Nau’s Success Depends On Getting People Out The Door

May 25, 2007

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Apparel startup Nau launched a new clothing line this spring made entirely of recycled polyester, certified organic fabrics, and biodegradable corn fiber. Because the fabrics are 25 percent to 30 percent more expensive than those used by other apparel makers, the company’s success depends on an experimental retail strategy, BusinessWeek reports.

Nau has built stores, called WebFronts, and instead of encouraging in-store shopping, it offers free shipping and a 10 percent discount if customers order clothes online from in-store kiosks. Nau bets that with this strategy it can hit 72 percent gross margins, compared to 45 percent to 60 percent at other merchants, despite the high cost of its fabrics.

It’s not easy for Nau’s textile partners either. Malden Mills, for instance, is losing money on its work with Nau on corn textiles. If the partners’ development risks and costs become too much, they could simply choose to cut the cord.

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