A recent fireside chat between Parade co-founder and chief executive Cami Tellez and a small, private group of 2PM’s Executive Members was more than enlightening. It ended with one attendee proclaiming, “I was nothing at 23 years old” (Tellez is 23), and another confirming, “She’s ahead of the curve.” One of those responses was from a heralded retail executive with a decade of helping some of the most visible brands in America develop omnichannel presences. Every other member in attendance was equally esteemed in their own right.
Tellez represents many of traits familiar in the high-growth, modern retail industry, detailed in books like Lawrence Ingrassia’s Billion Dollar Brand Club. You know the commonalities weaved in and out of brands like Warby Parker, Away, Casper, and so on: the Ivy League pedigree, the summer internship with the well-respected Tusk Ventures, proximity to New York (or Los Angeles), and a coveted role with Rough Draft Ventures. But what separates Parade from earlier brands at similar stages is a combination of three attributes: profitability, supply chain management, and arbitrage in consumer behavior.
Ten minutes into the discussion with Tellez, it became clear. Her team identified a simple arbitrage that may define the coming years of desirable digitally-native brand growth. While Parade is an apparel and accessories retailer, the brand acquires and maintains customers like a consumer packaged goods brand. It’s more than a qualitative notion of community, brand awareness, or presence – terms that we often assign to apparel retailers. CPG brands operate quantitatively in distribution, shelf space, frequency, average order and lifetime values. Parade is a product that its consumers buy with a cadence more recognized in CPG or beauty brands. I recently spoke with Jann Parish, the former Chief Marketing Officer of Victoria’s Secret, about the opportunity ahead for Parade:
It looks like Parade is firing on all cylinders; product that performs, marketing that resonates and an avid, loyal (and growing) customer base.
Loyalty to an apparel manufacturer separates brands like Lululemon, Nike and Athleta from the specialty retailers that continue to struggle despite promotional events, large retail footprints, and unparalleled distribution. What separates brands like Lululemon from traditional retailers like Brooks Brothers, Aeropostale, or Forever 21 is two-fold: Winning brands require loyalty and repetition. This is where apparel culture meets CPG’s superpower.
On Applied Loyalty and Repetitive Sales
When you buy your groceries from Whole Foods, you choose the same products time and time again: Siete Foods for your tortilla chip cravings, Olipop for your root beer fix, and Jeni’s for your weekly ice cream binge. You do this almost without thinking, whether you’re purchasing through an Amazon app or roaming the store in person. You will find the same expressions of brand loyalty and purchase repetition in the aisles of Target. You choose the same diapers, the same premium razor blades, and the same non-aluminum deodorant. Again, you do this without much thought.
variants ≠ variance
While brands like Onnit, Native, Care/Of, or Schmidt’s exited for high eight or nine-figures, apparel brands who’ve grossed similar revenue figures have failed to achieve the same. This has been a bane to digitally-native brand founders like myself. But the growing successes of like-minded brands like Parade, Tracksmith, Madhappy, Summersalt, Rapha, and even Todd Snyder (founded in 2011 and acquired in 2015) may offer similar contexts. Parrish continued:
Parade has done a good job being an anti-Victoria’s Secret without calling itself one, that means less acquisition cost to fight VS and more dollars to its community. Similar to the approach Lululemon took years ago with its brand: it didn’t fight Nike. It won with performance and community. Parade has product performance and community nailed. A shrewd distribution strategy is its next step.
Community and loyalty can be interchanged in these assessments. Founded in 2019, Parade grew from zero to eight figures in annual revenue within 18 months. One of Maveron’s investors in the brand, Natalie Dillon, recently shared:
Their brand love is off the charts. In their first 12 months they acquired nearly 100,000 customers. The brand did $10M in sales in its first full fiscal year in 2020 with about 70% coming organically. 
These are extraordinary numbers, and while there are dozens of brands doing greater merchandise volume, few are selling to so many customers so early in their life cycles. Nearly 15 months into a pandemic that shuttered a large cohort of the retail industry, Parade’s latest valuation added to my curiosity about the brand. Tellez raised at a $70 million valuation from some of the smartest money in consumer investing: Lerer Hippeau, Greycroft, Vice Ventures, Shrug, and a who’s who of consumer founders and independent investors.
There are reputable, digitally-native fashion and accessories brands with gaudier revenue metrics but few if any have the ability to raise at a 5-6x multiple, a markup commonly held for brands that market repetitive products. And this is what may end up separating this new class of modern retailers from the 1.0 and 2.0 phases. They’ve figured out how to endear themselves to the customers in a manner reserved for another class of goods.
Like many business travelers, I likely own a dozen Lululemon tees in varying colors. Many were acquired on work trips after a number of near-instinctive visits to the retailer for a purchase that was as predictable as it could be. The 23-year-old brand is one of the rare apparel retailers to understand that “variants ≠ variance.” Lululemon manufactures and subtly markets products so effectively that customers find reason to revisit their stores, often for the same SKU in a different variant. This is CPG loyalty manifested by an apparel retailer. Once applied to an earlier-staged brand like Parade, it becomes difficult to question the valuation.
Brands like Parade excel at earning loyalty expressed through repetition. Their marketing dashboard likely shares “repeat purchasers” as a key performance indicator whereas many apparel brands associate average order value (AOV) and “time to payback” as their key metrics. More brands of this generation will pattern themselves like the consumer goods that own the right shelves on the right aisles of your favorite grocery and market retailers. In doing so, they’ll teach the old dogs the tricks that they should have already learned.
By Web Smith | Editor: Hilary Milnes
2 thoughts on “Memo: A CPG Epiphany”
100% – this is pretty much where we are with Printfresh – it makes sense that undergarments would have such a high consumer cadence. We are a little further apart due to it being pajamas but same idea with regards to variants. Solved many of the issues we had with our previous women’s apparel brand where we had lots of new styles coming out all the time…great insight!
Leo, thanks so much for reading. I am glad that you connected with it.