DTC Briefing: How ThirdLove plans to grow its customer base this year

The biggest piece of news, announced Monday, is that ThirdLove is acquiring three-year-old startup Kit Undergarments for an undisclosed amount. ThirdLove co-founder and CEO Heidi Zak told me that the company had been looking for ways to connect with Gen Z, and acquiring a startup whose customer base skews younger was one way to do that.

ThirdLove is also on a mission this year to expand its physical retail presence — the company plans to open between six and 10 stores by the end of the year — and grow new product lines. Zak said that scaling its sports bra collection in particular would be a big focus for ThirdLove. 

Like Brooklinen, Parachute and many of the other digitally-native brands that launched in the mid-2010s, ThirdLove is looking for new levers of growth this year. While Zak declined to share sales data with me, the reality is that the longer that a DTC startup is in business, the harder it is to continue driving exponential sales growth each year solely through online sale. By expanding its retail presence and promoting new lines of products, ThirdLove is more aggressively going after more customers that don’t fit the profile of its early adopters.

Take the acquisition of Kit Undergarments. Zak describes ThirdLove as the “number one online bra brand for millennials, and says the company also has a strong following with Gen X. 

When ThirdLove launched in 2013, it was one of a growing number of companies — ranging from startups like Adore Me to mall-based brands like Aerie — hoping to take advantage of the fact that lingerie giant Victoria’s Secret’s sales were slowing. 

These startups took aim at a number of things they said Victoria’s Secret had gotten wrong in recent years: promoting unrealistic beauty standards, being too exclusive and not focusing on enough on proper bra fit. 

This is where ThirdLove hoped to innovate. As Zak puts it, she founded ThirdLove with the goal of “helping solve women’s issues with the products they might have.” ThirdLove aimed to take some of the guesswork out of online bra shopping with a fit quiz, as well as offering half-sizes to help women get a better, more precise fit compared to what they might find at Victoria’s Secret. 

“They [ThirdLove] were one of the key ones who started talking about how the bra fit should feel, and how to find the right size bra online,” Jessica Ramirez, retail research analyst at Jane Hali & Associates said. 

Meanwhile, Kit Undergarments is more fashion-focused. Co-founded by celebrity stylists Jamie Mizrahi and Simone Harouche, the pair describes Kit Undergarment’s typical customer base as 18 to 34 year olds, who are more likely to live in urban areas compared to the typical ThirdLove customer. 

“A lot of our followers, they know us as stylists… so a lot of our products have been seen on influencers,” Harouche said. Recent celebrities featured on Kit Undergarment’s Instagram include Riley Keough, Claire Holt and Katy Perry. The company sells bodysuits and shapewear, in addition to bras and underwear. 

Starting today, Kit Undergarments will be sold through ThirdLove’s website. “We expect to cross-promote the brands as it makes sense — whether that is through social, through partnerships, potentially through partnerships at our newly-opened ThirdLove stores — those are all things you’ll see from the brands over the next year,” Zak said.

Outside of a pop-up ThirdLove opened right before the pandemic, the company didn’t open any permanent stores until this year. Zak said that the company’s physical retail expansion “got derailed because of the pandemic,” but the company has opened four stores in California so far, and plans to open a few more before the end of the year. 

“We’ve hit a scale at ThirdLove with millions of customers where we are really able to continue to build both relationships [that are] more in-depth wit current customers, and then also acquire new customers who maybe weren’t as comfortable buying that first bra online,” Zak said. 

In addition to growing its store count, ThirdLove is also focused on expanding its product assortment. While its core product is still t-shirt bras, ThirdLove now also sells various styles of bralettes, sleepwear, leggings and tank tops. In particular, Zak said that sports bras are a line of business that ThirdLove would be looking to grow this year. 

Within recent years, sportswear giants like Adidas and Lululemon have released new sports bra collections with what they claim are unique technical innovations, but “I don’t think anyone owns the market,” Zak said. ThirdLove’s best selling item in that category is the Kinetic Impact Sports bra, released last year, which the company claims it spent two years developing. 

Ramirez agreed that while no one company owns the sports bra market, “within the sports industry, we’ve seen everyone try to tap into that.”

As ThirdLove looks to grow its brand and product assortment, its list of competitors also keeps growing. There’s not only Victoria’s Secret — which is more actively trying to address past criticisms of exclusivity — but now there’s also new digitally-native startups like Pepper and Cuup that also aim to better address women’s issues around bra fit. As ThirdLove expands into activewear, it’s also increasingly in competition with sportswear giants like Nike. Meanwhile, startups like Skims are also increasingly trying to get beyond shapewear and into the larger bras and underwear market. 

As competition grows, ThirdLove is trying to maintain a focus on fit as its differentiator.

“I’m really excited about the products we build,” Zak said. “And I think they’re superior.” 

What I’m reading

• American Eagle is quietly morphing into a logistics company, thanks to the acquisitions of AirTerra and Quiet Logistics over the past two years. Shekar Natarajan, American Eagle’s chief supply chain officer, spoke with CNBC about the retailer’s logistics ambitions. 
• Nike released its first pair of digital sneakers in partnership with RTFKT, the creative studio it acquired in December. 
• Retail Brew looks at why instant-delivery companies like Gorillas and FastAF are trying to recruit more beauty brands.

What we’ve covered 

• Haven’s Kitchen is one of many brands trying to use QR codes to get more grocery store shoppers to visit its website. 
• Once a stalwart of malls, denim brand True Religion named a new senior vice president of e-commerce in March to help spearhead its direct-to-consumer transformation. 
• Between Square, Toast, and newcomers like SpotOn, there’s more digital point-of-sale providers than ever looking to win over restaurants. But many restaurateurs told Modern Retail that they’re reluctant to disrupt their business operations to try out a new POS system.