INCUrable optimists

Josh Mehlman, Luke Telford
1 December 2009
Page 1 of 3 : single page

Brian and Vincent Wu. Photo credit: Anthony Geernaert

In just seven years, fashion boutique Incu has grown from a single store in an almost empty shopping centre to a mini-empire and major trendsetter. Having landed the Australian rights to sell UK brand Topshop, founders Brian and Vincent Wu have now set their sights on creating a top-drawer online store, writes Josh Mehlman.

Sitting in their empty store in a newly built, eerily silent shopping centre in Sydney's CBD seven years ago, twin brothers Brian and Vincent Wu may well have wondered if they had made the right decision chucking in their well-paid jobs to start a fashion boutique.

"When we opened our first store in the Galleries Victoria, that centre was dead," says Vincent. "We would appreciate it just when a customer walked in - at one stage we hardly had any customers."

Even in their most optimistic visions for the future, they could hardly have imagined they would own four stores and a wholesale business, let alone become the exclusive Australian distributor for iconic UK clothing brand Topshop.

Incu-bation period

Before starting up Incu Clothing, the Wu brothers both worked in marketing at different information technology firms.

"We would meet up at lunch times and we always felt it wasn't quite the right industry for us; we felt like we could do a lot more, so we started discussing business ideas," says Vincent. "We've always had an interest in fashion and store experiences because we used to travel a lot; just going into retail stores.

"We had no fashion industry knowledge, no retail experience, so we came at it pretty fresh, but at the same time we probably looked at everything a little bit differently from someone who has been in the industry a long time. Brian and I don't pretend; we're not the most fashionable people."

Perhaps not, but both brothers insist they are not geeks, despite their IT industry background. "My wife makes me kiss her before I check my BlackBerry in the morning," Vincent says with a grin.

The brothers did a lot of research during this incubation period and found a gap in the Australian market for a more inviting store experience.

"There were a lot of boutiques in Australia that we loved some of the products but didn't feel comfortable in there," says Brian. "When we went overseas, there was a lot of product that was not available here and I thought if we could just position ourselves in that kind of high end market - but not luxury goods - we could really hit something."

"We got to know someone who owned a massive chain store and someone who owned a really high-end celebrity boutique in LA," adds Vincent. "We talked to them about the way they operated their businesses and what made them so different."

Learning from experience

From launching the first store in October 2002, it took nearly two years before the Wu brothers felt they were succeeding.

"It took us that long before we could say, ‘OK, we really understand the retail game and how it works', says Vincent. "We made a lot of mistakes and I guess we had to make those mistakes just because we didn't have the experience.

"You see a lot of stores come and go because they’ve got this great brand vision but they don’t understand the business side"

"We learned cashflow pretty quickly. We've got business backgrounds, so that was probably something we were stronger in. But the fashion side, like how to approach brands, which tradeshows to go to, it took us a while."

Brian's experience in the business strategy consulting arm of EDS, now part of Hewlett-Packard, was helpful for the business side.

"We used to create business plans for other companies, telling them ‘OK, is this going to turn profit?' and ‘How much cashflow are you going to need'," he says.

"When we decided to start Incu, we did a three-year business plan, best case/worst case - and that is a good exercise before you try and raise your capital. I think this industry is very tough to get capital in; it is one of the most risky industries to be in, purely because fashion changes all of the time."

By the end of those first three years, Incu had doubled the size of its store and opened a second shop in Sydney's fashionable Oxford Street. In April 2008, they opened a separate women's store in the Sydney CBD and broke into the Melbourne market in September 2009.

Staying ahead of the trend

A major factor in Incu's success has been the brothers' skill at choosing the brands and items customers wanted - or convincing them that these clothes were fashionable.

"About half of it comes from instinct," says Vincent. "Sometimes we've had to drop brands, even though they had the best sell through for the season before, because we had this gut feeling that they were just losing it a little bit. But it's also about analysing data and just talking to staff."

This edge has helped Incu stay ahead of the major chain and department stores.

"With the big department stores, a lot of it is what has sold well in the past," says Brian. "We've got to look forwards. It is a big risk, every season you've got to almost start over again and just make sure that you'll have the right labels in six months time."

In the old days it was a simpler process: just see what the fashions were in the northern hemisphere and wait six months for the seasons to change.

"These days, you have online stores, international magazines, you can't be far behind," Brian says.

As customers grew to trust the Incu brand, it became more of a fashion leader.

"A lot of our brands don't perform very well in the first season, it takes them a good two or three seasons before you start seeing some traction," says Vincent. "Customers always like to check out what's going on. Maybe they need to see it in some magazine or a blog and then they go, ‘OK'.

"It was the same with our store. In the first two years, people were checking us out. Most of them had never heard of the labels so they'd ask, ‘Are these dodgy cheap copies?' It took us a while to establish credibility. Now, if we put in an unknown brand, people trust it because it's within the Incu umbrella."

People are the best advertising

Public relations is now a part of Incu's promotional mix, but most of the company's marketing has been word of mouth or directly targeting customers.

"I don't think we've ever done any advertising," muses Brian. "I think our most important thing is to market directly to our customers. The key is to reward customers directly through our VIP programs.

"I remember a customer walking in and saying, ‘I don't tell any of my friends about the store because if they find out, they're also going to come in'. I thought that was cool."

Incu has also aimed to hire staff who, like the founders, have a range of interests outside of fashion.