This is one of the most important things you’ll ever read about growing a profitable fashion brand with staying power.
Before we get into it, I want to thank this week's sponsor: Proppel. Proppel helps your marketing and operations team source exceptional remote talent from LATAM, so you can grow faster and reduce costs up to 80%.
If you submit a hiring request to Proppel by May 20th, you'll receive 10% off the placement fee. Click here to get started.
Every brand thinks that they want to go viral. They want a “hot item” that changes the trajectory of the business. There are huge benefits to this: your CAC plummets overnight. Sales and cash flow surge. Your brand might even become a household name.
Obviously, these are all huge upsides. But developing a “hot item” has similar outcomes to winning the lottery–many lottery winners (and brands) are actually worse off within three to five years.
I’m going to explain why that happens (with proof!) and how you can avoid it.
The Harsh Truth Of Hot Items
I’m going to pull back the curtain on hot items and tell you how this phenomenon will really impact your brand.
I have first hand experience here–one of my former employers was mired in “hot item” purgatory for years (and may still be there). I’ve also worked with several consulting clients who struggled with the issues I’m about to outline.
If you only remember one thing from this newsletter, make it this: hot item customers are not repeat buyers. The repeat rate (percent of new customers progressing to a second purchase) for hot item customers is going to be much, much lower than your pre-hot item average.
When these customers do come back, they’re probably going to buy the hot item again. So iterating on it in new colors and fabrics will help you a bit here.
You can think of the hot item as analogous to a viral PR hit, like Taylor Swift (or a celeb with a similar large, rabid following) getting photographed in your product. It’s a sudden infusion of awareness, but those folks don’t know anything about your brand. And they only care about it because of its connection to the celeb.
What does this mean? You have to be very careful about how you “comp” the sales and paid media performance you experience during a hot item period. If a hot item doubles your sales in 2025, you’d be foolish to plan sales up 2x in 2026 with the same ad:sales ratio.
Unfortunately, this is just what many brands do. And then, they make another fatal mistake: they decide that this is finally the moment that the brand has crossed over from stage one to stage two. They decide that it’s time to invest in “brand marketing” and assortment expansion.
How does this play out? If the hot item happens in year n, the brand will enter year n+1 with a much higher cost base, but the projected sales won’t materialize. Brand-eroding markdowns will ensue.
The brand reputation gets damaged. The brand’s ability to course-correct it tied to the founder’s ability to “wake up” and re-adopt a stage 1 mentality. But if the brand never had a functional phase 1 strategy, course-correction might be impossible.
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How can you maximize the upside of a hot item while minimizing the risk? Keep your investment in human resources smart and flexible.
Let's say your brand wants to scale up its Meta ads creative output after launching a best selling item. Instead of hiring a head of growth or bringing on an agency, you could:
- Work with a coach to upskill your Meta ads knowledge so you can own the strategy and lead the team
- Hire a fractional creative strategist to identify opportunities and write briefs
- Hire a LATAM-based graphic designer, video editor and/or media buyer by working with Proppel.
Proppel can help you define the perfect fit for your brand's needs, then find the right candidate from their roster of LATAM-based talent.
Your hiring dollars will go further, but you'll still enjoy the benefit of a lower language barrier and a bigger overlap in time zone and culture.
If you submit a hiring request to Proppel by May 20th, you'll receive 10% off the placement fee. Click here to get started.
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Case Studies: How Real Brands Handled Hot Items
Here are just a handful of stories that illustrate how this phenomenon plays out. Unfortunately, the end result is usually the founder losing control of his/her brand.
Important context here: when you see an acquisition announcement in the press where the sale price is not mentioned, it’s highly likely that the sale was a special situation/fire sale. You’ll notice that none of the sale prices of these companies are disclosed.
Mansur Gavriel developed two hit handbag styles, invested the proceeds into a men’s collection, runway shows and expensive photoshoots, and then the founders were pushed out. Eventually, the founders came back. You can read my full case study on MG here.
Rowing Blazers partnered with the original manufacturers of Princess Diana’s “black sheep” sweater to reissue the style when “The Crown” was at its pop culture peak. Within a year, markdown activity accelerated and the brand sold a majority stake to Burch Creative Capital in 2024. The brand’s founder was out entirely a year later.
Stuart Weitzman had two iconic footwear designs: an over-the-knee boot and the minimalist “nudist” sandal. The founder exited the brand at its peak, selling to Tapestry in 2015 for $530 million. The new owner was never able to develop another hit, and sold the brand a decade later for slightly more than 20% of the purchase price.
A positive hot item story: Hill House Home was primarily a bedding and linens company. Then, in 2020, Covid lockdowns turned its casual but polished “nap dress” into a viral hit. The brand pivoted its focus to ready-to-wear and has been thriving since. It still produces the nap dress and popular prints and colors still sell out.
How To Think About This For Your Brand
Most brands will experience a “hot item” of some kind–a product or collection that resonates especially well with the market, rapidly expanding TAM and cutting CAC.
Sometimes the “hot item” drives media attention and word of mouth, resulting in viral growth. But more often, 20-30% YoY growth will simply feel easier than it did in the past. Meta ads are easier to scale. Email conversion rates go up. Etc.
When this happens, you have two options:
- Lean hard into the “hot” product, and pivot your design aesthetic into it. This is the Nap Dress strategy.
- Treat the “hot product” as a one-off cash bonus. Bank the cash, do not “comp” the growth, and proceed as if the hot item never happened.
A harsh truth: the “hot item” is often something that is wildly different from the brand’s core aesthetic, so many founders are reluctant to pursue strategy #1.
And having the courage to pursue strategy #2 is equally difficult. There is a reason that “lifestyle creep” is a thing–as humans, we’re prone to start mentally spending an influx of cash before it even lands in our bank account.
But the alternative to these two paths is…frankly…financial ruin.
Fashion brands tend to have lower repeat rates than other categories, especially consumable categories like supplements or food products. It takes a much longer time to build up a “cash flow engine” from repeat customers.
The windfall of a hot item or strong season is your cash flow engine…but only if you manage it wisely.