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9B20A002

Karen Robson and Adam Mills wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com. Our goal is to publish materials of the highest quality; submit any errata to [email protected]. i1v2e5y5pubs Copyright © 2020, Ivey Business School Foundation

Version: 2020-01-16

M.M.LaFleur, a clothing company based in New York, specialized in office wear for professional women. Specifically, M.M.LaFleur targeted a difficult-to-serve group—working women who didn’t like shopping. Despite the challenging customer base, the company grew steadily since inception. By June 2019, six years after the company was founded, M.M.LaFleur had grown from a small start-up company into a thriving business with a loyal customer base. The company’s results were easy to be impressed with, but what could M.M.LaFleur do to continue its strong growth and momentum? M.M.LAFLEUR

Sarah LaFleur founded M.M.LaFleur in 2013. Her goal was to rethink the process of professional women shopping for work clothes. Her company’s mission was to take the work out of dressing for work.2 LaFleur recruited Mikako Nakamura, a designer who had experience working with major fashion labels such as Zac Posen, to lead the creation of the M.M.LaFleur collection. Shortly thereafter, LaFleur recruited Narie Foster to serve as chief operations officer. She explained her decision to bring Foster on board: Narie came on a week before our first trunk show because at that point I felt that I didn’t have enough time in the day. Because we had worked together before at Bain consulting, I knew that Narie could do everything that I could do and vice versa so we could basically replicate each other.3 LaFleur, Nakamura, and Foster formed the company’s leadership and remained M.M.LaFleur’s management team from that time on. The three women described their company as a styling service for professional women.4 THE M.M.LAFLEUR CUSTOMER

I am so sick of the stereotype that all women are shopping-obsessed.5 Sarah LaFleur

Authorized for use only in the course Marketing Strategy at University of Guelph taught by Lin, Y from Sep 28, 2020 to Dec 19, 2020. Use outside these parameters is a copyright violation.

M.M.LAFLEUR: MARKET SEGMENTATION AND TARGETING 1

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Our customer is too busy to shop. A typical e-commerce website is overwhelming to her. She comes home after a long day of decision-making at work, and the last thing she wants to do after putting the kids to bed is think about whether she’s a size 8 or a size 10, or whether gray will look better on her than brown. She wants to outsource that decisionmaking to someone else.7 With this premise, M.M.LaFleur catered to busy, professional women who simply didn’t have the time or interest in shopping for work clothing. This focus led to a customer base that was primarily between the ages of 30 and 558 and who earned between US$100,0009 and $250,000 per year. 10 When M.M.LaFleur first began operating, its customers largely consisted of women employed in finance or in law. Over the years, the company’s customer base expanded to include women working in more fields, including creative and technology workplaces.11 These customers were highly loyal; 70 per cent of M.M.LaFleur customers were repeat purchasers.12 In 2017, to reach its target market of busy, professional women, the company launched an outdoor advertising campaign in some major US cities. M.M.LaFleur started advertising on billboards, signs, and posters along bus, subway, and other busy commuter routes in Boston, New York, and Chicago.13 M.M.LaFleur’s vice president of brand marketing, Jen Braunschweiger, explained the decision: We’re a fashion company that designs clothes for professional working women who are busy and overcommitted. We’re interested in meeting her with our brand message wherever she is. One place we can communicate with her is on her commute.14 Additional promotion of M.M.LaFleur included the online publication of the digital magazine The M Dash, which portrayed modern, purposeful women.15 The company also had a social media presence on Instagram, Twitter, Pinterest, Facebook, and LinkedIn accounts. THE M.M.LAFLEUR COLLECTION

As the head of design, Nakamura led the M.M.LaFleur design team in creating and improving the collection. She approached the M.M.LaFleur clothing line with an eye to the unique needs of the company’s customers. For example, the brand provided clothing for women who likely worked long hours and had to travel for work. Therefore, the fabrics were sourced from Japan and Italy,16 and carefully checked for several relevant qualities. They needed to be wrinkle-resistant and breathable fabrics that would inhibit sweat, retain their shape, and hide undergarments. They also need to allow laundering using a washing machine, rather than requiring dry cleaning.17 The design of the garments also took the unique needs of customers into consideration. For example, many garments had snaps to hold bra straps in place, underarm pads to absorb sweat, or pant legs with hidden buttons that allowed the pants to be easily adjusted to different lengths.18 Garments were also tested for a range of activities that M.M.LaFleur customers normally engaged in throughout the working day. The clothes needed to allow the women to easily lean or bend, raise arms, and enter and exit taxis without unwittingly exposing body parts.19

Authorized for use only in the course Marketing Strategy at University of Guelph taught by Lin, Y from Sep 28, 2020 to Dec 19, 2020. Use outside these parameters is a copyright violation.

