Last week we announced our latest investment – a $6M round in a women’s fashion retail chain called Ruti. Founded by Ruti Zisser and Sharon Segev, the company has been operating to date without funding, building a well-run operation with 8 stores across the US and nice growth in sales.
The basics of this investment are simple – a strong team, great products (customer retention is very high) and a solid financial performance. However, many people asked me – why is Viola investing in women’s apparel? How is that related to early stage tech investing?
With that in mind, I thought it would be important to share the 3 main reasons we decided to make this investment, and why we think Ruti will become a very large success.
1. Ruti is operating in an underserved market segment
The brand has positioned its offering for women over the age of 35. It’s not that these women have no places to shop, but they do require a different offering than teenage girls. Many of these women have the purchasing power but are not sure what to buy in order to stay relevant and fashionable. In other words, they are willing to spend money once they get personalized guidance on what is right for them.
2. Online shopping is growing fast, but it is really evolving to become omnichannel
This means that consumers will spend a lot of money online but will still go to a physical store for the right shopping experience. In fact, we see how the digital native brands (Everlane, Allbirds, Casper) are all opening physical stores. The future of strong retail brands will be a personalized shopping experience that is consistent, both online and offline. In today’s world, the offline shopping experience is lagging dramatically compared with e-commerce. In fact, in most stores today, the consumer is not identified until they reach the cashier, at the end of the purchase funnel. Ruti has built a proprietary CRM with built-in facial recognition in order to create a truly personalized in-store experience.
3. Ruti has understood that technology can be a real enabler in creating a next-gen brand
Since its inception, the company has used technology to implement a personalized offline shopping experience, to collect all the relevant consumer data, and to create a fully integrated supply chain that caters to what consumers are looking for. Ruti is a next-gen retailer that uses technology in a new way that enables it to gain a competitive edge. In fact, our belief is that the future winners will have to be innovative in their technology. Selling great clothing will just not be enough.
The offline retail chain, the technology, the underserved market. All these lead to the company’s long-term vision – to build a women’s personalized fashion boutique at scale. In other words, they hope to become big, but still give the consumer the unique experience of a small boutique. If they succeed, this company will be massive.