The twins, Irina and Marina Golomazdina from Revda, dressed the same from childhood and invented clothes for themselves that were sewn by a friend of her grandmother. At the beginning of 2014, together with her husband, Irina Ivan Khokhlov, they founded the 12Storeez brand and began to sell clothes in the “cozy casual” style on Instagram - 12 collections of comfortable things from good fabrics per year. Today 12Storeez is a company with sixteen showrooms and an annual revenue of 1.2 billion rubles, which in the near future plans to conquer the foreign market.
Life around Yekaterinburg talked with designer brand CEO Ivan Khokhlov about how 12Storeez managed to grow into a company with billions in revenue over five years.
Established: year 2014
Number of stores: 16
Revenues in 2018: 1.2 billion rubles
The 12Storeez brand appeared in 2014. We launched as a minimally viable product - with virtually no costs, in an apartment showroom. At first, most of the sales went through Instagram and WhatsApp.
We spent two million rubles on the launch of the project — I invested one million, and girls each paid 500 thousand. When an investor chooses a startup for investments, one of the criteria important for him is the degree of participation in the project team. A person should be 200% interested in a startup - if he pulled in all his friends, his family, sold an apartment, he would give himself as much as possible to the business and would not abandon him at the first difficulties that arose. There are always conflicts in business - if a person has not sacrificed anything for the sake of the company, then giving up everything and leaving him will be easier.
Irina and Marina immediately adequately accepted my proposal to invest in the project together. Both by that time were already standing firmly on their feet, they had extensive experience in the fashion industry: Irina worked as a consultant for premium brands and as a personal stylist in Yekaterinburg, and Marina already had her first project. In the mornings, before heading to Cosmopolitan Shopping, where she worked as a fashion editor, Marina watched the series and simultaneously made headbands that she sold on Instagram - she earned her first million this way. The secret of our success lies in the fact that we are not only about creativity, but also about commerce.
Initially, I worked in the construction and trading sectors, but already in the year since the creation of 12Storeez, the brand has grown significantly - 25 people worked in the company. The first collection consisted of 25 models: top and culottes from cashmere, silk raincoats, lace skirts. All things were in equal demand and sold out instantly.
Then I realized that it was necessary to focus on this particular project - it was important to create a structure and train employees. Irina and Marina had good experience in the fashion industry, but using their background for other purposes was stupid - the company needed a separate manager. At that time, there was a sharp devaluation, and construction projects began to sag in volume, ceased to be profitable - and the second one, my company sold building materials.
Against this background, 12Storeez company grew monthly, so I made the choice in favor of the project quite simply. The brand was for me a more ambitious project in terms of self-realization - I understood that it was more likely that I could apply my new knowledge from Skolkovo here. I left the rest of the projects and concentrated on the development of 12Storeez.
Marina wanted the numbers to be in the brand name. When we approved the concept “collection every month”, we chose the official name 12Storeez - this spelling was formed in search of a free domain name. The domain 12Stories in the * .com zone was occupied by some little-known foreign musicians, so we had to make some changes and change the ending of the noun. Later, I realized that this was a mistake.
If we take a classic article or book on naming, then we learn that the name should be easy to remember and easy to write. For example, Zara: a word consists of two syllables, all sounds are understandable, and “p” produces an amplification effect. In many languages, the brand name is pronounced the same.
Now the brand name is correctly pronounced no more often than five times. The most common pronunciation of the name is "twelve stories"
Now the brand name is correctly pronounced no more often than five times. The most common pronunciation for the name is twelve stories. If earlier I didn’t like when people called us that, and now when I hear the pronunciation of some leading words “tvel”, then I understand that it’s better to keep saying “twelve”.
We also have a YouTube blog called Twinstoreez, but the brand name is not confused with it. The blog was invented specifically for Irina with Marina, and not for the company as a whole - it’s customary on YouTube to share personal content, branded on this social network lives much worse. However, now we have thoughts on how to remake the channel in the format of the company’s blog - several videos are released on the channel every week, so it’s difficult for girls to act in this mode. If a traditional blogger does nothing but develop his blog, in our case the channel is only 10% of Irina and Marina’s working hours.
The first showroom was our apartment in Yekaterinburg. The first store in the office appeared a month and a half after the launch in the Vysotsky business center. When the brand turned six months old, we opened a point in Moscow.
Initially, we were not going to think locally and become attached to the Urals. We have a goal to become a global company, successful not only in Russia. For this purpose it is impossible to think with local patriotism. Patriotism is a changeable thing. We rarely say that we are a Russian brand.
The average customer check in our store is 12 thousand rubles. We are in the medium plus segment. As a rule, in this category are buyers who have grown from the mass market - this is the middle class. Separately, we can distinguish people who switched to our segment from luxury, partly for financial reasons.
