From the source: Zoltan Csaki, Citizen Wolf
Inside Retail Weekly: Tell me about Citizen Wolf – what’s your business model?
Zoltan Csaki: Citizen Wolf combines algorithms and on-demand manufacturing to create the future of fashion today. It’s completely custom in terms of fit; every garment is made for your body. It’s the most planet-friendly way of making clothes; it’s truly sustainable and ethical. Because we make everything here in Australia, it’s very easy for us to control at least tier one of our supply chain – because, you know, it’s our company.
IRW: What was the last financial year like for your business?
ZC: It’s been a pretty wild ride. We’ve been in business for about three and a half years now, but the first 18 months we were really making a minimum viable product. We still were trying to figure out what we were doing and how we were doing it – it was less about the why. We hand-measured about 1500 people, and then we hand-cut their T-shirts. And when I say we, I mean me, and my background is not fashion, so it was a steep learning curve. We did that very consciously knowing that we weren’t going to do it forever and that it wouldn’t scale, but we needed to understand all of parameters around bodies and T-shirts.
About 18 months ago, we turned on the algorithm to what we call Magic Fit. Now, in order to do a fully tailored garment, all we need is height, weight, age and bra size, and with those data points, we can create a mathematical model of your body that’s 94 per cent accurate. From that estimate, we create a custom pattern which is then cut by laser and sewn here in the factory. In February, we moved to this new factory here in St Peters [in Sydney’s inner west].
IRW: Where were you located before?
ZC: We started in Fishburners, and basically we blagged our way in because it’s for tech startups. We knew we were going to be a tech startup, but in those first 18 months, it was highly manual. We basically got kicked out because we were buying fabric and cutting it up after hours, and they said you’re supposed to be making an app or something.
But it was the best thing that could have happened at that point. We ended up finding this little studio office in Surry Hills with a one-car garage that couldn’t be rented out. The landlord said, ‘Look, I can’t charge you for the garage, but you can have it’. And that’s how we opened our very first shop…knowing nothing about retail.
The last year has been pretty wild, as I said; we opened the new factory, and the algorithms have gone from strength to strength in terms of sheer volume. Our volume now is probably triple what it was a year ago, which is really exciting. We started advertising on Facebook, which is great because we’re a direct-to-consumer brand, and for the longest time, that meant we would drag people into our shop in Darlinghurst, and then in Haymarket, and convince them to buy something, and then we’d make it. That was really our acquisition strategy, which is the opposite of a digitally native brand. That was all pre-algorithm; now about 70 per cent all of our sales are online.
IRW: Do you think there’s still a place for physical retail in your business?
ZC: I firmly believe there’s a place for it. I would say it’s not even optional now for digital brands or direct-to-consumer brands; it’s almost expected because that’s what Allbirds does, that’s what Warby Parker does, that’s what Outdoor Voices does…all these brands that people think about and aspire to be.
But I think it’s increasingly difficult from the brand side because we’re a small team. We’re eight people full time, so to do online well and physical retail well and the factory – and we’re a tech company, don’t forget…it’s really hard. We do some of it much better than others. I don’t think we’re particularly good at the physical retail side of things yet, but we’re getting better.
IRW: It seems like a lot of customisations brands are either tech-first or fashion-first, and struggle to find the right balance. I know the Shoes of Prey guys had more of a tech background…
ZC: They were the pioneers in so many ways, and quite frankly, they have paved a path that we are now following. But I think our business is fundamentally different in a few ways. One, we have an evergreen product. They were occasion-wear. You were getting married, or you wanted a statement pair of shoes. Great. Perfect solution. But the timeline until the next order from the customer was so long that they had to be constantly acquiring new customers. Whereas if I make you a T-shirt that’s guaranteed to fit your body, and it does, and no one else does that, I’m pretty sure I know where you’re coming the next time you need a T-shirt.
