From the source: Sarah Timmerman, Beginning Boutique
Inside Retail Weekly: How did Beginning Boutique start?
Sarah Timmerman: It started after a trip to Paris. When I was 21, my parents offered me either a ticket to Paris or a party and I took the ticket. I went to [former luxury department store] Colette and I just had an incredible retail experience. At home, if your credit card wasn’t black or it looked like you didn’t you should be in that store, the service was terrible.
But when you walked into Colette, every staff member wanted to help you find products you didn’t know you even wanted. It was an incredible shopping experience. There were iPods on the wall before iPhones. They were so forward-thinking and there was nothing like that in Australia. I wanted to bring that to James Street in Brisbane – a mixture of fashion and cool products – but there were no shops available, so I had to go online. I basically started with designer product and I really wanted to support designers starting out, but unfortunately the GFC hit and people didn’t have the money to spend on clothes.
We started with designer product in 2008. Then we pivoted the product to stay afloat and constantly made iterations to what we were doing to find our growth and by constantly finding out who our customer is. We’ve just gone from there.
IRW: How did you move from designer to fast fashion?
ST: We had a pop-up near a TAFE in Southbank, and at the time our website platform was terrible. It was bespoke, it didn’t work and was absolutely ridiculous. It cost me so much money as well. I opened the pop-up to save enough money to get a website.
I worked all the hours and we didn’t have enough stock because designer stock is a three-month model. So if you’re going from online, making zero sales with three-month stock, you think, ‘Oh my God, I’ve got so much stock’.
And then you open a pop-up and you start selling stock… We didn’t have enough, so we had to fill from fast fashion. Filling from fast fashion, we had better margins, more choices, less risk because I don’t have to buy three months out. This model of designer fashion doesn’t work for anybody because the customer is always king. It doesn’t matter if I can’t sell that product – they can’t sell the product, they’re going to go out of business anyway and then we all lose.
It was really just an iteration over that period of three months that we were selling fast fashion. It felt so good to make sales and so nice to finally be able to sell a product that people want. That’s where the evolution came from.
IRW: How would you describe the Beginning Boutique customer?
ST: She’s 18 to 24, her friends are her family. She loves going out, she loves partying, she loves makeup. She’s figuring out who she is as well. It’s a difficult time when you’ve finished school, you’re going to university, you’re trying to find your first job and there’s so much pressure as well. So we’re just all about giving her a good time on the weekend and making sure her outfit makes her feel fabulous.
IRW: I know you believe profitability is something that’s highly underestimated, which is ridiculous. Can you elaborate on that?
ST: There is constant pressure for growth and growth isn’t cheap. Growth requires you to make bets you don’t know are going to pay off for sure. You hope all your bets pay off and there are obviously opportunities, but everything costs money and if you want to be profitable and growing, at some point, that growth will slow because you’ll stop taking as many chances because you’ve got more to lose.
It’s interesting that growth doesn’t equal profitability, yet as a business owner, you’re expected to hit both targets. It’s something that we’re constantly juggling and discussing in the office, because we have huge opportunity in the US but do we take our eye off Australia and potentially lose some profitability here to invest there? It’s a really difficult conversation.
IRW: Meanwhile, you’ve been doing some pop-ups too. How’s that going?
ST: We do occasional pop-ups, more like activations. We do Splendour, Coachella and different events. We don’t do a lot of pop-ups anymore – it’s an intense amount of work and we can’t be everywhere for customers, unfortunately.
IRW: Do you see bricks-and-mortar in the future for Beginning Boutique?
ST: No, I don’t but I’m not opposed to it. It just has to be the right deal at the right time and it would have to be more than a retail experience. It’d have to just be more – it couldn’t be just a shop.
We did do a pop-up in Westfield, which was a great offer for a pop-up. But I don’t think Westfield is being fair to its retailers. I feel for the people in Westfield permanently, because they’re not getting foot traffic through the door and that’s [Westfield’s] primary responsibility. If you’re going to run a shopping centre and you’re going to charge retailers that kind of money, you need to make sure each and every retailer in there can make money.
Why would I spend $150,000+ on a lease when I could spend that on marketing or anything else and service my customer just as well? It’s nuts.
IRW: Nasty Gal is one of your heroes. What is it about [founder] Sophia Amoruso that you admire?
ST: I love that she was out doing it on her own. I was really inspired by the level of detail she went to. When Sophia was running the business, before things started getting a bit loose, the level of detail on every piece of styling and buying – it was such a well-run ship. I really admired that and I felt like she set the standard for lookbooks and fast fashion and the fact you can produce a Vogue-level editorial on a much smaller budget and a much faster timeframe that was just for retail.
IRW: Beginning Boutique is in fast fashion but you’re trying to sell long-lasting products at the same time. Tell me about that.
