Kate Hudson’s athletic apparel brand Fabletics is now worth over $250 million. Launched only three years ago, Hudson has gone from a high-profile movie star to an entrepreneur with an impressive understanding of business strategy as she continues to watch innovative yet risky moves pay off.
Hudson’s initial business model was simple. Consumers can purchase apparel items on the Fabletics website or opt to become a VIP member. As a VIP member, customers subscribe to receive a monthly outfit in the mail for only $49.95 per month. Outfits are picked out by the Fabletics website based on a survey that subscribers fill out regarding their clothing tastes and workout preferences.
The company quickly grew its number of VIP members partly due to Hudson’s enormous social media popularity acting as a marketing tool for the brand. Hudson’s Instagram page boasts millions of followers who look to the actress as both a wellness guru and a style icon.
When Hudson introduced a handful of brick-and-mortar stores last year, the business world took notice. Many consider physical stores to be almost obsolete thanks to online retail trends. However, Hudson introduced her physical stores as “reverse showrooms,” allowing customers to come in and try the clothes on for themselves before becoming VIP members.
The risky strategy paid off. Hudson plans to open several more physical stores both in the United States and internationally over the next three to five years.
One of the reasons that this “reverse showroom” technique has been such a success for Fabletics is because of the way that the physical stores integrate the website into the shopping experiences of the stores’ customers. For instance, when a shopper tries an item on, that item appears in the customer’s online shopping cart. Customers who have not yet subscribed to become VIP members on the Fabletics website are encouraged to do so by store workers.
Fabletics also stocks each store based on which online items sell the best in each region. If Fabletics shoppers in California favor sports bras over sweatshirts, Fabletics stores in California will reflect these trends to ensure that customers are able to touch and try on as many different sports bras as possible.
It’s safe to say that the success of Fabletics is the result of Hudson’s deep understanding of modern consumers. Fabletics appeals to a new breed of shoppers who are interested in the convenience of the subscription-based shopping model. Hudson also created the brand right before the peak of the “athleisure” trend, which refers to the integration of athletic apparel into everyday wear. Her keen understanding of trends combined with her sense of risk is what has brought the company into the success it has today.
With “athleisure” still on the rise and more brick-and-mortar stores to come, Fabletics has a bright future ahead. Many other apparel brands are sure to follow Hudson’s lead in the year to come.