'We're kind of at the beginning of building a community': Hanna Andersson CEO Aimée Lapic on how the 40-year-old kids' apparel brand is evolving

0:03Hello, everyone, and welcome to the Modern Retail Podcast.

0:30a DTC company than you've ever been before. And I want to talk about all of that. But Amy, how are you doing? Thanks for joining. Oh, Cale, thank you so much for having me. I'm excited to chat with you. There's so many positive things happening at Hannah Anderson. I can't wait to share. Absolutely. But first, I want to go into who you are. So I'm pretty sure that you have a pretty robust career in business. You were at GoPro before. Is that correct? Yes, I was. Yes, I've had multiple kind of lifetimes within retail and within high tech. My last job, I was the head of the chief digital and marketing officer for GoPro and really helped them advance and drive their e-commerce business and subscription business, which was really exciting.

1:14Prior to that, I was the CMO and head of the subscription business for Pandora, the digital radio company. and prior to that I actually was at the Gap for about 14 years of my career and I was the CMO and the head of the e-commerce business for Banana Republic. Wow so this is really a full circle thing where you you started in apparel then you went into all that weird tech stuff and now you're back into apparel. Right on exactly yes and and that's honestly one of the reasons why this is such a fun moment for me is that it is full circle from how I started my career in apparel and way back when I actually ran Gap Outlet internationally and learned a lot about the kids and baby business at that time.

1:56So really fun. Really? So yeah, can you actually give a little bit of that? So what was your trajectory at Gap and Banana Republic? Was it doing the business things? Was it marketing? What were you doing? Yes. My very first job way back when I joined the Gap is I ran CRM, so Customer Relationship Marketing for Banana Republic, and many people probably remember the credit card and the Lux card, all of that. That was my very first job at the Gap. I was the person who was trying to get you to sign up for a credit card and we turned that into a very successful loyalty program for Banana Republic and then eventually tied all three brands, Gap, Old Navy, and Banana to one credit card program.

2:38So I did a number of jobs at Banana. And then I went over to Gap and helped launch their international business. So at the time we were in Canada and a little bit in the UK and Japan. And my team and I really drove Gap outlet and actually Banana Republic factory stores internationally, in addition to running marketing for the North America business. So we opened China. We tripled our business in Japan. And we really grew from the UK into multiple European countries, France being one of them, near and dear to my heart. So very exciting times at The Gap. It was a wonderful experience, and I have lots of great memories and spent over a decade there of my career.

3:22Very, very cool. So can we go into a little bit the history of Hannah Anderson? Because it's a pretty old brand, and it's been around for a while, but it's had many different iterations. It sure has. This is the wonderful thing about Hanna is that it's such a phenomenal brand. This is our 40th anniversary. 2023 is our 40th anniversary. We were founded in 1983 as honestly one of the first premium sustainable kids clothing brands and founded on the idea that clothing can be not just good for the children, but but also good for the environment in terms of lasting through multiple kids, multiple wearings, less landfill, organic cotton.

4:06I mean, we were the first organic cotton brand before organic cotton was even a thing in kids apparel. Over time, Hannah has really morphed itself, as you said. We've evolved. And so today, we no longer operate in stores. We're 100 % direct to consumer and are, you know, frankly, much more profitable because of that and honestly, much more attuned to our customers and anticipating their needs because we get real-time feedback from our customers through our digital channels and our digital experience. And that's what I'm loving is that we are able to launch some really terrific things for the brand, but also our customers like our Hannah Meadow marketplace that we launched back in February.

4:49And that really reinforces the idea that the quality of the clothes is everlasting. I mean, literally, we had people who sold clothes that they have had for over 20 years, multiple generations of children wearing them, and they're constantly selling them today. And they're able to either get paid in cash or get paid in a gift card to use on the regular price site. And it's been a really terrific success for us and for our customers. Got it. Cool. So I know this predates you, but correct me if I'm wrong, but there used to be over 50 Hanna locations. Like you were pretty, you had a lot of stores.