ST: We’d never produce something knowing it will fall apart. If we have any indication that a product is faulty or not up for wear, we’ll pull it from sales. Sometimes that happens without us knowing, and with customer feedback, we know we have to get rid of it. We had an amazing dress we produced that everybody wanted and still want, but the fabric was faulty so we can’t do it again. It might be a dress we can sell easily, but if our customer isn’t having a best experience, it’s not worth it.
If there’s a product that is constantly coming back from returns or a staff member has purchased a product and there’s an issue, it’s a feedback loop and on social media, everyone loves a chat. We can pick up quite quickly what is going wrong.
IRW: Where do your clothes come from and how do they get made?
ST: We don’t have a huge designer brand mix, but we do have two internal fashion designers. We also source from Australian people doing the same thing, like fast-fashion suppliers. But we do have five main factories we work with in China and they produce the bulk of our exclusive product.
IRW: Fast fashion has copped a lot of flak around sustainability lately. What are your thoughts on that?
ST: We’re currently doing an environmental sustainability plan. It’s simple – we want all our factories to be ethically certified by the end of this year. From what I’ve seen and al the interactions I’ve had with factories, they’ve been ethical, but we’d like certification in place. We’d like to work towards better fabrication. All our consumables in the office, we aim to use recyclable products, like Thank You or Who Gives a Crap. There are so many simple things you can do internally. As a business, you have a lot more rubbish than a home. We’re trying to cut down on waste in our packaging and making it biodegradable.
I thought what [Flora & Fauna founder] Julie Mathers brought up at Shopify+ was really interesting – it’s also about treating your staff ethically as well, so making sure they’re happy and healthy… but I’m not going to give them free meals. It’s not because I don’t love them, it’s because at the end of the day, would they rather a pay rise or their food paid for?
IRW: Obviously you launched Beginning Boutique before fast fashion became so big and overseas players came to Australia. Are those international brands competition for the business?
ST: I feel like H&M and Zara aren’t even a problem at all. I think the difficult thing for us is competing with businesses like Boohoo, Pretty Little Thing, Missguided and Fashionova. It’s so cheap – and I think people are starting to think that, too. Those brands are harder for us than H&M because unfortunately, it’s become slow with its growth. You need to stay quick and customer-focused – if you take your eye off the customer even for a month, you’ve got issues.
IRW: What future plans do you have for the business?
ST: Other than the sustainability project that we’re running, we definitely want to double down on our product strategy, making sure we’ve got the right thing at the right time. Figuring out what technology partners we need for the long term. That’s really difficult. Everyone thinks they have a solution but they don’t, but there is no one servicing the e-commerce fast-fashion industry well. That’s going to be an interesting challenge we look forward to taking on.
Not that we’re going to take our focus off Australia, but we’ll be applying some time to the US to give it an opportunity to grow even further. We’ll be increasing our marketing and PR over there as well as hosting some events.
And of course, training and mentoring staff. Last year, we had exceptional growth and now we have to train and mentor staff we have to be staff we need in a few months’ need.
We have about 35 staff and we definitely try to keep things right. I’ve always been a fan of having less people and paying them more, as opposed to having lots of people. And throwing people at a problem doesn’t fix a problem, either. It’s about keeping it tight and growing sustainably.
IRW: A major issue for a lot of online retailers is logistics and delivery. Where are you guys at with that?
ST: We work with Australia Post really effectively, but in terms of warehousing – you can’t outsource that. It’s the main part of our business. Every promise is based on that warehouse. If you don’t have a strong warehouse, you don’t have a strong online store. We nailed that last year and I feel comfortable with where we’re at. I’m really excited. Last year, we implemented warehouse management software – a cost-effective, highly efficient software that took us 12 weeks to roll out and it allowed us to really streamline everything.
IRW: What are some of the challenges in your industry right now?
ST: Definitely the changing landscape of marketing, with the huge changes in influencer marketing and still getting a return on investment. It is a challenge that’s coming.
We love influencer marketing and working with our partners there and trying to find partners that love our product. There’s nothing worse than having someone who doesn’t want to be in your clothes and paying them to work for you. I think the world would be a better place if it was more genuine. If it means if someone has to offend us by saying, ‘I don’t like your clothes’, I’d rather know.
Last year, [influencer marketing] was incredibly underpriced. In terms of this year, the pricing model has gone up dramatically, and I think that will stop at some point. You can’t keep charging more and more for the same thing – it becomes not profitable for one side – and that will be interesting to see what happens this year.
Another challenge is the competition from Boohoo, Pretty Little Thing and so on… I don’t want to be someone selling a $20 dress – it doesn’t feel right at all. So for me, it’s about being true to brand, and I think that’s expensive and it takes a lot of thought.
IRW: What’s it like working with Gen Y and Gen Z customers?
ST: It’s a great customer base because they’re flexible and they change and they love what they love and hate what they hate. It’s really exciting to be a part of that market. It’s great fun, because I don’t ever have to think about what would Kmart do? You can reinvent the rules and they love that. It’s really fun serving that customer.