American Giant’s Bayard Winthrop: “Customers don’t really care much about stores anymore.”

SAN FRANCISCO — The internet is still reeling from Kevin Plank’s endorsement of the president’s economic policies (and his subsequent full-page explanation this week intended to help alleviate the pressure). The Under Armour CEO has gone all in on the American made argument, but he misstepped in bringing politics into the equation: In today’s climate, that is a grave mistake.

Like Plank, American Giant CEO Bayard Winthrop is fiercely in support of the American-made approach. Unlike Plank, he’s wisely kept politics out of it. (continued below…)

In a call this week, Bayard spoke to Lean Luxe about what ‘made in America’ means to him right now, how he decides which staples (from past eras) to bring to market, and how American Giant is making best-in-class quality basics manufactured here in the US — at prices most people can afford.

Our toplines from that conversation (edited for clarity):

What he hates most about luxury industry ‘best practice’ today:

“There’s a lot of misalignment happening right now in the apparel industry. Customers are changing so rapidly. In that environment there’s just a lot of thrashing around, and I think that’s coming through, increasingly, in these big clearance sales and these massive write downs that are happening in the market.”

Legacy brands are desperate to recapture the young consumer:

“Brands that are losing resonance with young consumers are desperately seeking ways of recapturing them. That’s real painful to watch for me. I’m not crazy about a lot of the ‘race to the bottom’ in the apparel industry that I think we’re seeing. That $5 or $6 t-shirt trend. It’s an unfortunate trend, because it really disconnects customers from quality.

With just a little bit of care and attention, I think quality can be delivered in such a fundamental way to the customer today, so I’m a little bit reflexively negative towards the brands that are going in the other direction, that are trying to do these really cheap, churn-and-burn, in-and-out kind of styles. I’m not inspired by it at all.”

On why customers may not care much about stores anymore:

“Going back six years ago, the apparel industry basically had built itself around trying to win the real estate battle — get to 300 to 500 to 800 doors. When you go down that road it forces you into huge inventory bets, and massive marketing spend to drive people into buying inventory — and then the inevitable massive markdowns of the inventory that doesn’t sell.

When you have a business model that’s predicated on huge markdowns, you have to drive massive initial margins, and massive initial margins require that you put downward pressure on product quality and brand values.

I said, ‘Well, wait a second. What if you don’t buy into that? What if you don’t buy into a huge store rollout and massive discounting, and you redeploy the investment into high-quality, American made goods — and most importantly, to price those items at a great value?’

That’s a fairly simplistic insight. It’s sort of saying that the customer doesn’t care about stores much anymore, and they don’t care about massive marketing anymore, they care increasingly about ‘made in America,’ and they want great, affordable quality, made-in-America products. If you accept that, which I did, then it’s a pretty simple unlock.”

On where MLCs like his have an advantage over incumbents:

“The current legacy brands that are out there, Levi’s being the most obvious example of this, can’t really walk back the commitments they’ve made to international sourcing and retail and marketing [when it comes to bringing back made-in-America products].”

He used the Bloomingdale’s partnership in November as a promotional tool (rather than a sales funnel):

“Situations like [the Bloomingdale’s partnership], are for me, really more about brand extension and storytelling. It really has nothing to do with sales.

For us, it was an opportunity to put the brand in a whole new set of customers that gave a lot of love to only one of our items. (We featured just the sweatshirt with them.) It gets the brand in front of a bunch of folks [across 15 stores nationwide and in two Bloomingdale’s catalogues], that we typically wouldn’t be seeing.

But that partnership was anything but one-sided:

For Bloomingdale’s perspective, they’re in a similar battle for relevance and eyeballs for consumers that are looking for the younger brands, the brands that are more values oriented. In some ways, we’re at the apex of that conversation. Six years in, we’re unlocking the American-made at scale paradigm, and yet we have no retail presence. So for Bloomingdale’s, it’s an opportunity for them to participate with a brand that really has been having a hard time meeting demand, and has no retail presence. They can solve that for their customer. So it puts them in a spot to be curated and out in front and thoughtful.”

American Giant is performing remarkably well in cities not on the coasts:

“We’re outperforming our peers in places like Saint Louis, and Kansas City, Dallas, and Houston and places that are maybe not quite as coastal.”

Why is that?

“I had a real desire to bring a brand to life that is bringing THE best quality on the market. Period. No qualifiers. And is priced at a way that is reaching the average consumer out there. Now that is getting back to the industrial, mainstream quality of what made in America used to represent. That’s what makes the parts in our organization move everyday — we’re not making an excuse for being American made, we’re just making it a part of who we are. I don’t know if that is part of why we’re doing great in [the south and the midwest]; I’d like to think it’s one part that, it’s one part that we’re addressing your week in and week out wardrobe, and we’re not chasing fashion, just doing the really basic stuff really well.

I hope what we are doing, is we are bringing made in America back to average consumers who have just as much a desire to access great quality and American-made stuff.”

His motive for bringing American-made beyond the hobbyism stage:

“People tend to forget, but American made 40 years ago, was a label that represented not only the best quality in the world, but also the value. People used to come to the US to buy jeans, to buy sweatshirts, to bring home and resell because it was the best stuff in the world. But it was also priced in a way that people could afford it. Forty years later, American made has become something totally different from that — now it’s utter shit. It was either really bad quality that fell apart in six months, or it was relegated to the boutiques where jeans were $280 or sweatshirts were $190. I’m not at all interested in making jeans that retail for $250. There’s nothing challenging or unique about that — at all.

Here living in San Francisco, surrounded by the most innovative minds in the world, who are breaking down barriers everywhere — I’ve got a phone in my pocket that has every song I’ve ever listened to, every bit of information you’d ever need, a map, all my contacts — and I’m being told I can’t make a great sweatshirt in North Carolina anymore, and have it priced affordably? I thought that was bullshit.”

On choosing staples:

“We try to identify pieces on the market, and components of your wardrobe that we think are real staples, but that have really become a shadow of what they used to be. The nylon jacket used to be a staple, totally utilitarian. It could go in the fog, the sleet, the rain, the fall weather, the spring weather — it was sort of a go-to, grab-and-go, everyday piece.

[In developing our new products] that really begins with a methodical approach, thinking about what made those items great, what were the fabrics that were there, what were the fit elements — it was almost a deconstructionist approach to each of them.”

On looking to the past for new ideas:

“What I’m interested in with earlier eras of clothing, is that when you think about how it used to be, we had less things back then that had to be more utilitarian-focused. Go look at old images of Paul Newman and Steve McQueen, I mean things just fit well, and looked good on — that’s because it was great quality stuff. It wasn’t all baggy and mass market-y. We asked more of our clothes. We had to wear things in multiple scenarios, we had to wear it throughout the day. When I was a kid I had one jacket. One jacket that I wore over and over. It functioned in all environments for me. It was tough it was gutsy. There was a certain quality that was required out of that garment. That basic idea really maps across a lot of the stuff that’s in your wardrobe. ”

Could denim, of all things, be the next great American Giant product?

“The denim market I’m fascinated by. You know the denim industry has become really bifurcated. It’s got on one end, a bunch of boutique-y fancy stuff that’s wildly expensive and complicated. And at the other end of the market, there’s a bunch of crap. But there’s not this middle player of fantastic quality, straightforward, great denim made in America. Why fucking not?”

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