5:24When was the strategic decision made that you would sunset that and be focused more on the digital business? It's a great question. It does predate me. So Hanna made the decision in 2019 and started closing stores in 2019 and early 2020. That was actually very prescient, I guess. Phenomenal timing, honestly. Who knew what was going to happen? But because of that, we were able to actually not just recruit the sales that had happened in the stores, but drive incremental business. So we've been growing, even though we have no more physical footprints. We've been growing through very targeted marketing, partnerships, lots of things I can talk about, all through direct-to-consumer.

6:05When you joined, and that was July of 2022, I believe it was July 19th because it was the day after my birthday. I noticed that when I was looking at the flash releases. Ah. What was your mandate? What was like, what did you come and say, these are the things that I have to do? So I'll give you my mandate and I'll crux it in why I came to Hannah in the first place. As a mom of three, so three phenomenal children, I have known the brand for a long time. And I've always been impressed with the happy designs and the premium quality. And so what basically Hanna needed was someone who could come in and take phenomenal product and help drive growth through a couple of different areas.

6:46And so my mandate was help us build our brand awareness. So Hanna is a very loved brand. We have a very high net promoter score. Our existing customers stay with us for years and frankly, generations. So we have moms now who wore Hanna's as young children. But we have very low brand awareness. We're only in the mid-teens in terms of our percent of brand awareness. And having had the opportunity to work across a couple, you know, a few different, very iconic, globally recognized brands like Banana Republic, like Gap, like GoPro, I understand what it takes to drive brand awareness. And so that was mandate number one.

7:24How do we become more well-known with our customer base and our future customers in terms of driving this kind of iconic global brand? And then this second kind of area that I was asked to lean into is what Hannah had already started doing, and that's selling digitally, selling through e-commerce. So as I mentioned before, I've been lucky enough to drive a couple of different e-commerce businesses, GoPros, Banana Republics. And so I'm very familiar with what it takes in terms of driving digital capabilities that end up driving long-term growth and profitable growth for a company. And that was basically mandate number two.

8:02And my own personal mandate of what I wanted to do is the team at HANA is an incredible team, just an amazing group of people. And I am all about how do you build really phenomenal teams that build each other up and drive long-term success for each other and for the customer at the same time. And so that's what I love to do. And it's basically what I'm trying to do at HANA as well. Got it. Those are a lot of big things that you're trying to do. With the first one, I want to ask, Hannah's a little bit different from the previous brands you've worked at because they have brand awareness thanks to either stores or wholesale distribution.

8:39So what are the levers that you're pulling? Is it all just digital marketing? What are you thinking about to make it so that more people know about Hannah Anderson? It's a great question. So it is first digital marketing in terms of it's easier to measure the impact of digital marketing. So dollar in equals dollar out in terms of lifetime value or gross margin expansion, et cetera. That's kind of number one. Number two, we're focused on partnerships. So who can we partner with in terms of gaining access to either their customer base or a similar kind of customer base in a tangent and adjacent spectrum, if you will?

9:18So a good example of that is we've recently partnered with Dr. Becky, who is a well-known expert on all things children. And so it's not necessarily another kid's clothing company, but a person who is very respected by moms. We're trying to do more and more of that to get in front of future customers as well. And the third area, frankly, is we're building a broader community. So not only of our existing customers, they're number one, but also of other folks who are being introduced to the brand through advocacy, through community development, etc. etc. And that's how we're trying to drive awareness as well.

9:56So in a very viral way that's authentic to who we are as a brand. Got it. I want to go into those last two things. So the partnerships, does that function generally the same as influencer partnerships or with Dr. Becky? How are you working with her such that it's a partnership? Is she helping with product development or is she mentioning them on her social feeds? How does that work? Or how does it work in an ideal world, I guess, is my question. In an ideal world, the partner would be multifaceted. So not only would she or he mention us on their social feeds or in their community, but also they would help us in terms of partnering on either future needs of the customers through product innovation or product ideas, but also current needs in terms of giving feedback from their community around what is working and not working within our product or within, frankly, within our marketing or within kind of how we're thinking about prioritization.

