Bayard Winthrop launched American Giant in 2012 with a clear conviction: that apparel is a muddy category. You have a lot of middle players, but none of them have much in the way of brand resonance.
"The Gap to Banana Republic to Champion to American Eagle, all of these brands . . . had big distribution mechanisms, big distribution engines," he says, "but didn't really mean anything, or resonate with the consumers in a kind of emotional, fundamental way—and yet they're very big."
So Winthrop had a hunch: if you build a brand that resonates, the customers will come.
Why? Because, he says, manufacturing was in a weird way like this: You had "Made in America" brands cranking out flimsy, synthetic blends on the low end and then high-quality, but incomprehensibly expensive stuff on the opposite end, such as a $500 pair of jeans.
This consumer conundrum is the result of a long, slow trend in manufacturing. Winthrop recalls the clothes that he grew up with, like Champion sweaters, Levi’s jeans, the heavyweight Navy hoodie that his father had. Back then, the paradigm for manufacturing emphasized putting time and resources into products, followed up by customer service. But over the past 20 years, the paradigm shifted: Clothing brands were built with heavy investment in distribution (hello, malls) or into marketing (hello, shopping bags with naked models on them). As a result, 70% to 80% of the price tag on a given T-shirt finances rent for brick-and-mortar storefronts and for advertising campaigns.
American Giant, Winthrop says, is a reaction to that trend:
"When you invert that paradigm and say, ‘To hell with that, I'm going to go back to the old way of investing, take advantage of the Internet and consumer distribution models, and invest those costs back into product and service,’ you reemphasize (investments) dramatically. It's almost unfair. The reason why I can produce beautiful sweatshirts with tons of needlework and paneling and gussets, and custom hardware, is because I'm investing way, way more into my product than my competitors are."
The response, in turn, has been staggering: On Slate, Farhad Manjoo declared American Giant to be the Greatest Hoodie Ever Made last Christmas. It was "rocket fuel," Winthrop says. Since then, the company has been trying to keep up with demand.
"More and more, it feels as though we’ve tapped into a bit of a third rail of consumer interest about a category that was not really getting filled in the market," he says.
This was the other conviction that American Giant launched with: If you could deliver American-made quality and value, that would unlock the mainstream customer, someone who wanted high quality but wasn’t about to lay down $500 for a pair of jeans. The other piece, of course, is that while brands have been built around distribution and marketing, customers are now more empowered. So not only did the Web remove the need to sink investments into brick-and-mortar distribution, it also enabled customers to be more discerning and word of mouth to fly faster.
"It's more than just about a sweatshirt or a T-shirt," he says. "It's more about being authentic, trying to do something right and well that I think clearly resonated with people."
So, strangely enough, new technology has enabled a return to old-school values. Customers don’t need a bunch of professional athletes to tell them what to buy; they can look it up themselves. And as companies like Toms reveal, people are going to support the brands that mean something to them.
Bottom Line: "There’s almost irrational loyalty to us," Winthrops says, "because we’re doing something important in the eye of the consumer."