“We’re looking more in the d-to-c model for lessons on the future of fashion than what old-school brands have done,” said chief executive officer Jeff Abrams.
In 12 years, Rails brand founder Jeff Abrams turned $5,000 of bar mitzvah money into $500 million in total brand sales, thanks to the plaid rayon “Hunter” shirt with a cozy hand feel and a sexy fit that became popular in the mid-Aughts with Beyoncé, Jessica Alba, Gisele Bündchen and other celebrities.
Now, five million shirt sales later, the Vernon, Calif.-based brand is thinking bigger — opening retail stores, expanding its range of contemporary clothing encompassing knitwear, outerwear and dresses; men’s and soon, denim — all with the same soft touch.
“We are becoming a bigger brand in importance in the fashion space, but we still have a long way to go in growth potential,” said Abrams, who has been able to avoid furloughs and cuts for his 100 employees through the pandemic. “Customers finding our e-commerce and finding our product comfy and cozy struck a note through COVID-19….So we were able to get through better than those offering fancy, high-end outfitting.”
When COVID-19 hit, the brand, which is stocked globally in 1,500 retail doors, including premium department stores Nordstrom, Saks Fifth Avenue and Neiman Marcus, accelerated its digital transformation, registering a 200 percent increase in sales through its own e-commerce. “Wholesale used to be 95 percent of sales, but little by little we’ve been building e-comm,” Abrams said, adding that Instagram advertising, influencer marketing and adopting foreign currency exchange have all helped drive online sales to 20 percent of total revenue for 2020. “Next year we’re hoping to double our e-commerce again. We are hoping to have d-to-c be 40 percent of our business through e-comm and physical retail.”
Abrams is also pushing into brick-and-mortar, which he sees as a storytelling vehicle for the brand, which he named after his Eurorail adventures post-college and which has a SoCal/European casual vibe. (Brand ambassadors and new at-home catalogues have also been key.)
Rails opened its first brick-and-mortar store in New York’s SoHo this fall, a 2,500-square-foot California-meets-New York industrial space at 54 Greene Street where Abrams acknowledges traffic has been a bit low but enthusiasm high, particularly for the men’s wear offering.
The space has a clean design with concrete floors, high ceilings and soft neutral tones and is offering enhanced COVID-19-era services like virtual style consultations.
In the spring, the brand will hang a shingle in Hayes Valley in San Francisco, followed by a store in Austin and a pop-up in Paris. Abrams also has his eyes on Los Angeles, either Melrose Place or Abbot Kinney, for fall 2021. (The brand took on minority investment from private equity firms SK USA and Peterson Partners in 2018.)
In terms of product, while the volume of shirting sales has increased, the percentage of total revenue it represents has decreased as the brand has grown other categories. Men’s is also becoming a more important part of the business, with sales up 250 percent year-over-year.
While Vernon contemporary category competitor The Collected Group is leaning into basics to weather the pandemic storm, Rails sees newness as an essential component to growth, even now.
“When COVID-19 first happened, it was straight sweat sets, comfort work-from-home,” said Abrams. “As we got to fall, it was how to blend that comfort with something to wear out — a novelty sweatshirt with a silk skirt, for example.”
Rails never stopped sharpening its style offering. “Now we’re doing more fashion with puff sleeves and trucker jackets. It’s now more about full outfitting. Silk was an iteration we brought into the collection. While we’re in the contemporary market, we’re entry-level, so we were able to gain a lot of market share from people doing silk shirts for $250 to $300 where ours are $188 to $200,” he said.
“Sometimes it feels like there is an old-school playbook that a lot of brands built in the wholesale world to do the same cookie-cutter thing season after season. They build core and just replant, replant, replant, and then the customer says how many of the same top can I buy and it gets tired,” Abrams said. “Customers are looking for newness — the combination of trend and fashion and speed to market. We’re looking more in the d-to-c model for lessons on the future of fashion than what old-school brands have done.”