You may have read about Kit and Ace closing all their stores outside of Canada and retrenching to focus on their Canadian and online businesses. Some may consider this just part of the macro story regarding store closures, poorly performing malls, Amazon dominance, consumers not preferring to shop in stores any longer yadda, yadda, yadda…
Do not be fooled – these closures have little (if anything) to do with external, negative economic forces. This has everything to do with a failed strategy, hubris and a blank check.
Don’t get me wrong…The product is outstanding…Shannon Wilson is a genius when it comes to fabrication, product design and what the consumer will wear based on her track record at driving Lululemon’s product for its glory growth years…The Kit and Ace stores I have been into are tucked into small, off-beat unique locations, just as Lululemon did at the start (remember Queen Street waaaayyyy West back in the day in Toronto?)…
The branding is first class and their store experience is acceptable, clean, bright and relatively friendly, if not a bit young and inexperienced. Their website is slick and shoppable and easy to navigate and understand.
So what happened? What prompted this seemingly rash decision? Chip Wilson has always had a mercurial streak to him. That is part of his secret formula I gather. Especially since departing Lululemon (a company he and Shannon founded) in controversial fashion, he has not been shy about egging on his successors on the board and in management as to what they are doing wrong and what they should be doing differently. He has taken to the airwaves and even bought billboards across from the home office in Vancouver with pointed messages to employees and shareholders. He is not shy.
He plowed a ton of money into this new concept because he could…upwards of over $40 million by all accounts. But when you are worth over $2 billion you can do these things. That is another aspect that makes this rash decision curious. It cannot be about cash flow or monthly burn rate as the upfront investment is usually the largest.
So what is it? What would really cause Chip to pull back on his investment so suddenly after already opening 61 stores in a hurry, hither and yon? For example, the newest store on Woodward Avenue in the soon to be hot area of a rejuvenated City of Detroit, had opened barely 10 months ago, but it was always understood to be a long term investment. What turned him so sour on anywhere but Canada?
Nobody knows for sure. With unique, well designed and proprietary product, small stores and a well capitalized backer, how could this fail so suddenly and brazenly?
Stay tuned, as there is much more to this story yet to be told. Just do me a favor, and do not tell it alongside the other retail failures, as it is a unique animal all on its own.