Before founding M.M.LaFleur, LaFleur herself experienced the desire to have a sharp, work-appropriate wardrobe, but found that she had no interest in spending her limited free time shopping.6 Recognizing that she was not the only woman who felt this way, she decided to try to provide clothing to professional women who, like her, did not have an interest in shopping. She explained how her customers felt:

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After the fabric and design were determined, the garments were produced in a variety of locations. Roughly 40 per cent of the garments were produced in factories in New York and New Jersey. All other garments were produced in overseas factories, including in Italy, China, and Vietnam. The factories were chosen based on their experience and ethical standards.22 The decision to produce garments in local or international locations was based on demand. Initially, local family-run factories would be selected for production of the garments. If demand increased substantially for a particular garment and the US factories could not deliver the required products on time, production was moved to a location abroad that could accommodate large scale production.23 Garments in the M.M.LaFleur collection ranged from $30–$50 for smaller items to $100–$300 for a dress and up to $500 for outerwear.24 Many garments in the M.M.LaFleur collection were extremely popular. For example, the Etsuko dress was first introduced to the collection in 2014 and was priced at $195. By 2017, the Etsuko dress was available in 21 colours, had been restocked more than 20 times, and had generated more than $3 million in revenues.25 The Etsuko dress in black alone was responsible for more than $1 million in revenues. Nakamura provided some reasons for the dress’s success: When we designed this dress, we took into account all the things that our customers asked for: machine-washable fabric, long sleeves, wrinkle resistance, pockets, and lots of stretch and comfort. It also comes with a thin leather belt, so you don’t have to worry too much about styling this dress. You just put it on and go.26 Other popular M.M.LaFleur dress styles included the Tory and the Casey, both of which had wait-lists extending to more than 1,000 customers.27 SHOPPING AT M.M.LAFLEUR

The concept of personal styling for women with better things to do than shop, has found a following: Sales are 50 times what they were five years ago.28 Sarah LaFleur M.M.LaFleur had both e-commerce and retail operations. Shoppers could purchase M.M.LaFleur offerings online by requesting what the company referred to as a “bento box,” or by purchasing pieces à la carte from the M.M.LaFleur collection. Customers could also visit retail outlets, including showrooms or pop-up stores, to select their preferred garments. E-Commerce

Customers could view, select, and purchase individual items directly from the company’s website, or they could take advantage of the company’s custom catered service—the bento box, inspired by the popular Japanese food service. To prepare a bento box for the customer, M.M.LaFleur would personally curate an assortment of garments and accessories and send it to the customer. When the bento box of garments arrived,

Authorized for use only in the course Marketing Strategy at University of Guelph taught by Lin, Y from Sep 28, 2020 to Dec 19, 2020. Use outside these parameters is a copyright violation.

Another important factor was clothing size. Most women’s wear manufacturers seemed to develop their clothing styles based on a size 2 model, and only scaled the garment up for larger sizes. Nakamura, instead, started the design based on a wide range of model sizes. According to Nakamura, her clothes were designed to be worn by “three-dimensional beings with hips, shoulders, butts, and boobs of varying sizes.”20 Ultimately, the M.M.LaFleur collection was designed for sizes 0 to 22W.21