10:50So there's a whole host of things that can come from partnerships. With Dr. Becky, we've partnered to basically really get her advice as a parenting expert and a psychologist in her newsletter about talking about what's positive about some of our clothing or our products in terms of everything from, frankly, the swimsuits having UV blocking UV rays to literally the skin sensitivity within kind of certain kids and how our organic cotton is soft. and better for skin-sensitive folks. So there's a whole host of things that she can do in terms of recommending our product for specific needs of her customer base.

11:33Got it. And how, you know, with these types of, this focus on partnership that's very much about brand, you know, sort of just introducing people to the brand, how do you approach attribution with that? Because, you know, I can imagine she's talking about certain products, but also she's just talking about the brand as is. Do you have any levers that you're pulling to try and make sure it's working? Yes, we do. We have short-term levers and then we have longer-term levers. So one of the things we have stood up since I've been with a company is the ability to look past last-click attribution. So within marketing, most digital companies measure the effectiveness of either paid media or even organic media or organic partnerships through specifically, can I track where that that last platform, media placement, et cetera, a customer came from before they made an actual sale on our site or a transaction on our site.

12:29So we've been doing that for years. And in winter and earlier this year, we stood up the ability to really look at media across a multitude of different touch points through a media mix model to see not only from last click attribution, but also incremental return on ad spend where it came from, incremental new customers where they came from, et cetera. And that is through a series of tests that we stand up within different geographies, et cetera. And that media mix model is another data point with our last click attribution that really measures the incrementality from some of the partnerships, as well as some of our media placements.

13:11Got it. And what is your media mix exactly? Are you mostly just on the platforms? Are you on TV? Have you changed that since you've joined? So we're doing a lot of testing today. We're mostly on the platforms. The bulk of our ad spin is within digital platforms itself. We've just concluded some connected TV testing that was pretty successful for us from an incrementality perspective. So we're really excited about that. Yes, that's not always the case, as you know. I do know. So we're excited about what we learned over the summer campaign, and we want to roll that into a fall and holiday campaign as well.

13:44We've also done a fair amount of, or we're intending to do a fair amount of different types of upper funnel testing, marketing testing as well. So some of that's still coming, frankly, but it's not all linear TV is an area that I'd love to test in. We haven't done that yet, but it's something that I'd love to try and test into as well. You mentioned many minutes ago about community, and I feel like community is one of those very buzzword-y, laden words that means many different things to many different companies. with kids and like children, I have many ideas about how you could foster community with a certain brand.

14:20Like what have you been working on specifically with that to sort of engage the customer base? Like, is it about having an online group? Do you do Facebook? Do you do Reddit? Or like, what does it mean to engage the community base? So our idea of community continues to evolve. And I think that's actually super positive because we were learning what communities really tend to make a difference and not for different brands. And I would say we're kind of at the beginning of building a community. There has been a very strong community for many years of HANA customers that love our brand, that speak on behalf of the brand that hasn't actually been fostered by the brand.

14:58Like it hasn't been negated by the brand, but it's just happened organically. And so you can go onto YouTube or within Facebook, et cetera, and see moms talking about kind of wear testing the HANA jams over time. You can see moms talking about how wonderful the fabric is on their kids who may have eczema or not. I mean, it's all organic. It's all authentic. It hasn't been really fostered or driven by the brand. It's all been happening on the side. What we've been testing into is how do we take that pure love of the brand that's happening already and actually ask people who are already talking about the brand to start reviewing and giving feedback on some of our new products as well.

15:40And that's what I mean by community is we're taking an existing group and we're basically just introducing them to more of our adjacent products. So this brand began as a PJ brand. It is probably the first brand that really fostered family matching for holidays in pajamas. It's actually how I got to know the brand about a decade ago is that everybody could wear one. It was really cute, even the dog. And so we were known as that pajama brand. How do we get that same level of love and introduction to some of our other product categories? Like right now, as you probably know, we introduced a whole active line in February as well.

