The Costco Membership Model Comes for Luxury Fashion

(Bloomberg Businessweek) -- Dedicated followers of fashion tend to fall into two groups: those who favor a heavily branded look that’s as subtle as a football jersey, and those who favor a discreet, under-the-­radar style that announces itself only to a select few.

E-commerce site Italic caters to the latter set—and those who never before could afford either. It began in 2018 with $13 million in venture funding as yet another millennial-­targeting, direct-to-consumer disrupter. The site offers unbranded ­women’s and men’s clothes, shoes, bags, and home decor produced by the same factories that Burberry, Fendi, Stella McCartney, and other bona fide luxury brands use. And all sold at cost.

I first came across Italic when a fellow fashion-obsessed friend told me the prices were incredible for what you get. A slim briefcase with design similar to a $2,500 Prada version runs just $200; a $55 poplin pajama set is made by the same craftspeople who sew Vilebrequin’s $280 swim trunks.

By aligning itself with establishment brands, Italic Inc. doesn’t have to spend what other DTC startups have had to shell out to build consumer trust: A $36 hoodie feels less cheap once you read—in large type under the picture—that it’s made in the same place as a $375 Armani version.

If the fashion brands are concerned about being undercut, Italic’s founder, Chief Executive Officer Jeremy Cai, hasn’t heard. “It’s not a big problem,” he says. “We’re a small upstart and not eating into the market share of the big luxury houses.”

Despite that winning blend of product, price, and cachet, the company hasn’t been fully immune to the challenges retail brands have faced this year. In July the site moved to a ­members-only model: Italic customers must now pay $100 a year simply to shop the 800 products on the site.

Cai says it was a necessary step to lessen reliance on investors, ­noting the “crash in venture-­funded capital for DTC brands.” A few luxury retailers have been testing a similar Costco-light model: Restoration Hardware’s Grey Card costs $100 and offers exclusive access, flash sales, and a variety of discounts.

Yearly memberships tend to make me nervous, though. I made peace with Fresh Direct LLC’s DeliveryPass by ­routinely ordering once a week—more often now. But I’d buy groceries, anyway. I’m less jazzed about paying a fee simply to shop for little luxuries, whether Public Goods ($59 a year for the right to buy toothpaste and olive oil) or Thrive Market ($60 a year to purchase all-­natural barbecue sauce and coconut powdered keto creamer).

But with all this time at home, I bit. I’d planned to start with an order of Italic’s Serene towel set and a recycled jersey vintage-wash short-sleeve T-shirt, which have some of the best reviews on the site. But both were sold out—the ­towels in every color—with no estimate of when they’d be back, though the site restocks daily.

Because I was set on a tee, I up-leveled to the Pulse performance, made from a 95% bamboo blend. At $25, it was $10 more than the recycled version but still less than half the price of my treasured $70 James Perse tees. The box arrived within three days. (Shipping is free if your order exceeds $50.) The neckline was a little tight, but that may relax with wear, and overall, the T-shirt had a quality feel. Even if the Pulse tee winds up being only half as good as my Perse shirts, that’s still a win in my book, because of the price.

I also picked up a Dopp kit, something I’d been mulling getting for a while. Italic’s $80 contender in black came in high-quality leather, with even stitching and a smooth ­zipper­—my personal mark of a quality bag. The Dopp kit crystallized how Italic can fit in the unbranded luxury ecosystem: Most fashion consumers don’t want a head-to-toe logo look. I certainly don’t. I have a Louis Vuitton Keepall 55 in monogram that’s been a trusty travel ­companion for more than a decade, but an LV Dopp kit can cost $1,000, and that’s a steep price to pay for something that lives near a toilet. Even if it’s a Ritz-Carlton toilet.

Style is about mastering a mix, not blindly following trends or piling on labels. I can carry my Vuitton bag (with my new Italic Dopp kit inside) and wear a pair of Veja sneakers and an Italic tee. And I’m not the only one. More than ever, modern shoppers thoughtfully blend great basics with investment pieces. It’s a more conscious way to get dressed and, in these times, much less conspicuous.

©2020 Bloomberg L.P.