Specialty Fashion leads the way in online sales: Five lessons from the company’s impressive turnaround

While the bricks-and-mortar fashion world continues to flounder, online sales are booming – and savvy, old-school businesses are successfully riding the wave.

Speciality Fashion Group, which houses brands including Millers, Katie’s, Crossroads, Autograph and City Chic, announced a return to profit in the 2013 year. But more importantly, its online sales have now reached 3.8% of total revenue, or $21 million.

The figure is extremely high for an Australian business, but for a fashion business, it’s nothing out of the ordinary. The fashion sector is one of the fastest growing divisions of the digital economy, and some of the hottest start-ups like Shoes of Prey and The Grand Social are examples of fast-growing businesses.

The success is somewhat of a contradiction. Fashion largely depends on a physical interaction with product, but digital sales are outpacing bricks-and-mortar.

Shoes of Prey founder Michael Fox says the allure is easy to understand given shoppers want convenience more than anything.

“Definitely not every customer wants to shop online,” he says. “But there are plenty of people who are just happy to see a product on a screen and then buy it.”

The convenience of returning items, practiced by companies like ASOS and StyleTread, is another key.

But Nicole Venter, the head of digital strategy at Retail Oasis, says the attraction is easy to understand. Fashion shoppers want more than just a bricks-and-mortar experience.

“Shopping for fashion is an engaging experience. However, through social commerce you’re not just selling stuff online, fashion retailers are incorporating social media, reviews, they’re offering advice for how to style yourself and so on.

“Stores started going online and it was quite boring. So others started engaging with fashion, and got really involved in the process.”

It’s a practice companies like David Jones are emulating, through strategies such as publishing articles with fashion advice. ASOS, says Venter, is another solid example.

“In terms of social media, they’re really top-class. It’s just an example of fashion consumers, particularly those in their 20s to early 30s, want a lot more variety online than just the products.”

But while Specialty Fashion Group has managed to boost its online sales, it’s not the only part of the business that has done well. Net profit turned from a loss of $2.8 million to $12 million, revenue is up, and the cost of doing business has remained relatively flat.

With fashion retail under pressure, Specialty Fashion Group has managed to turn a solid result. So how did it happen?

Multi-channel investment

In total, Specialty Fashion Group recorded 50% growth in online sales to $21.9 million for the year, equivalent to 3.8% of revenue. In the results, the company says this growth was “enabled by investments made in team, platform and customer engagement”.

This is a key lesson for small business, even in that one sentence – Specialty Fashion Group has recorded improvements because it actually spent time and money investing in its digital sector.

You should do the same.


The cost of doing business in Specialty Fashion Group only rose by $100,000. That’s an extremely low increase, and the company attributes it to “tightly managed wage and rental costs”.

Cost-cutting is always important. Finding savings anywhere you can – like in rental costs – should always be on your radar.


And speaking of rentals, the group has managed to deliver some more savings by negotiating leases and getting rid of poor-performing stores. In total, the company closed 47 locations.

Negotiating well is key lesson. You always need to maintain good relationships with your landlords so if something like this does happen, you can find a way out. Specialty Fashion Group clearly is in a position to do so.

Never tick off your landlord – it’s always easier to save yourself some money when they’re on your side.

Big data

It’s become a cliché at this point, but using data is a huge help in improving the way your business can speak to customers in a more efficient way. By targeting your emails more accurately, you’ll get a better return.

Contained in the fashion retailer’s yearly update is this line: “Sophisticated customer analysis and segmentation have increased email campaign responses well above industry standards.”

Remember to use data as often as possible – you’ll end up saving yourself more time and trouble in the long run.

Always be prepared

The fashion industry has to face significant challenges, including fluctuations in prices for certain key materials. Which is exactly what happened to Specialty Fashion this year.

During 2012-13, cotton prices continued to rise. Which means the company had to use its call option to protect itself against those rising prices, at a cost of $214,000.

It seems like a lot of money, but it’s much less than if the business was exposed to those higher prices.

It’s a small lesson, but a key one – always be prepared for the worst.



Notify of
Inline Feedbacks
View all comments