16:21That's very different than pajamas. I mean, it's literally skorts and shorts and wicking tops, et cetera. It's all about active and play, et cetera. So we wanted to introduce some of the moms and folks who love us to our new products by gifting it to them, by asking them to write reviews, by really asking them for real feedback. And so that's the way we've been fostering our community. Got it. I wanted to get into the expansion with the athletic wear. What is the overall strategy with product expansion? How do you decide what areas you're going to go to? And you can use the athletic wear as an example.

16:56Was that just because everybody's buying athleisure right now and you thought, why not kids too? That would be a good reason, but that wasn't our reason. In general, so we look first at like, what are we known for? Like, what's our destination category, et cetera? So we're known today as a pajama brand. And we're known for kind of the wearability, the room to grow, the longevity of it. And then we've, over time, have introduced play clothes that really speak to the same things. So room to grow, cuffs that enroll, wear testing, reinforced knees on the pants, et cetera. So we've taken kind of the things that we're known for within pajamas and we brought it into play clothes for boys and girls.

17:38With our athletic line, we basically said, OK, well, what else are we known for? Like we're known for the longevity. We're known for like really getting in there and getting tough and dirty and hard on clothes and the clothes lasting and they're lasting for a long time. And so we basically said, okay, what is the next kind of use case, if you will, for kids in which they need that? And it was active, basically. We've been asked for a long time from our customers to come up with active, not an active wear line per se, but like clothes that kids can wear on the playground over and over again or in their gymnastics class or in their tumbling class or in their playing little league, et cetera.

18:20I mean, kids are very active, probably much more active than me, I imagine. They're a lot more active than me. How long did it take you to develop that? Like, what is the product expansion process from idea to when it's actually into market? That's a great question. It depends on how big the idea is, and it depends on how different it is from the normal line or kind of normal categories. So for the activewear line, the idea started before I joined the company. and in under a year they went from idea to sourcing to assortment to what it would look like to marketing it. So that's pretty fast for a clothing company.

18:58I can remember back at the gap, it would take us like honestly a year and a half to two years to come up with a new product line or new product innovation. So very fast. For something like some of our, honestly, our pet johns, which have grown tremendously, it's a smaller idea, it's a smaller category, But that's happened in a much shorter timeframe. So it really depends on what the category is and how different the product is and what the innovation looks like. Got it. I wanted to talk a little bit about the resale program, which you mentioned up at the top. Can you just give sort of a high level of how that works?

19:31You gave a good sense for why you want to enter it, but if you want to flesh it out a little bit more. I think it's a lot of different apparel companies are doing this, but why specifically did you think Hannah Anderson was ripe for doing resale? So that's a great question. So honestly, Hanna is probably the perfect brand for doing resale. So a lot of companies do offer a resale marketplace. The reason it's so appropriate for Hanna is we pride ourselves on the fact that the clothes last for hundreds of washes, that they last for multiple kids within a family. That, frankly, we've done customer research, even since I've joined that say a lot of new customers are introduced to Hannah from their local resale store or a friend handing them a favorite bag of clothes saying, I can't bear to throw these away or give these away, donate these.

20:25Will you take them? And they happen to be Hannah's because they're so high quality and they last for so long, which is why we thought this makes so much sense for the brand. We're already one of those brands as known as being very durable, very high quality. Honestly, longevity is on our side. And it would make sense to offer resale as an opportunity for our customers to give back, but also be paid for what they did, what they bought, and be able to use the credit for future close as well. So when we thought about what that marketplace could look like, there's a whole host of different ways to approach resale, right?

21:02You can go with a platform that will do all the resale for you. You can go with a platform that does, you can partner with certain stores, et cetera. But we really wanted to be able to make it person to person so that our customers were the ones who benefited the most from the resale. So on our marketplace today, you as an individual can list your items and sell them for either cash or credit towards a regular price purchase at hannahanderson.com. And we give you a little bit more if you choose the credit versus the cash. So we give you over 100 % if you choose a gift card. And we are seeing overwhelmingly customers choose the gift card and make another purchase on our site.

