Torrid Seizes D2C Movement To Capture Rising Demand For Plus-Size Apparel

Plus-size retailer Torrid’s debut as a public company on Thursday (July 1) was met with much excitement from the market, a further sign that direct-to-consumer (D2C) sales may be key to addressing a long-underserved market.

In its first day of trading, Torrid’s stock jumped 15 percent from its initial offering price of $21, pushing its valuation to more than $2.5 billion.

Torrid had 3.2 million active customers in 2020, generating $974 million of net sales. The company said across the U.S., the market for plus-size apparel and intimates is $85 billion, with 90 million women wearing size 10 and up. The plus-size market is typically defined as above a size 14 — still below the average American woman’s size of 16-18 — but even with that narrower scope, the plus-size market is still estimated to be worth roughly $24 billion, according to Coresight Research.

Plus-sized consumers have long been underserved by the apparel market, forced to wear floral prints or drapey, oversized clothing despite the fact that, like every other shopper, they want a range of stylish, well-fitting options in different styles and tastes.

And there’s ample opportunity in the market, especially with Lane Bryant parent company Ascena Retail filing for bankruptcy last year and closing more than 150 stores. Coresight Research found the plus-size market is growing twice as fast as the total clothing market at an average of 4 percent annually.

Others, however, such as Alexandra Waldman, co-founder and chief creative officer of Torrid competitor Universal Standard, decry the fact that a separation still exists between straight-sized and plus-sized clothing.

“The world doesn’t need another plus-size brand,” Waldman wrote in Quartz in 2018. “I think what we need to do is take those two branches, the plus-size and the straight-size, and bind them back together and just start making clothes for women, for everyone.”

D2C Advantage 

Torrid is going public at a time when brands are increasingly leaning into direct-to-consumer offerings in order to better serve their customers — something that the plus-size apparel market has not always done successfully.

Over the past several years, Torrid has expanded its eCommerce capabilities, transitioning its eCommerce fulfillment operations away from former parent company Hot Topic and into its own distribution facility in Ohio. Torrid’s digital sales grew by 28 percent in 2018 and 2019, then jumped by 38 percent last year amid store closures and a slowdown in store traffic due to COVID-19.

And even with digital accounting for 70 percent of Torrid’s sales in 2020, the company had a return rate of only 9 percent for eCommerce purchases — lower than the 40 percent of online footwear and apparel orders that get returned across the industry.

To be sure, Torrid is hardly the only company to see an opportunity in providing plus-size consumers with direct-to-consumer offerings. In its initial public offering (IPO) filing with the U.S. Securities and Exchange Commission, Torrid noted “substantial competition” in the plus-size women’s apparel industry from both specialty and general retailers, many of whom have great financial and marketing resources available.

Gilt, ModCloth, Universal Standard, HOURS and Eloquii are just a sampling of the brands that either directly cater to plus-sized customers or have inclusive sizing ranges that extend beyond most retailers’ limit of 14 or 16.

Eloquii is particularly formidable as it has the power of Walmart behind it. The box-store giant bought the brand for an undisclosed amount in 2018.

Omnichannel Offerings

Liz Munoz, CEO of Torrid, told Yahoo Finance that part of what makes her company special is also the spread of retail stores across the country, “indoctrinating them [customers] into the brand, educating them on fit and what they love.”

Making a customer an omnichannel shopper, she said is key, and Torrid has remained focused on creating a unified digital and physical experience. The retailer has over 600 stores across the U.S., having opened approximately 30 in the past two years, and plans to open “a substantial number” of new ones in the future.

PYMNTS’ How Consumers Live In The Connected Economy research shows that even among the most highly connected consumers, 54 percent have recently made purchases in a physical store.

In its SEC filing, Torrid said the stores act as a low-cost source of new customer acquisition, with a small upfront investment of capital “that is quickly paid back as a result of our customers’ high repeat purchasing behavior.”

In 2020, the average omnichannel customer made 7.8 purchases and spent approximately 3.2 times more than single-channel customers, Torrid said.