The following is a re-post of my January 21, 2011 column for Crain’s Chicago Business’ Enterprise City blog.
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I recently sat down with Eric Hsueh, who along with partners Erikka Wang and Jon Cotax, founded AKIRA, the high-fashion retail chain, in 2002.
Then in their mid-20s, the three friends from the University of Illinois at Urbana-Champaign were inspired by Erikka’s vision for a women’s clothing boutique. With no outside capital and their collective life savings on the line, Eric remembers that, “My biggest fear was disgrace: can we pay our bills and not embarrass ourselves? I knew we would not fail but at the same time, I didn’t know.”
It was that open-eyed ignorance and blind ambition that drove them to open the first store in Bucktown, on Chicago’s Northwest Side. For six months, it was just the three of them with no additional employees. By 2008, they had six stores. In 2009, they added three more and a robust online presence. Last year, four additional Akira locations opened, including their first suburban ones at Woodfield Mall in Schaumburg and Old Orchard Mall in Skokie.
Seven new stores amidst the “Great Recession”? With no access to outside capital? To fuel that growth, Akira relied on strong inventory turnover and a loyal customer base for ever-important cash flows, and also benefited from a soft real estate market.
“Two [stores] were planned and two were low-risk, good real estate deals. In terms of expansion, you have to be prepared but also opportunistic. We leveraged our reputation which we worked hard to build, positioning ourselves as a desired tenant, Our reputation is important with customers, but it’s also important on the vendor side: we keep our promises and pay bills on time.”
Today, the 13 brick-and-mortar stores, the online store, and its corporate headquarters support 224 employees, 95 of which are full-time. In eight years, Akira has put its stamp on Chicago’s fashion scene and become a force in the retail apparel marketplace.
Eric believes that the company’s success has been driven by a combination of its unrelenting focus on sales (“selling, selling, selling, selling…and then more selling”), a dedication to customer service, a talent to manage cash flows, and its unusual culture.
He says he can’t go to bed at night unless every store manager texts him and business partner, Jon, with that day’s sales. Store managers are encouraged to communicate with customers via text and Facebook messages to build long-term relationships and take orders when customers aren’t in the store.
When the recession hit, “we didn’t just wake up and cut costs; [we have been] looking for ways to reduce expenses since day one. And in retail, your biggest risk is inventory so you have to be able to turn it fast.”
Eric describes Akira’s culture as “nuts, disorganized, fanatical. But we have an insanely high level of trust among all of us, a lot of passion, a lot of creativity, a lot of customer-centric stuff. It works and it works well.”
Akira’s suburban expansion was the subject of a Crain’s story and news video earlier this week. Check them out for even more insights on the challenges ahead for this fashion-forward company: