The clever way that Stitch Fix gets more data to feed its style-matching algorithm

Screen Shot 2019-03-30 at 5.42.31 PMMy latest article for editorial website CIO Dive profiles Cathy Polinsky, the CTO at Stitch Fix Inc. It’s the fast-growing (and now public) online clothing retailer known for having personal stylists — backed by data & style-matching algorithms — select items customers might love and deliver them in a box.

In about two and a half years, Polinsky has:

  • doubled the size of her team so it could support, rather than constrain, the burgeoning business
  • helped Stitch Fix expand into additional markets: menswear, plus sizes, “extras” (such as socks & underwear), and kids
  • supported international expansion — starting with a launch in the U.K. later this year
  • adapted systems to Europe’s General Data Protection Regulation, the Sarbanes-Oxley Act, and California’s privacy law

My favorite part of the article covers the clever way that this company gets additional data to improve it’s style-matching algorithm.

To gather even more clues about customer likes and dislikes, Stitch Fix developed an application called Style Shuffle. The Tinder-like game shows a series of clothing items and lets clients give each one either a thumbs-up or a thumbs-down — thus providing more data to feed the style-matching algorithm.

“Clients love it. It’s super engaging. It’s fun. We have over a billion ratings now on this platform. Over 75% of our active clients have tried it at least once. Clients who have played with Style Shuffle have better ‘keep rates’ — they’re keeping more items because we’re sending more relevant items and really getting their style,” Polinsky said.

The company must be doing something right: Stitch Fix reported net revenue up 25% from last year in the second quarter of 2019. The number of active clients increased 18% to 3 million — and on average they each spent 6% more than the previous year.

10 signals and trends

Gleaned from recent press reports and other sources:

These are boom times for U.S. makers of unmanned military aircraft (drones).

Sample Lab Ltd. opened a  “marketing cafe” in Tokyo that lets trend-setting women see and test new products.

With the recession crimping legal budgets, some big companies are insisting on flat-fee payments instead of law firms’ long-standing practice of the “billable hour.”

City “water cops” are handing out citations to people caught wasting water resources in drought-stricken areas.

Lumber mills that produce woods for hardwood floors and maple cabinets have been devastated by the U.S. recession’s double whammy: the housing bust and unavailable credit.

Some hospitals find that owning up to medical errors reduces litigation and helps them learn from their mistakes.

Despite a 25-year effort to improve U.S. education, the latest high-school SAT exam scores are disappointing. Asian-American students are thriving but the SAT gap for blacks and Hispanics widens.

More than half of Somalia’s population needs humanitarian aid, the U.N. says.

Software makers are scrambling to develop cell phone safety applications that prevent texting while driving.

Inexpensive mini-reactors may be an alternative to building giant nuclear powerplants, though there are technical, financial and regulatory hurdles.

World’s first carbon-neutral garment factory

Is this the start of a rush towards green factories? “MAS Holdings claims to have built the world’s first carbon-neutral garment factory in Sri Lanka,” reports Anthony Townsend at The Institute for the Future. The plant will make underwear for retailer Marks & Spencer in the UK.

While the plant cost 25% more to build than a traditional design (it would have been 15% without some frills due to being a showcase), with rising fuel prices it’s expected to pay for the difference in less than five years.

According to MAS Holdings:

It features the biggest installation of solar panels to date in Sri Lanka, which will provide around 10% of the total electricity required for the plant. The remaining electricity will be mini-hydro, sourced through a green power agreement that MAS pioneered for Sri Lanka earlier this month.

Apparently this is part of Marks & Spencer’s wide-ranging effort to be carbon-neutral by 2012.

A sudden downturn in consumer gadget mania

The latest consumer spending survey from ChangeWave Research shows “a sudden, huge pullback in U.S. consumer retail spending on electronics — the largest decline since 2002.” The survey of 4,427 consumers, conducted February 18-25, looked at discretionary spending on a range of popular electronic devices, including video game consoles, digital cameras and iPods.

In an unprecedented sign of weakness, only 19% of survey respondents say they’ll spend more on electronics over the next 90 days, compared to 33% who will spend less.

“These results clearly show that the consumer electronics sector is getting whacked,” said Tobin Smith, founder of ChangeWave Research and editor of ChangeWave Investing.

Hardest-hit stores: Best Buy and Circuit City. (But Costco and Wal-Mart will be OK.)

Hardest-hit products: LCD TVs, digital cameras, cell phones and iPods.

Bright spots: The Nintendo Wii, Blu-ray HD DVD players and GPS devices.

And there was little evidence that consumers will be spending their “economic stimulus” tax rebate checks on consumer electronics.

“Rather, our findings point to an increasingly preoccupied American consumer who has fallen out of love with gadgets — at least temporarily,” Smith said. 

The future of brick-and-mortar retailing

“Faced with the threat of online retailing and other pressures, retailers globally are seeking to win back market share by making the customer’s shopping ‘experience’ more theatrical, with emphasis placed on the sensuous elements of an in-store shopping trip,” according to market-research firm Datamonitor.

“The next step in the battle to retain customers is to streamline the buying experience, bringing it more in line with Internet shopping in terms of ease and speed of transaction,” the firm says.

Datamonitor analyst Alex Kwiatkowski says that retailers, given difficult market conditions and rising energy costs, will turn to the following technologies (sprinkled with my own cautionary comments):

Digital signage: Though expensive, it’s the fastest-growing advertising medium. The ads can be tailored to the audience, and proximity sensors can determine when someone is nearby and boost the sound level until the person leaves. (Comment: But it adds to the number of advertisements bombarding us throughout the day.)

Near field communication (NFC): A form of radio frequency identification (RFID) technology used for ‘contactless’ payments. It’s fast, and tends to increase “average spend per transaction.” Kwiatkowski says: “Major retailers who do not implement the technology face being left behind as customers demand ever-faster transactions, a trend exacerbated by the ease and speed of online retailing.” (Comment: But there are security and privacy concerns.)

Self-service checkout: It cuts costs, queue times and shrinkage, while providing a solution to employee shortages. “The technology is popular due to its ability to cut checkout time with one attendant capable of overseeing up to six checkout terminals….” (Comment: For this reason, it’s not popular with labor unions.)

Rising gasoline prices may boost online shopping
No Contact: Could smart phones spur contactless payment card adoption?