And it was really important to us that we sell to both men and women because everybody struggles with fit; it’s a universal problem. When we started, we thought we were going to be for the giants and the midgets of the world, but it’s just not the case. If you look at the distribution of the height and weight of our customers, it pretty much maps the bell curve. It doesn’t matter if you’re a size 4 or a 10, or an XL or a 6-XL, everyone struggles with some element of fit because mass sizing is built for 19 per cent of the population, and yet the insanity of the industry is that they just roll ahead anyway. And then you layer on whether people are going to like your stuff, whether they’re going to like the colour, whether you have enough units, and you get into the [situation] we’re in now – which is overproduction being the norm.
One in three pieces of clothing made every year goes straight to landfill, or is incinerated, unsold. That’s in the order of 30 billion garments every year. If you think of the input costs – the cotton, polyester, labour, freight to get it all around – it’s crazy. And then, one in three pieces of clothing sold every year also ends up in landfill within 12 months because it breaks or shrinks or goes out of fashion or just didn’t fit in the first place. How does nobody care about this? How is business as usual still OK? And quite frankly, how is anyone making any money? The true insanity of the fashion industry is that despite [the waste], there are a lot of people making a lot of money. That blows my mind perhaps more than anything.
For us, this structural issue is the greatest opportunity – if we can prove there’s a way of making clothes that’s better for the planet because nothing goes to landfill, but it’s better for the customer too because everything is guaranteed to fit your body, that’s the primary function of clothing, right? So we just thought, there’s got to be a better way, and we’ve got to figure it out because, tick tock, we’re fast running out of time in terms of climate change. I think one of our greatest advantages is that fashion is not our background, so we can ask really naive questions like why would you make two out of three things and just send them straight to landfill?
IRW: Tell me about how and where your products are made.
ZC: We have a factory in St Peters. We are Ethical Clothing Australia accredited; that just means that everyone gets paid fairly. Australia has very well regulated labour laws anyway, so it’s really hard to not pay people, although it occurs. But Ethical Clothing comes in and they make sure that everybody’s getting paid Award wages or above. In fact, we pay above.
That’s really important to us because apart from the environmental issues with fashion, there’s that whole elephant in the room around ethics, malpractice and slavery. It’s pretty gross when you go into offshore manufacturing and child labour – all of that stuff happens.
Globalised supply chains are extremely complex, and auditing picks up a few things, but it’s never going to be able to pick up everything, so we’re very proudly made in Australia. For one thing, it makes it very easy to do the right thing. It’s also important because the local manufacturing industry is dying, although there has been something of a renaissance with smaller brands making things here because it’s way easier. It is really hard to run production out of China or Bangladesh, or wherever it happens to be. The stuff they send is not the same as the sample, the sizing and colours are wrong. When you’re doing it here, quality control is way easier.
But the most important reason that we make [our clothes] in Australia and will continue to do so is speed. We turn around around our T-shirts on average in seven days, whereas even a lot of the big suiting players doing made-to-measure in China are looking at four to six weeks turnaround. People might be willing to wait that long for a fancy suit or wedding dress, but for an evergreen staple like a T-shirt, I just don’t think they are.
IRW: What are some of the challenges of keeping it local?
ZC: Price, quite simply. But again, because we’re direct-to-consumer, it’s less of an issue for us. We don’t have all those crazy margins in between.
Just as an example, we pre-wash and shrink all our fabric before we cut. That allows us to deliver something that’s guaranteed stable. You can put it in the dryer if you want, it’s not going to twist, it’s not going to shrink. It’s a really easy thing to do, we just take it to the washhouse and say, ‘maximum shrinkage please’. But obviously it’s another process, and that’s another cost for us. Most brands pass that cost on to the consumer, but where possible, we choose to absorb those costs because it’s the right thing to do for the customer.
IRW: What are your plans in terms of scale?
ZC: The short story is automation. Robots are going to drop in price exponentially over the next few years, and we’re going to be at the forefront of that. And I think that’s going to really put a rocket behind the renaissance of local manufacturing. Because with automation, it doesn’t matter if the robot is in Bangladesh or in Sydney, it’s basically going to be the same price.
But we’re a few years off from that, so between now and then, we’re going to employ more seamstresses and we’re going to increase production by getting a second laser cutter, doing two shifts instead of one and fitting more machines in the space that we’ve got.
IRW: Where do you see customisation going in the future?