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To determine which items were curated for any particular bento box, the customer would complete a brief questionnaire. The survey was intentionally short and easy to complete. It asked the customer some practical questions about the workplace dress code, the customer’s size and body shape, famous women whose style the customer admired, and the type of clothing or accessories the customer was interested in receiving. “We actually know our clothes best,” LaFleur said. “If the customer shares a few details about herself, we think we can identify what will best work for her.”30 A personal stylist would then select a few pieces from the M.M.LaFleur collection and carefully arrange them in different compartments and layers within the bento box, in the same manner that Japanese food is arranged for a dining customer. This concept helped ensure that the clothes arrived unwrinkled, with garments packed in reusable, zippered plastic bags. Customers could then repurpose these bags to transport their gym clothes or to compartmentalize items in suitcases for travel.31 The bento box service was not set up as a subscription service. Rather, it was simply a way for women to try on clothing or accessories before deciding if they wanted to purchase them. The M.M.Lafleur bento box idea proved extremely successful for the company. By 2017, the service accounted for 80 per cent of the company’s new sales, and 40 per cent of customers placed an order for a second bento box within 12 weeks of their first purchase.32

Retail Outlets

Retail options for purchasing M.M.LaFleur offerings included trunk shows, showrooms, and pop-up stores. Trunk shows were short-term events in which sellers showcased their merchandise to customers in small venues, such as small sections of department stores, hotel rooms, or other suitable areas. In its early days, M.M.LaFleur hosted many trunk shows out of hotel rooms and other venues, including one show at the New York apartment of a friend of LaFleur’s. Customers would not take home the clothes they purchased at a trunk shows, they would instead try on some items and order those they liked, which would later be sent to them.33 Showrooms were typically held in larger spaces than trunk shows, and included samples of a wider range of garments. M.M.LaFleur began using local spaces around New York as temporary display areas or permanent garment showrooms.34 By 2019, the company had set up permanent (or long-term) showrooms in New York, Boston, Philadelphia, Houston, Atlanta, San Francisco, Chicago, and Washington, DC.35 Similar to its trunk shows, M.M.LaFleur’s showrooms carried only samples of garments, which were intended only for customers to try on. After choosing to order merchandise through a sales associate in the showroom or by visiting the company website to place an order online, the garments would be sent to the customer. Although anyone was welcome to visit an M.M.LaFleur showroom, the company encouraged customers to make an appointment for a more personal experience. With a showroom appointment, customers were offered complimentary glasses of Prosecco (with refills) and a one-hour session with a personal stylist, who would pre-select several styles for the customer to try on during the appointment.36 The experience was highly effective in generating sales. Women who booked appointments at showrooms often spent up to three times more than online shoppers.37

Authorized for use only in the course Marketing Strategy at University of Guelph taught by Lin, Y from Sep 28, 2020 to Dec 19, 2020. Use outside these parameters is a copyright violation.

the customer could try on each item, decide which to keep, and send the rest back. Shipping was free both ways. Prices for the four to six items in the box ranged from $35 for accessories to $325 for a dress.29

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M.M.LAFLEUR IN 2019 AND BEYOND

We want to be the biggest workwear brand out there.39 Sarah LaFleur Company revenues continued to grow each year. In 2013, the company earned approximately $30 million in annual revenue;40 by 2017, that figure had increased to more than $70 million.41 LaFleur had ambitious goals for her company: “As a company, our goals continue to be to expand to new product areas . . . as well as move into new markets and territories throughout the US to reach even more women.”42 In her quest to grow the business, however, LaFleur needed to decide on the specific next steps for the company. One option for growth was serving new markets. The brand could grow by serving customers in new geographical locations. Although the brand began by serving women located in major cities in the eastern United States, demand was growing in other areas as well. For example, 2019 saw the fastest growth in cities such as Denver and Minneapolis. LaFleur explained that different styles were popular in different geographical areas: “Many of the workwear brands like J.Crew and Hugo Boss compete within the bicoastal cities, but they’re not as big a presence in cities in the middle of the country. . . . We’re coming back to Minneapolis, Dallas and Denver to test for month-long pop-ups.”43 Beyond the United States, M.M.LaFleur could also consider international expansion, especially into neighbouring Canada. In regard to any geographical expansion, the company needed to consider how to approach the new market. For example, was it best to open additional showrooms and pop-up stores, or should the company consider adopting a wholesale approach to the business and sell its clothes through department stores? The M.M.LaFleur collection could be successful in upscale department stores such as Nordstrom or Barneys, both of which seemed suitable partners for the company. Another option for growth was to offer new products or services. Although M.M.LaFleur had achieved great success by focusing on women’s workwear, the brand could grow well beyond that market segment to include women’s casual wear, formal wear, and undergarments, among others options. Going further, M.M.LaFleur could consider developing completely different products and serving new markets. For example, the collection could expand to provide workwear for men, in addition to workwear for women, and possibly expand even beyond this segment. NEXT STEPS

In its short history, M.M.LaFleur had achieved great success. Sales had grown each year, and customers were highly loyal to the brand. Moving forward, how should the company proceed to ensure the growth of its customer base?