Active growth in brand sales began with promotion in social networks. First of all, it was connected with the personalities of Irina and Marina - twin girls with a noticeable model appearance and their own style became the face of the brand. An important role was played by their experience in the fashion industry: Irina worked in the retail sector, which helped us immediately begin to produce commercial models that are interesting to customers. Marina's skills in fashion shooting allowed to properly shoot and present things. The right promotion channel and well-chosen content gave us a good start and allowed us to quickly develop in the market.
Patriotism is a changeable thing. We rarely say that we are a Russian brand
Now we have 16 stores in Russia - in Yekaterinburg, Moscow, St. Petersburg, Kazan, Rostov-on-Don and Sochi. Soon we will open showrooms in Vladivostok and Novosibirsk. Investments in points are always different, the amount depends on many factors: on the size of the room, rental deposit, repair, whether it is a top-end shopping center. Usually, we invest from 2 to 20 million rubles in their creation. The payback of points is also different - it all depends on the investments made. There are shops that will pay off according to plan only in a few years, and there are those that have paid off already in the second month.
Before opening in new cities, we do not carry out any additional work with them: firstly, the brand is already known on the market, and secondly, we are opening in strong shopping centers. We used to think that we would always create separate showrooms and use only our traffic - it seemed a mistake to be located in shopping centers. Later we realized that opening a separate showroom is really cheaper, but in terms of speed of development, this is a much less profitable option. The location in the shopping centers found its strengths: the finished infrastructure makes it possible to park the car and visit the food court. If the showroom lives on its own, then a person should go there every time on purpose - the motivation should be much higher.
If in Moscow today we already have 10 points in shopping centers, then in Yekaterinburg there is still only one - a separate showroom on Khokhryakov. Moscow began to generate income very quickly, but Yekaterinburg remains the most effective in terms of profitability - here lower rental costs and salaries for employees. We feel that we have already grown from the showroom in Yekaterinburg and are now thinking about a new point in the city.
The online store now accounts for 30% of all sales, 2% of orders come from non-CIS countries - from the USA to New Zealand and Japan. As a rule, these are people who emigrated from Russia, but it happens that they are not connected in any way with our country. I remember that he once corresponded with a Japanese woman who placed an order with us.
At one time we were selling on the Lamoda site - we were interested in bringing a new audience to us. But after three months we left there - the level of sales was not high enough. True, somewhere deep down there is a feeling that we have not worked enough with the site to draw such conclusions. We did not offer a large enough range for sale and did not use Lamoda's external marketing tools.
The company has about three hundred employees. At the beginning of our existence, 12Storeez production was located in Yekaterinburg, but we quickly abandoned it. In order to produce something really good and in large quantities, different models must be given to different factories. Clothing production involves a very high level of specialization.
To produce good coats, you only need to produce coats - all technologies and employees should be sharpened specifically for the manufacture of coats. Good jeans can only be made in a jeans factory. Sneakers and high-heeled shoes also need to be produced in different factories. Plus - materials, quality level and prices matter.
Another problem that we encountered was that we had to independently manage production and solve its problems. Imagine: a cutter, on whom the entire production process depends, did not go to work because of the garden. Someone else did not provide everyone with work, because he was sitting in Odnoklassniki. I had to solve private production problems to the detriment of the development of the company.
We began to outsource production. Knowing your core competencies and outsourcing everything superfluous is the art of entrepreneurship. Now we work with 50 factories in Russia, China, Turkey and Vietnam. The design department is now in Moscow - there we develop models, create the first patterns and experimental samples.
To produce good coats, you only need to produce coats - all technologies and employees should be sharpened specifically for the manufacture of coats
For a thing to be born, sisters come up with its concept. They collect the base from the pictures, where they like some of the details depicted - part of the sleeve or pocket, later they sketch this thing. Previously, they did this themselves, now the work is done by a specially hired art designer. Then the concept is discussed with the designer, his task is to explain whether he can technically bring it to life and how best to sew the thing.
Initially, we did not position ourselves as designers in the classical sense. Irina and Marina choose trends that are close to them personally, make clothes that they like. They themselves come up with models, choose colors, fabrics and select accessories.
The timing of production of a thing depends on where it is produced - in Russia or in China. The cycle from the emergence of an idea of a thing to the moment it reaches the store takes from 5 months to 12 months. With the growth of the company, we slowed down significantly with production - we try to thoroughly work out models, closely monitor quality. Due to the increase in the team, the speed of decision-making also decreased. When there were only three of us, we could very quickly agree on everything. Now whole departments are doing this.
On the other hand, we are now optimizing and systematizing processes in order to arrive at a shorter production time in the near future. Previously, in Russia, the production cycle took 1-2 months - we produced things much faster, but at the same time in smaller volumes.
