Start-up succeeds on timeless staples and quality

Australian entrepreneur Luke Grana's clothing store is the go-to shop for under-35s searching for quality staples for their wardrobe.
Australian entrepreneur Luke Grana's clothing store is the go-to shop for under-35s searching for quality staples for their wardrobe.PHOTO: AGENCE FRANCE-PRESSE

HONG KONG • Luke Grana arrived in Hong Kong with no contacts, cold-calling "angel investors" he had found on LinkedIn armed with only his curriculum vitae, a business plan and some big ideas to overhaul fashion.

In a little more than two years, his eponymous clothing store amassed US$6 million (S$8.1 million) in seed funding and has become the go-to shop for under-35s seeking quality staples for their wardrobe.

And yet Grana is not a designer, has little fashion experience and his inspiration came from a business brainstorming session rather than a passion for couture.

What he does have are plans to shake things up.

"The way we shop for clothes is going to change," the 32-year-old says.

Global fashion sales total around US$1.8 trillion a year, with online accounting for 5 per cent, he says, citing a Euromonitor report.

"That is forecast to grow to 30 per cent by 2030," he adds, suggesting that Grana, which has no physical stores - only a space where customers can try the clothes before buying online - is well placed to take advantage of this shift.

The current system, with its reliance on expensive shop space, middle men and vast inventory, he says, is "hopelessly inefficient" - and results in opaque pricing.

"I made things simple. So if a T-shirt costs US$7.50 to produce, we'll sell it for US$15 - a straightforward mark-up."

Quality is his other pillar. The brand uses world-renowned material such as Chinese silk from Huzhou and Peruvian Pima cotton, sourced from the same mills that work with luxury brands such as Ralph Lauren and Lacoste.

"We deal direct with the mills and factories, items are then shipped to our warehouse and then shipped to the customer," he explains.

Hong Kong, the world's biggest cargo hub, is well suited for his global audience. The United States, Australia and Singapore are also key markets.

Of the hundreds of cold calls he made in late 2013, just one replied: banker Pieter Paul Wittgen.

Mr Wittgen, now the company's chief operating officer, was impressed enough by Grana and his ideas that he introduced him to a wider network of "angels".

The firm now has backing by big-name investors including BlueBell Group, distributors for the likes of Christian Dior in Asia, and Golden Gate Ventures, a leading backer of start-ups in the region.

Grana's head of design, Anthony Hill, worked for Paul Smith.

On average, Grana's customers spend US$120 an order, while sales are above expectations - rising 25 to 40 per cent each month - he says.

Earnings are being reinvested in expansion to Japan, South Korea and eventually China, but Grana expects to be profitable by late next year.

It may seem an overnight success, but for Sydney-born Grana, this has been a long time coming.

In his teens, he read company annual reports and business books. Aged 21 and still at university, he set up his first business - a coffee shop - using US$15,000 of his life savings.

After nine months, he sold it for US$145,000 and went on to launch and sell - at profit - two similar ventures.

At 24, he set up Charge Point, an electric car charging infrastructure, but sold up in 2012 when he realised the concept was "10 years ahead of the industry".

He took time off to "surf and brainstorm" with his profits.

"During brainstorming, I realised there was a disruption coming in fashion."

But his next start-up Coachy was a webcam teaching service - an "Airbnb for tutoring", in his words. Again, he found his ideas were ahead of the curve: Internet speeds then could not support his idea, so he closed up. "I learnt the importance of being in the right market at the right time."

Grana's eureka moment came during a holiday in Peru, where he came across Pima cotton. Within the week, he had visited mills and bought samples for friends and family.

"Based on their reaction, I knew I had found my product. But I didn't know about styles, pricing or how to merchandise," he adds.

So he went and got some shop floor experience working at Zara and French Connection.

He seems assured that this is his moment. Certainly, the focus on "timeless wardrobe essentials" is prescient: British design house Burberry announced a move to "seasonless collections" as the trend for decluttering sees fast fashion falling out of favour.

At Grana, they focus on timeless colours and run a limited number of seasonal ones.

"There are no sales, just one standard price year-round."

Social media presence has helped spread the word quickly. Grana's advertisements pop up regularly on Facebook, 17,000 follow the Instagram account and it uses Snapchat to give a glimpse into the mills and factories it uses.

He concedes that "fashion has a bad reputation" for exploitation, but is confident that his firm does not use child labour, adding that independent safety audits of production will begin this year.

"I don't want to copy anything from the traditional model," he says. "We are doing things differently."


A version of this article appeared in the print edition of The Straits Times on July 21, 2016, with the headline 'Start-up succeeds on timeless staples and quality'. Print Edition | Subscribe