A Tale of Two DTC Brands: Why Some Soar and Others Crash | This Week in Fashion, BoF Professional

On Wednesday, Softbank’s Vision Fund announced a $400 million investment into Vuori, a California-based activewear brand. Although Japan’s Vision Fund is known for investing in technology, this investment shows that Softbank sees activewear as the next big market.

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Vuori is an independent brand that is small and manages its own products. “not a lot of people had heard of,”BoF was able to speak with Joe Kudla, the chief executive officer and founder. But since its inception in 2015, it’s been growing 250 percent every year. And much like the rest of the activewear space, Vuori’s business surged during Covid, with sales tripling.

The pandemic-fueled demand for yoga pants and matching bras sets is not likely to abate anytime soon. Coresight Research reports that the category accounted for $120 billion in 2020. It is expected to continue growing at a compound annual rate of 8.4 per cent through 2023, according to Coresight Research.

But not every pandemic trend — and brands that thrived off them — have faced such outcomes.

This week saw the news that Entireworld, a trendy loungewear company known for its colorful sweatsuits, was closing down. Scott Sternberg, founder of Entireworld, wrote on Instagram that the brand needed to be restructured. “significant capital to be able to compete with the countless brands out there,”But had to shutter “after years of unsuccessful fundraising”und an acquisition that fell through at the last moment (Sternberg did no respond to a request of comment).

These two brands survived the pandemic. fashionTrends now face two outcomes, which is a result of crucial business decisions made by each company around product, growth trajectories, and how they envisioned profitability.

Entireworld didn’t have a distinct product from the beginning. The brand rose to prominence at the same time that sweatsuits became a trendy, Instagrammable trend. outfitEntireworld was the place to go in early 2020 for casual wear. The brand was also challenged by other brands that produced colourful sweatsuit sets. Entireworld was unable to stand out.

“It had a good burst of initial attraction, but they were selling something you could have gotten anywhere, at a better price point,”Kristin Kohler Burrows is the senior director of Alvarez & Marsal’s consumer retail group.

“When you’re fighting against big behemoths, you have to come out with a strong point of difference and a unique iconic product, but you must also quickly figure out how to leverage that into a broader product line if you want customers coming back,” Kohler Burrows added.

Entireworld did diversify, selling an assortment of sweaters, t-shirts and undergarments, but these items didn’t catch on like its sweatsuits. Even if they are worn by Selena Gomez and Leandra Medine, it’s hard for a brand to survive on one product. “How many sweatsuits is one shopper realistically buying?” asked Kohler Burrows.

By contrast, Vuori launched as a men’s activewear brand that tackled a specific market with a specific product.

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At the time of its founding, Kudla said the men’s market lacked fitness clothing for men who “wanted a healthy lifestyle,” but did not see themselves as sports-centric as Nike or Under Armour’s customers. At the time, Vuori faced competitors like the newly-launched Rhone, as well as Lululemon, but the apparel giant had not built a strong men’s business until years later. Kudla saw a chance to make clothes that men could wear outside of the gym.

Vuori started out with moisture-wicking shorts. The brand then expanded to include athletic tees and hoodies as well as surf apparel. Kudla stated that Vuori was committed to producing high-quality products. “evergreen product.”

“When you’re speaking to one product that you do make better than anyone else, it’s a great customer acquisition driver but eventually, you have to build newness for customer retention and lifetime value,”He said. “We’re mindful of trends but we’re not slaves to them. We don’t want to be in the fashion cycle.”

Vuori is also cautious financially. Kudla said that he has a “conservative nature,”He decided that, despite watching brands like Warby Parker or Allbirds raise funding rounds to scale, he preferred to follow a slower-growth strategy. The brand hit profitability in 2017, and only after that did it grow its retail footprint and expand into women’s in 2018 (it raised $49 million in funding in 2019).

With Entireworld, Sternberg’s business blueprint looked very different. Sternberg was raising money while he was spending. During the pandemic, Sternberg was open with shoppers in marketing emails, revealing that the business could go downhill.

“Operating at a loss and hoping for investment isn’t a sound business plan, it’s a disaster waiting to happen,”BoF was told by Gary Wassner. He is co-chief executive at Hilldun Corporation, a factoring firm.

Vuori has not received the same industry approval or marketing halo as Entireworld. It certainly doesn’t have the same name recognition as competing activewear brands like Athleta, Alo Yoga, Outdoor Voices or Sweaty Betty. But while Entireworld relied solely on direct-to-consumer channels, Vuori has wholesale partnerships with Nordstrom and REI, and will soon be in the UK’s Selfridges and Cotswold Outdoor. Many startups are beginning to embrace the strategy of choosing wholesale rather than pure DTC.

“Although at a lower margin, a finite number of strategic wholesale partnerships can be very important for driving brand awareness and customer acquisition, particularly if the strategic wholesale partner shares the same customer target,” said Kohler Burrows.

Softbank has a track record of aggressively powering companies like Uber, Flipkart and WeWork to fast growth, and its plans for Vuori isn’t any different. The company plans to open over 100 stores in the US over the next five-years, and expand to Europe and Asia in the next year. Vuori will be compared to giants such as Lululemon by investors. Lululemon stated that it will surpass its 2023 goals by year’s end.

“Athleisure was growing before the pandemic, as more people were getting healthier, getting outside and focusing on fitness, and the pandemic only accelerated that,” said Kohler Burrows. “The trend has also moved to take a mix of business and athleisure attire and so brands will get great tailwinds, given that the world is going more casual.”

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It’s a crowded market but one in which brands can succeed if they roll out differentiated product and are strategic about their finances.

THE NEWS IN BRIEF

FASHION, BUSINESS, AND THE ECONOMY

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LVMH’s growth slows down as post-lockdown comparisons get tougher. LVMH’s sales growth eased from the previous quarter when purchases of Louis Vuitton bags and other luxury items surged after stores reopened. Organic revenue at LVMH fashionThe company released a statement Tuesday stating that the leather goods unit grew 24 percent in the third quarter compared to a year ago. The group claimed that it was “confident”The momentum is expected to continue.

Uniqlo owner expects profit recovery when pandemic abates. Japan’s Fast Retailing expects continued recovery in sales and profits in the year to August 2022 as the pandemic abates, the owner of clothing brand Uniqlo said on Thursday. According to the company’s 2021-22 fiscal year, it expects its operating profit to rise 8.4 percent and reach 270 billion yen ($2.4 trillion).

After being criticized online, Coach claims it has stopped destroying merchandise. After an Instagram video featuring slashed handbags from TikTok went viral, Coach announced that it had stopped destroying merchandise in-store returns of damaged or unsalable items.

China’s Fosun Fashion Group rebrands as Lanvin group. The newly renamed entity now owns brands like Lanvin and Sergio Rossi, Wolfords, St John Knits, and Caruso. It has also taken on strategic partners and new investors as part of its revamp. The latest capital round increases the value of the entity. fashionAccording to a press release: Group to $1 Billion

Saks Off Fifth raises minimum hourly wage by $15 The luxury retailer at a discount price said that the pay hike will affect all hourly store associates in North America immediately. The company also pays hourly store associates “appreciation”Bonus of $500 in part of larger effort to retain and attract talent amid tight labour markets buoyed by the pandemic.

Dolce & Gabbana focuses on an independent future, even if China fails. Dolce & Gabbana plans on remaining independent to preserve its creative freedom even as the Italian government tries to impose limits on it. fashionHouse recovers sales lost to the pandemic and a botched ad campaign in China. Alfonso Dolce, chief executive, stated that sales are expected to return to pre-pandemic levels in the current fiscal year.

Fast fashion brand Lulu’s files for IPO. The California-based business is profitable. It generated between $104 million to $106 million net revenue and around $50 million gross profit during the three month period ending Oct. Fast food is a common theme. fashion brands, Lulu’s releases hundreds of new styles weekly and operates on a data-driven model to determine what to keep producing.

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BEAUTY IS A BUSINESS

Parfums Christian Dior appoints Francis Kurkdjian perfume creative director. WireImage.

Parfums Christian Dior names Francis Kurkdjian as the perfume creative director. WireImage

Parfums Christian Dior names Francis Kurkdjian the perfume creative chief. Kurkdjian will continue to be artistic director of Maison Francis Kurkdjian (a brand named after Dior) which is also owned by LVMH Group. He succeeds François Demachy, who served as Dior perfumer-creator since 2006.

RMS Beauty acquired, David Olsen joins as CEO. Highlander, a Dallas-based private equity firm, has acquired the American brand of clean beauty, which was founded in 2009 by Rose-Marie Swift, a makeup artist. Olsen joined Highlander in 2019 as a managing director. He was previously the chief executive at Cos Bar, a prestige beauty retailer.

Ideal Image, a cosmetics company, is reportedly preparing for an IPO. According to Bloomberg, Ideal Image is considering a US initial public offer. The company provides services like botox, laser hair reduction, and skin liftings. L Catterton, a private equity company, holds the majority of the company. It could file as early as this calendar year.

PEOPLE

Asos CEO steps down amid executive and board reshuffle. Asos.

Asos CEO resigns amid a reshuffle of the board and executive committee. Asos.

Asos CEO resigns amid a reshuffle of the executive and board. Asos stated Monday that Nick Beighton has left the online retailer after 12 years of service. Mathew Dunn, chief financial officer, will manage the day-to-day operations as chief operating officer. Katy Mecklenburgh, group finance director, will be acting as interim CFO. The company stated that the search for a successor will soon begin.

Tiffany names her first CMO in many years. According to her LinkedIn profile Andrea Davey has been with the company since 2013. She has been promoted to senior vice-president of marketing to chief market officer. WWD first reported this news.

Tod’s appoints general manager amid CEO changes. The former chief executive Umberto Macchi di Cellere is no longer with the group. Vice-chairman Andrea Della Valle, and Diego Della Valle are still in charge of the chief executive. Cellere has been replaced by Simona Cattaneo, who previously held roles at L’Oréal, Burberry and Dior.

MEDIA AND TECHNOLOGY

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Amazon and Walmart are gearing up for a crucial Diwali showdown. This year’s weeks-long festive period is instrumental for the retail giants, who are both angling for a bigger slice of India’s burgeoning e-commerce market. Forrester Research estimates that online sales during the holiday will increase by 42 percent and reach $9.2 billion.

Diana Pearl compiles the information.

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