ZC: I think up until now customisation has meant getting your initials on something. Don’t get me wrong, that had its moment. Everyone walks around with their names on their iPhone case, and that’s nice, but what we do is really deep customisation, it’s made-to-measure and made-to-fit.
I think fashion has lagged accessories in the customisation journey because it’s so much harder to make something fit someone’s body than it is to stamp their initials on something with gold foil. But it’s coming. Nike has been doing it for a decade, though it was always just as a sort of a plaything on the side. But I think it’s going to become more front and centre.
I think where customisation becomes really powerful is when you become part of the story of the garment. If you’re choosing the neckline, the fabric and how you want the hems to be, and if you lay made-to-measure on top of that, we find customers have a different emotional attachment to our T-shirts than almost anything else in their wardrobe.
And for that very reason we offer free repairs for life. It’s actually a terrible business decision, but again, it’s the right thing to do – not only for the customer but for the planet. The longer we wear the clothes we already have, the more we diminish the footprint of said garment, mostly in terms of carbon but also water. I think the statistic is for every additional nine months we wear something, we reduce the footprint by 30 per cent.
We proudly make everything to last, but you know, I have a dog, Maggie, and she jumps all over me and puts holes in everything. If that’s the case, we will fix your T-shirt for free because we just want you to keep wearing the things that you love.
IRW: What are the biggest challenges you face as a customisation brand?
ZC: There are two main challenges – the make side and the data side. I didn’t say this before but we ended up creating our own factory because nobody wanted to work with us. When we first started, the pattern maker [we reached out to] told us it couldn’t be done. The fabric people were like, ‘We’ve done the spreadsheets, it doesn’t work. Nobody will make it, nobody will buy it’.
Everybody told us no, because when you come from that world, when your normal is mass production, doing things on-demand or by the single pace doesn’t make any sense. We created our own factory because we were confident there was a way to do it that made the end product accessible. In terms of price, we honestly could be selling our t-shirts for $300, but we choose to sell them for $59 because we believe made-to-measure should be accessible to everyone.
Then there’s the data problem on the customer side.You need to be able to get people’s measurements accurately, easily and simply, but you can’t force customers to go somewhere to get measured by a human or even a 3D scanner. I don’t believe 3D scanners are the future; I think they’re like the mini-disc, an interim technology until the MP3 came along and just decimated it. Asking people to measure themselves is a terrible idea because nobody knows how to do it. We knew that if we started with bad data, the end product wouldn’t fit, so we had to solve the data problem.
I think that’s really the uniqueness of what we’ve built, an end-to-end solution from the UX of the algorithm, which takes 10 seconds to fill out, to the single-piece production. Our medium-term goal is to open up the technology so other brands can do this. We want to prove the model works so more brands move to an on-demand model; the tailoring is an added bonus.
We do tailoring because it’s the best experience for the customer, but honestly, what the planet needs is more on-demand manufacturing and less waste. We see tailoring as a Trojan horse for a better way of making things.
IRW: What are your some of your biggest bugbears when it comes to businesses trying to embrace sustainability?
ZC: I do not envy the task of somebody who’s trying to turn around the proverbial oil tanker. If you’ve been in business for a long time, and you’ve got a globalised supply chain, and you have your way of doing things, and then suddenly, everybody’s woke and wants to save the planet, it’s really hard to change things. I get that. My problem is when these bigger brands, which in my opinion, frankly are not doing nearly enough, make token gestures towards doing the right thing and then are lauded in the media.
I don’t care if you’re using recycled polyester, the world doesn’t need more recycled polyester swimwear. I’m sorry. It just doesn’t. It’s better than virgin polyester, but it’s not helping. Helping means looking at the structural issues at the heart of the industry, and that’s oversupply. Doing the right thing means transforming the business fundamentally.
My honest opinion is that if you’re not running a rental model or an on-demand manufacturing model, you’re not sustainable. No matter how big or small you are, if you still make more than you can sell, if you still make to standard size breaks, if you still make to flawed forecasting models – and nobody has solved forecasting, that’s why we’re in the predicament we’re in – you’re not sustainable.
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