Hardly known for their fashion sense, German male business professionals (and their desire for pants that fit) have long been ignored by retailers: They weren’t the ones doing the shopping and often lacked patience and time to choose their wardrobes.
Now, at least three German startups see them as a market. The companies, dubbed Modomoto, Outfittery and Modemeister and all based in Berlin, have a largely similar model: to remove the customer from the process of picking out clothes and have a personal stylist take over. The retail trend is known as “curated shopping.”
Founded in December 2011, Modomoto employs 40 people, half of them stylists. Last year, its revenue was about a €1 million ($1.3 million), with about 55% profit margins, Modomoto CEO Corinna Powalla told Quartz. Powalla said customers don’t have time for extensive shopping anymore—not on the internet and not in a store. “We benefit from online and offline customers,” Powalla said.
Here’s how it works: Modomoto gathers information from first-time customers during a 15-minute telephone interview. Sample questions cover what style the customer is wearing or would like to wear and what type of clothes he needs the most. The company’s stylists then put together a package with three outfits they’ve selected and send it to the customer. He tries on the outfits and pays for the products he keeps, returning any unwanted or ill-fitting products. The customer can also choose how often he wants to receive packages from Modomoto.
Because the personalized service is such a labor-intensive endeavor, it is mostly employed by smaller companies and startups. But the possibilities for these companies to grow without relying on computer-assisted models are rather small, according Heather Ashton, analyst for IDC Retail Insights. In contrast to computer-automated services, curated shopping is limited by the number of employees who can serve a given customer. TrunkClub, a US retail startup established in 2009 with a strategy like the German firms’, now uses a computer-assisted model to help serve more customers, by allowing them to “request additional trunks on-demand, provide detailed feedback on items in previous orders and manage their style and fit preferences in an easy-to-use online interface,” CEO Brian Spaly wrote in an email to Quartz. Over the course of 2012, the company saw its customers triple to 20,000. Spaly expects TrunkClub’s revenue to be “north of $25 million” this year.
This strategy is “more of a niche-market or will be used by larger retailers (think Nordstrom) for a small subset of overall customers, namely those that represent the highest value to the retailer,” Ashton said.
Today, Modomoto boasts a base of about 10,000 regular customers, many of whom are academics and entrepreneurs. And perhaps an even better sign: a recent story celebrating its first anniversary asked, “Do guys in Berlin seem a little better-dressed than this time last year?”