Lauren James downsizes, rethinks distribution model

Lance Stokes does not subscribe to the so-called “retail apocalypse” theory. He does, however, believe strongly in the evolution of retail, which is why Fayetteville apparel company Lauren James Enterprises is in the midst of a significant restructuring of its business. Specifically, how it distributes its products.

Stokes, who founded the women’s lifestyle brand in 2013 with his wife Lauren, says the retailer closed its Fayetteville store on Dickson Street on May 1, and has outsourced its distribution to New Jersey-based Dotcom Distribution, a company that fulfills and ships orders for e-commerce companies, primarily in the apparel and beauty/health space.

The partnership with Dotcom is in a transition phase and should be finalized by the end of June. The result is Lauren James has also closed its 60,000-square-foot warehouse and shipping facility in south Fayetteville, primarily used for distribution, and reduced its workforce of 100 employees by nearly half. Stokes said about 90% of the employees affected by the downsizing were working part time on fulfillment and shipping orders in the warehouse.

Lauren James is consolidating all its administrative, creative, marketing and design studio functions into a 4,000-square-foot office just off the downtown square in Fayetteville. The downsizing will allow the company to grow smarter in the future, Stokes said.

“Lauren James is good at sales, creative, marketing and design, and those are the jobs we want to bring on in the future,” he said. “We want to bring on high-paying jobs in those specific areas. We’ve recently hired our own software engineer, our own UX/UI designer. We are investing heavily on the back end in technical jobs. We’d like to continue to hire in that space in the next 12 to 18 months.”

Stokes said the company will eventually get down to around 25 full-time employees in Fayetteville before beginning to ramp back up again toward 50 workers. The company also has about 15 part-time employees in Texas at the company’s two stores in Plano and Southlake.

‘WE’RE NOT AMAZON’
Lauren James — named after Lauren and part of the couple’s first son’s name, which is Lofton James — is known mainly for its T-shirts, dresses and swimwear. The company was recognized this past August by New York-based Inc. magazine as the fastest-growing company in Arkansas and one of the fastest-growing companies in the U.S.
Lauren James had revenue of $13.2 million in 2016, according to Inc., a three-year increase of 6,010%.

Stokes declined to give a company revenue figure for 2017, but said so far this year online revenue growth is up 90% compared with last year. Revenue from the company’s wholesale business is about the same this year as last year, he said.

Stokes said as he examined the trends, investing in the company’s e-commerce business has taken priority over the wholesale business. The amount of clothing being purchased online is growing rapidly. According to Statista, one of the leading research firms on internet activity, U.S. revenue generated by online apparel and accessories retail sales is expected to hit $123.4 billion in 2022. The total in 2017 was $80.9 billion. In order to keep pace with that type of consumer trend, Stokes said Lauren James’ current method of distribution wasn’t viable.

“We’re not Amazon,” Stokes said. “If we have a big sale, say 20,000 or 25,000 online orders come in in one day, it takes two or three weeks to dig out of that hole, and people are calling us the day of their order asking where it is. As e-commerce gets more relevant and we continue to talk to our customers directly, they want the shipping component we obviously can’t achieve ourselves.”

The fulfillment partnership with Dotcom will allow the team at Lauren James to focus on new product development, its customers, marketing and expansion into online and traditional retail channels, said Robert Coon, Dotcom’s vice president of sales and marketing.

“Dotcom executes on operations to ensure the Lauren James customer experience is delivered, without constraints, in every channel as the brand continues to explore options and grow rapidly,” Coon said.

Stokes said warehouse distribution and shipping times are problems the company has been trying to solve for some time.

“We invested in software and all those things, but ultimately our growth outpaced our capability on the distribution side,” he said. “It wasn’t for lack of effort. We did our best, but ultimately partnering with a group whose whole business is shipping is the best way to go about it.

“On large orders, now it doesn’t take us two weeks. It’ll take two days,” Stokes added. “It’s all about pleasing the customer. You have to [think] customer-first, which is what this move is all about. When we’re getting yelled at because we haven’t shipped an order for two weeks because we’re so backlogged, that isn’t a great customer experience. It’s been a problem for about two years.”

In total, Dotcom has approximately 100 full-time office and management team members and 400 associates working in its facility each day, Coon said. During peak seasons, the number of associates can double to 800 associates or more.

Dotcom processed more than 5.3 million orders in 2017, and is on track to process over 6 million orders for its clients this year. The company partners with about 25 brands across the U.S. and internationally, but Lauren James is the first in Arkansas.

“The [Lauren James] brand epitomizes everything Dotcom looks for in a new partnership,” Coon said. “That is, Lauren James is a strong, established lifestyle brand that is supported by a loyal customer base and proven management team.  With a clear division of duties between the two companies, there is no limit to what the brand will achieve over the coming years.”

MOVING FORWARD
Stokes said the company is focused on growing its e-commerce business, but he is also excited about the growth of its wholesale partnerships. Lauren James products are carried in about 80 Dillard’s stores in the U.S., “and we plan on expanding our relationship with them,” he said.

The retailer has also doubled its licensing business every year since 2015, mostly with a collegiate line of clothing, through partnerships that include Barnes & Noble and Fanatics.com, and those relationships will be extended as well.

Stokes said moving forward, the retailers and brands who will succeed are the ones that figure out the right mix between brick-and-mortar and e-commerce. He says it’s still important to have a physical presence, if it’s done strategically.

“We’ve tested with two Texas stores and will continue to test with pop-up stores and temporary spaces and collaborations with other brands,” he said. “Opportunities like that are what we are looking for.”

Lauren James has one of its popular Pink Friday sales coming up — it’s the retailer’s largest sale event each year — and Stokes said the company will use the occasion as a celebration of the business’ next chapter.

Five years ago when Lauren James was born, the company’s primary customer demographic was ages 18 to 24.  Stokes said that’s now shifted to customers ages 25 to 35, indicating the retailer’s core customers are growing with the business. As a result, Stokes said new products this fall will be a little older and little more refined.

“It’s almost like a rebrand,” he said. “We’re getting more sophisticated, a little bit older and we want to grow with the customer that’s been with us for the past five years. We’re really excited about the future of what we’re doing.”