Industry Chronicle

Velveteen’s Growth Into Retail is Real

Velveteen boys 2

Laura Egloff’s love for her brand Velveteen is making her foray into retail a real option with new ideas.

By Marianne M. Madge

Laura Egloff from VelveteenEsthetics and experience. Those two concepts offer a summation of designer and entrepreneur Laura Egloff’s pursuits, vision, and success. The southern California-born business maven founded children’s clothing brand Velveteen in 2013, and with a combination of market intuition and adventurous decision-making is concurrently establishing a viable e-commerce business and an engaging retail concept.

“As a small brand in particular, our main role is to produce and promote beautiful quality clothing — if we’re not selling that clothing we don’t exist,” says Egloff, who opened Velveteen’s first store in February 2018 in the renowned retail destination Lee Garden Two in Hong Kong, the city in which she resides with her husband and two young children. Retail, she continues, is “my touch point with our end consumer. I talk with them, it’s more tangible. They’re buying into a universe I’ve been able to create. There’s an equal focus on both (brand and retail).”

That focus has Egloff devoting 2019 to expanding both the brand’s offering and the retail business. After experimenting with a selection of boy’s merchandise last year, Velveteen will introduce a complete and comprehensive boys line this season to complement the girl’s line, which will likewise broaden. Perceiving a void in a boys market presenting little selection other than “sports” wear or “tuxedos,” Egloff determined to create a boys offering that “allows them to dress like their Dads.” The offering in 2019 will likewise expand to include more knitwear, she adds.

 

Products for both boys and girls include merchandise for a “baby” sector — three months to 24 months — and the children’s collection for ages three years to 14 years. Retail price points range from entry level summer items at approximately $40 to $150, with average price points ranging from $100 to $115; winter apparel price points are higher, reaching $200. Accessory items average $20. “Ceremony items” such as a “silk party dress” are higher, Egloff says, while noting that price points remain “globally consistent.”

Those product lines will be featured in Egloff’s wholesale brand offering and in the company’s two new brick and mortar stores scheduled to open this year — the first next month in London’s Notting Hill, followed by a second Hong Kong store scheduled for August in the K11 mall, an inventive destination concept converging art and retail shopping — one replete with a baby stroller lending service.

Velveteen currently has product in an estimated 150 retail stores in 22 markets, with the U.S. the strongest market, followed by the Middle East. Egloff hopes to strengthen the brand’s presence in Europe — e-commerce is selling into Germany and France, she says — and is forecasting growth in the United Kingdom with the opening of the London store and her own understanding of the market from a six-year professional tenure in that capital city.

When Velveteen launched nearly six years ago, the foray into retail was unanticipated, Egloff explains. “The initial strategy was for distribution as a wholesale company in the U.S. and Europe and ecommerce,” says Egloff, whose background in women’s wear led to her first international post in London. “The business created a brand and a website. Retail (is) s a very different business. Fundamentally, it helped me design better. When I design a collection, it’s not just creative, it’s commercial: What do I need in the store and when? It’s amazing to watch these two channels and the end consumer. It is a big game changer.”

Egloff is changing the retail game as well in her boutique-styled stores, offering a cafe bar for parents in the new 1,050 square foot London store and designated areas for arts and crafts for children in all venues, both concepts traditionally considered a “no no,” she offers, within conventional retail wisdom.

“A workshop table takes space, retail space,” says Egloff, whose 540-square-foot Hong Kong store hosts crafts workshops every Saturday and also offers a “dedicated Montessori tutor.” The store includes a “Selfie wall,” photographs of the young customers, as well as a “gallery wall” on which, if children “approve,” they may display their artwork. The workshop space will likewise be part of the new 750 square-foot Hong Kong store. This retail philosophy creates an “experience” and fosters “relationships,” says Egloff, “it’s not just about selling.”

Yet that customer experience and those client relationships are indeed facilitating sales. Company revenues are currently estimated at $1 million, 85 percent of which derives from wholesale, Egloff explains, while the remaining 15 percent is split between the Hong Kong flagship store and e-commerce. With an expanded product offering and two new retail stores sales could double within the next twelve to twenty-four months, with wholesale then accounting for an estimated 70 percent of revenues with 30 percent “direct” to consumers, the latter equally split between e-commerce and the brick and mortar stores. The strategy on the new stores, Egloff says, is simply to strive to initially cover costs, with forecasts then potentially up to five times that amount; often revenues arrive somewhere between the two, she adds.

The workshop experience, however, is about more than engendering lasting customer relationships. Arts and crafts in a Velveteen store utilize fabric “scraps” and other recyclables for children to create everything from dresses for their dolls to Christmas ornaments. Not only are children “making something beautiful,” Egloff conveys, the programs align with her efforts of sustainability. With her own children ages 8 and 6, sustainability is something Egloff considers as part of a business mantra, even to the point of assessing returned merchandise as part of that effort.

“One of my biggest issues with e-tailers is the free returns,” explains Egloff. “The environmental impact is a lot of carbon footprints — that aspect I’d love to tackle. The return rates on e-commerce are substantially higher than anything in a brick and mortar store. Anyone offering free returns has a return rate of 20 percent to 30 percent,” she continues, explaining that free returns encourage consumers to order multiple sizes of an item knowing those that do not fit may be returned for free. “Someone pays,” she adds, noting e-commerce return rates may in part be diminished by brand owners “knowing” their brand and offering personal customer service. “We try to give the best, most personal customer service,” Egloff adds. She would know; Egloff is the one fielding customer service queries. “It comes to me,” she says, “rather than a student intern.” Velveteen’s return rate averages 10 percent.

“At this point our e-commerce does well, and there is so much more potential,” says Egloff. Toward that end, Egloff has added two team members dedicated for the electronic facets of the business, including a marketing manager to organize all digital marketing across social media, part of an expanding staff that has grown from Egloff and two assistants in 2017 to a global team of 25. “The brick and mortar, e-commerce and wholesale customer are cross-functional” from a business effort, she explains. As one of the few design studios in Hong Kong, Egloff maintains that her staff, hailing from 13 different countries, enhances the creative inspiration of Velveteen.

Egloff’s own creative esthetic is decidedly Eastern, one inspired in India, a country she has been visiting for ten years. With a designer friend based in Delhi, Egloff began traveling to India three years before she launched Velveteen, and was transfixed by “how integral color and aesthetics and music are within their daily life.” The country’s “woven natural fibers and embroidery detailing and beautiful techniques” are a reason 85 percent of Velveteen is sourced in India. Festivals such as “Holi,” India’s festival of love and colors, have been part of Egloff’s “scariest,” “hysterical” and “inspiring” moments in India. “It can be chaotic,” she explains of her visit during Holi. “Many people stay at home and don’t go out.” Never one to miss an opportunity, Egloff ventured into a “lace and trim” market with her friend during the festival, only to be showered with water by playful eight-year old boys who had spotted the foreigners.

In some respects Egloff has been a “foreigner” since she first departed southern California, yet that foreign influence of London, Hong Kong, and India continues to inspire Velveteen’s design, Website, e-commerce, and new retail ventures.

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