21:48And so it's become the true nature of resale is all about circularity within the marketplace and less waste, less clothes getting in landfill. And it's a beautiful model of that's happening. Exactly. How does the fulfillment work? If it's person to person, does it mean that they just then ship it up and send it to you who sends it to them? Or do they send it to the other person directly? They send it to the other person directly. We are not the middleman. We're literally just allowing customers to use our marketplace. And it's not 100 % altruistic. Like it's, it's, um, but, but where we honestly, the benefit for Hannah is the fact that people can actually see firsthand that these clothes are durable and high quality and that we're not just telling them in a marketing field that they're durable and high quality.

22:37And the other benefit is that most people come back and buy again, after they sell the clothes that they've already used. How has, like, can you give any, any color about how it's grown in terms of listings And also, who are you seeing? Like, how are you marketing this and who is taking to it? Is it already your most engaged customers that are selling them? Or how is that all working? That's a great question. So I have a little bit of data that I can share. I can't share as much as maybe you want to know, but I can share a little bit. I'll take whatever you can give me. Excellent. So when we first launched, we were told a good goal would be to have about, I believe it was 2 ,500 units listed on site because these are all individual.

23:19We've had over 17 ,000 units listed for sale, so really engaged selling population. We are seeing predominantly the people who sell be our long-tenured customers, so customers who have been with the brand for years. And one of our hypotheses, and we're digging into this data, is that these may be customers, We thought initially there were customers that had aged out of the brand, but that's not actually the case because well over 50 percent, much higher than that, are actually choosing this gift card and coming back and buying again at the site. And they're not buying baby for the most part. They're buying kind of little to big kids.

23:59So it does lead us to believe that these are customers that are still within the age bracket of HANA. And we're excited about that because that's the ideal for us. We're not against people coming and reselling their clothes and leaving and taking the cash. That's an option. But the ideal is that it becomes a loyalty program for us, that people want to sell their clothes to be able to buy future clothes for Hannah as well. Got it. Yeah. And the folks that are buying for the postpart, what's really interesting is the folks that are buying for the most part are brand new customers as well to the brand.

24:29So we're giving access to the brand at a lower price point to customers also and probably tapping into a completely new customer segment. Really? And so are you specifically marketing that you have this marketplace online or sort of how are you reaching those new people who might want to buy them at a discounted price? It's a good question. So we are marketing primarily through our existing channels. So either posts on social media or within our email base, we're talking about it as as a reinforcement of the quality of the clothes. And we're showing visuals of literally multiple people can wear the same item over time.

25:08And it stands the test of time. But we're not afraid to talk to our existing customers and to new customers about this as an alternative. We've spent a little bit of media behind it to try to acquire new customers, but most of it is coming organically through word of mouth. Got it, got it. And virally. That's great. Great. You mentioned that sort of a quasi-loyalty program. And I actually want to ask you this because of your last role at GoPro, you were in charge of subscriptions, right? I was. So was that something that you've been, any type of loyalty slash subscription program you're trying to introduce at Hannah Anderson to sort of boost it?

25:43Because I feel like many DC brands are trying to think of that. Or is that not on the table right now? I wish I could answer your question, but I just can't. Okay. I will accept that. You can ask me in a year and we can have a very robust conversation. All right. Amazing. I'll wait for then. Well, so then that leads me to what are your plans? Like, what are you thinking about for the year to come? I guess what's on the roadmap? So we have done a lot of work really focusing the team on what's going to make a big difference in the brand and the growth story. And so first and foremost, it's all about building this brand awareness.

26:16So we are doing some upper funnel media testing. We've invested in an ambassador program. We have 40 plus new ambassadors that are kind of customers tried and true that we're really asking to help us sell the brand and the clothing to their followers. So that's a big focus for us. We're also focused on some fun future product collaborations, but I'm not going to say anything else. And from a digital capabilities experience, we're starting to stand up personalization in a big way. So we've gotten some really nice traction so far. So there's more to come on that from us. As I mentioned, we're optimizing our digital media.