In the same way the future of driving is driverless cars, we think the future of shopping is frictionless forms of commerce,’ CEO Greg Alvo told Venturebeat. ‘In many cases, our customers need to be handheld through the transformation of how to talk to a consumer in a more ongoing relationship versus a purely transactional one.’
By frictionless forms of commerce, Alvo means the slightly creepy way that retailers are able to crunch data to find a precise way of anticipating consumer needs. Subscription models have become a fixture of the digital consumer experience with services like streaming and content, but tightie whities?
‘Think about the items and services that you buy (or at least consider buying) on a somewhat periodic basis already,’ says Wharton Marketing professor Peter Fader. ‘Even big-ticket items (such as cars and copy machines) can be treated as subscription relationships — with greater profits to the seller and more convenience/satisfaction for the buyer.’
You’ve probably heard of Harry’s razors, which posts razors to its customers doorsteps and in 2015 was valued at $750m. Amazon is also in the game, offering items that we generally purchase periodically such as detergent as part of its Dash loyalty arrangement.
Fruit of the Loom is not even the first underwear brand offer their drawers on demand. Meundies and panty drop are already offering similar services, which like Harry’s razors offer bespoke, premium items in previously unglamorous categories. Underwear has never been as cool as it is now.
Fruit of the Loom itself has moved into more premium wares and will look to cash in on its brand value with loyalty in a world where consumers are increasingly promiscuous.
When asked about how Fruit of the loom would handle the move online, Buffett told shareholders that ‘the world is changing, big time.’ Of corset is, Warren.
Image Credit: Nemo Bis/ Wikimedia Commons