Recently, 12Storeez account subscribers and instagram users have left comments that valuable fur items are inappropriate in the assortment of a modern clothing brand. This prompted us to remove fur products from production and remove them from the assortment matrix for 2019 and subsequent years. First of all, we removed the fur coats from sale in the online store and deleted the publication of models on Instagram. At the time of my reply, we had a few pieces left in the stores that we later sold.
We quickly discussed the issue inside and quickly made a decision, because we are a company that has grown from social networks. For us, customer feedback is something we always listen to. This does not mean that we do only what we are told in social networks - in this way you will not invent anything new, you will not create it. I am a logical and practical person, therefore I always reason and weigh all the pros and cons.
Recently, 12Storeez account subscribers and instagram users have left comments that valuable fur items are inappropriate in the assortment of a modern clothing brand. This prompted us to remove fur products from production and remove them from the assortment matrix for 2019 and subsequent years.
Yes, the topic of ecology is much more multifaceted. In order for a person to be truly environmentally friendly, he needs to abandon consumption altogether - buy only shoes, one coat and wear them all his life. But I saw that there are many people who do not like that we use natural fur in production. They are unpleasant to see that in the assortment of their favorite brand there are similar things. We weighed the pros and cons, and in this case we decided to meet the buyers.
We live in the 21st century, where people have the opportunity to comment on everything in public. Today's customers do not need to call call centers - they can contact the founders of companies directly and launch waves of criticism on the Internet.
We have a very loyal audience. Of course, there are times when someone is not happy with the quality of the item, the dimensional grid, the terms of delivery and return. We publish all the reviews that customers leave on our website - now their average rating is 9 points out of 10 possible. This is a high result for a fashion retailer. If the buyer gives a rating below 9 points, then we will definitely clarify that he did not like it, and try to take into account the comments.
We have never had unsuccessful collections, but there were not the best models. The most popular products are always basic things. We repeat some models, but still change the color or fabric. We are often associated with a brand that always has good quality knitwear or a cashmere sweater.
The models that Irina and Marina create, inspired by a recent trend that people have not yet managed to understand, may become unsuccessful. It happens that at first we are upset, but after six months, on the contrary, they start asking us to do such things. Last year, we sewed a black dress with a stand-up collar and for a long time could not sell it - we constantly talked about the model on social networks, even made a discount on it. Irina and Marina love this style, so they often wear it and take pictures in it, uploading it to their accounts. Subscribers began to ask what kind of dress it was and where to buy it, so we decided in April to repeat the model. There are many such stories: people see things on Irina and Marina and begin to be interested in them.
One of the mistakes of 12Storeez was the desire to work without a discount system.We even considered options for burning residues if sales were bad, just not to make discounts. From the experience of our market colleagues, we have seen that buyers get used to discounts and already refuse to buy anything without them. Many well-known retailers who live off price stimulations have become hostages of this. But it hits the business model - companies operate at zero or at a loss.
One of the mistakes of 12Storeez was the desire to work without a discount system. We even considered options for burning residues if sales were bad, just not to make discounts
At first we thought that we would give the rest of the collections to bloggers so that they would advertise us for free. In practice, it turned out that bloggers need all the freshest, and you can never seduce them with the rest. Still, burning things was stupid - only luxury brands do that. Two years later, we accumulated a certain amount of balances, and we still decided to try discounts - nothing bad happened. It is important to simply follow the deadlines for the sales and not turn the brand into a permanent sales store.
In terms of development, we focus on companies that implement various technologies, as well as those with strong marketing. In fashion retail, we look at Inditex, in particular, Zara and Massimo Dutti, the flagships of this holding. We also monitor large multi-brand stores and marketplaces: Wildberries, Lamoda, Farfetch, ASOS, Net-a-Porte, Everlane. We also look at related markets, for example, the cosmetics market: we like what the Russian Golden Apple network and the American Glossier brand do. Strong marketing from the Scandinavian brand Daniel Wellington. The omnichannel strategy leader is Hoff, a furniture hypermarket.
We follow everyone a little bit and borrow only the best practices. Now we are developing a management system - in our opinion, Skyeng, an online English language school, is an example of its successful implementation. We are watching startups, as they are key drivers of trends and innovations.
In 2018, we had a goal - to make sales in the amount of one and a half billion rubles. According to the results of the year, the revenue for all placed orders amounted to 1.2 billion rubles. In 2019, we want to increase it by 2.5 times.
We always set ourselves the most ambitious goals - the higher you aim, the more you accomplish. If you have completed at least 70% of the plan, this is already a good indicator. A year ago, when drawing up a plan, the team turned me around my temple - it seemed to everyone that this was unrealistic. This year, setting goals was already easier.
In the near future, we want to open 13 more stores, as well as pointwise try selling abroad. We see that in Russia in the next couple of years we are likely to exhaust our potential for multiple growth. We will continue to grow, but not at such a pace, and we do not want to slow them down.
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