Authorized for use only in the course Marketing Strategy at University of Guelph taught by Lin, Y from Sep 28, 2020 to Dec 19, 2020. Use outside these parameters is a copyright violation.

M.M.LaFleur also occasionally opened pop-up stores. Pop-up stores were an increasingly popular phenomenon, in which a retail outlet would “pop up” in an available space around the city for a brief time, as little as one day or as long as several weeks. In 2019, M.M.LaFleur held pop-up store events in various stores across the United States, including Palo Alto, Phoenix, Minneapolis, and Los Angeles.38

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1 This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives presented in this case are not necessarily those of M.M.Lafleur or any of its employees. 2 Julie Sygiel, “MM.LaFleur’s Cofounders Share Their Secrets to a Successful Business Relationship,” Forbes, September 28, 2016, accessed May 10, 2019, www.forbes.com/sites/juliesygiel/2016/09/28/mm-lafleurs-cofounders-on-the-keys-to-successful-cofounderrelationships/#221fbb5b2166. 3 Ibid. 4 Ibid. 5 Elizabeth Segran, “This Women’s Clothing Brand Is Made for Professional Women Who Hate to Shop,” Fast Company, March 31, 2016, accessed May 10, 2019, www.fastcompany.com/3058412/this-womens-clothing-brand-is-made-for-professional-women-who-hate-to-shop. 6 Ibid. 7 Sarah LaFleur, “7 Lessons I Learned While Building a Fashion Company,” M Dash, October 19, 2017, accessed May 10, 2019, https://mmlafleur.com/mdash/sarah-lafleur-interview-building-a-fashion-company. 8 Sarah Halzack, “MM.LaFleur: The Startup That Wants to Dress You for the Office,” Washington Post, March 24, 2017, accessed May 10, 2019, www.washingtonpost.com/business/mmlafleur-the-startup-that-wants-to-dress-you-for-the-office/ 2017/ 03/24/ 86fb 8af8- 0dd6-11e7-9d5a-a83e627dc120_story.html?noredirect=on&utm_term=.78d8ac3817bd. 9 All currency amounts are in US$. 10 Segran, op. cit. 11 Adrianne Pasquarelli, “Must-Have Dress Boosts Sales 550% at This SoHo Startup,” Crain’s New York Business, November 23, 2015, accessed May 10, 2019, www.crainsnewyork.com/article/20151124/RETAIL_APPAREL/151129960/sara-lafleur-swomenswear-label-mm-lafleur-is-helping-to-style-those-too-busy-to-style-themselves. 12 Maria Leighton, “This New Women’s Clothing Brand Takes All the Guesswork out of Shopping for Work,” Business Insider, June 11, 2018, accessed May 10, 2019, www.businessinsider.com/mm-lafleur-bento-box-womens-work-clothes-review-2017-4. 13 Zac Stambor, “Why MM.LaFleur Embraces Outdoor Advertising,” Digital Commerce, October 15, 2018, accessed May 10, 2019, www.digitalcommerce360.com/2018/10/15/why-mm-lafleur-embraces-outdoor-advertising. 14 Ibid. 15 “About The M Dash,” M Dash, accessed June 19, 2019, https://mmlafleur.com/mdash/about. 16 M.M.LaFleur, “Contact and FAQ,” accessed May 10, 2019, https://mmlafleur.com/help. 17 Charlotte Cowles, “The M.M.LaFleur Design Philosophy: How We’re Revolutionizing Workwear,” M Dash, July 26, 2016, accessed May 10, 2019, https://mmlafleur.com/mdash/mm-lafleur-design-philosophy-miyako-nakamura. 18 Lindsay Blakely, “How This $70 Million Startup Transformed the Way Women Shop for Work,” Inc., June 2017, accessed May 10, 2019, www.inc.com/magazine/20...