S12 E6 Quincy: a case study in causes of failure Part 2

In this podcast, I continue to look into why a promising start-up, Quincy Apparel, that had everything going for it, failed. Today I look at the launch of their first season.

The story so far.

Founded by two Harvard Business School MBA graduates Christina Wallace and Alex Nelson. Quincy Apparel was going to bridge the gap between companies that offered affordable women’s suits, which in the words of Quincy’s business plan, “gape and hang like ill-fitting boxes,” and high-end brands that offered more fashionable suits at higher prices. Quincy would offer the high-end brands better fitting and feeling clothes at lower prices.

Quincy Apparel would follow a business model pioneered by two vertically integrated start-ups. Bonobos, which sold men’s pants, and Warby Parker, which sold eyewear,  both were achieving success both in the marketplace and in attracting investor interest. Both companies demonstrated that the direct-to-customer model could work in the fashion industry.

Quincy Apparel developed a new size system that allowed better-fitting clothes and tested the concept at a series of trunk shows. The trunk shows had proven to be a success; with 50% of young professional women attending making purchases averaging $350. These were not token purchases but a vote of confidence in the product and the fledgling company.

The company was about to launch its first season.

For full details of Quincy Apparel’s early day please read Quincy Apparel Part One.

Preparing for a hard launch.

The co-founders of Quincy Apparel recognized that offering multiple sizing options for each garment would add complexity to the production process and therefore result in higher costs. But they felt that the direct-to-consumer model, eliminating the wholesaler and retailer, would enable them to be cost-competitive. The fact that inventory would be held at a single location rather than multiple retail outlets would be a further advantage. Inventory management would be a challenge, so a two-step production process was developed. Large-scale production that took the garments to 80% of completion would be outsourced to larger factories. These semi-finished items would be stored at Quincy’s rented warehouse. The warehouse would do multiple duty as a showroom, and an office. When a customer placed an order, the garments would be sent to a finishing unit for the final sewing to complete the production process. The finished garment would be returned to Quincy’s warehouse for despatch to the customer. As production was based on actual demand the founders hoped to avoid the end-of-season markdowns that often erode profitability in the fashion industry. To put this in context, in 2022 Boston Consulting Group stated “Retailers around the world invest more than $1 trillion in their in-season and end-of-season markdown programs”