Tuesday, November 18, 2014
The Umbrella Brand: Is Streetwear Ready for Corporate Takeover?
You don’t have to look far for proof of streetwear’s current boom. Everyone from Business Of Fashion to The New York Times is queuing up to sling you their two-cent take on the unprecedented growth of this once-fringe interest, and the question on everyone’s lips right now isn’t so much “when will it end?” but “how can you get involved?” In 2011, Reuters valued the global streetwear industry at a not-too-shabby $60 billion and since then that number has only grown. It goes without saying that such performance has not gone unnoticed…
In fact, while these impressive numbers still pale in comparison to the $290 billion-a-year luxury goods market, thanks to the continued cross-pollination of ideas between high-fashion and street culture, interest in the long-term future of streetwear has never been greater. Far from being seen as some immature younger sibling to the serious world of catwalks and couture or a diminished version of the high street, streetwear is now a credible, comparable force in the global market and many would like to see it managed in a similar manner. That’s code for one thing: more corporate ownership.
Those familiar with the high-fashion and high-street market landscapes know all too well just how dominated they are by a few key players. The gilded behemoth that is LVMH (that’s Louis Vuitton Moet Hennessey) owns, along with its eponymous LV, such pillars of the global fashion industry as Givenchy, DKNY, Christian Dior, Kenzo, Fendi and Céline – and that’s only a fraction of its full 60+ brand, $4.6 billion-a-year luxury portfolio. Its main competitor, Kering/PPR, counts GUCCI, Saint Laurent, Alexander McQueen, Stella McCartney, Balenciaga, Bottega Veneta and PUMA among its many interests. Meanwhile, over on the high-street, Japanese holding company Fast Retailing owns UNIQLO, Helmut Lang and Theory, while H&M sits on COS, Monki, Weekday and Cheap Monday. Finally, Indetix (whose founder Amancio Ortega is the second-richest man in fashion, behind LVMH’s Bernard Arnault) owns Zara, Massimo Dutti and a whole host of smaller brands.
That list is just a partial insight into the elaborate chains of ownership that extend through today’s fashion and clothing industry. Faced with such popular interest right now, it’s only logical for those in streetwear to wonder how long it is before a similar effect starts to take hold across their borders. Yet, in truth, the corporate incursion into streetwear brands has been on the table for some time now. The real question you need to ask is, “how far will it go?”
While, at present, no streetwear company has shown any serious ambition to grow to the monolithic size of an umbrella brand like LVMH or Kering, for a glimpse at the sector’s potential trajectory you need only glance sidewards at the skate, surf and snowsports market. This kindred industry, while only a tenth of the size (at just $6 billion), has seen a far higher number of its core brands bought out by larger organizations looking to develop a rich business portfolio, and that has had knock-on effects for both the producers and consumers involved.
The largest of these outfits is VF Corp, which owns Vans, Eastpak, Jansport, The North Face and Timberland, among several other high-street names. Slightly more palatable to grassroots skate fans is the skater-owned (but no-less business-savvy) Sole Technology Inc., made up of Etnies, Emerica, éS, ThirtyTwo, Altamont and STI Lab. On the other end of the spectrum, age-old skate property Zoo York was bought up in 2009 by unashamedly corporate venture fund Iconix to add to their increasingly disparate roster of Umbro, Ecko Unltd, Rocawear, Starter and Ed Hardy. DC Shoes, meanwhile, has been owned by Quiksilver (the number one action sports brand in the world) since 2004.
Many long-serving members of the skate, surf and snowsports communities have made no secret of their displeasure at the encroaching specter of “Big Business” on their once grassroots-heavy scene. Critics argue that companies like VF Corp, Iconix and Payless (the now-owners of Airwalk) have no vested interest in nurturing the world of action sports beyond strengthening their own profits, and that their increasing dominance in the market threatens not only its lasting credibility but the scene’s future as a whole.
While there’s perhaps some truth to that, such an argument neatly overlooks the fact that the action sports industry has been going through some pretty tough times of late. The global financial crisis dented sales of skate and surf apparel considerably, and were it not for the financial buttressing that comes with being part of a larger corporation, many of these brands might’ve been forced into administration outright. Just look at independent surf brand Billabong, which, after enduring months of painful sales decline, announced last year that its brand was officially worthless.
But what does the sick and ailing surf industry have to do with the buoyant world of streetwear, where pockets are bulging and sales figures are in rude health? First off, even in streetwear, no brand is unsinkable. When scene godfather A Bathing Ape ran into financial difficulties in 2011 it took Hong Kong mega-retailer I.T to step in with a buyout proposal to save it from the scrapheap, proving it only takes a few wrong decisions to get into deep water (especially in a market where new competition is entering all the time). Despite this, the real worth of major corporate backing comes not from its capacity to avert potential crisis, but its ability to realize opportunity – and it’s that which might tempt more brands to follow suit in future.
Take Converse, for example. In 2002, the century-old shoe brand was struggling on revenues of $205 million. Since it was purchased by Nike, however, it has swollen to a $1.4 billion business able to compete on a level hitherto unimaginable. What’s more, thanks to some careful decision-making the brand has retained a credible standing in the marketplace. With the help of Nike’s considerable commercial influence Converse has been able to collaborate with countless respected names in the industry, proving exactly what can be achieved with the right balance of good governance and a sizable cash injection.
Here we see another major advantage of a brand being absorbed into a larger organization of similar companies: the ability to pool skills and knowledge. Within an action sports outfit like Amer Sports, for example, the sharing of technical insights between its brands Salomon, Arc’Teryx, Wilson, Atomic and Bonfire is a no-brainer. Yet, looking further afield, it’s not hard to see how a fashion-focused label like Our Legacy or OFF-WHITE could benefit from the talent and expertise of a major catwalk design house, or how a respected newcomer brand like I Love Ugly could push to the next level with the help of an A.P.C. or Acne. This kind of resource sharing has been a key selling point of the LVMH/Kering model, but there’s no reason it couldn’t extend to streetwear as well.
Yet, for all the doors you can open with the aid of a wealthy corporate sponsor, there’s no escaping the detrimental effect such a move can have on a brand’s image. Big business may be many things but cool is most certainly not one of them, and in the fickle world of fashion, reputation is worth more than its weight in gold. As such, it’s not hard to understand why many brands have so far been reluctant to accept any attempt at forming some sort of streetwear mega-company. Even Nike – easily the biggest force in the industry and the best positioned to move towards a LVMH-type role – has shied away from the large-scale subsidiary brand model, choosing instead to focus all its efforts on its own brand and one or two others (namely Converse and Hurley International).
For the moment, at least, it seems most mid-level streetwear brands are keeping themselves to themselves and that often means seeking out other means of income in order to keep playing on a major global scale. Norse Projects, for instance, is twinned with industry-facing distribution company California Sports, who own the Scandinavian distribution rights for brands like Palace, OBEY, Herschel, HUF and Elka. Using that revenue, they support the growth of the Norse brand. Likewise, I.T (owners of BAPE) finance their operation via distribution contracts for everything from Kurt Geiger and Anna Sui to NEIGHBORHOOD and WTAPS. In both cases such supplementary income is vital to their continued success as a company.
This diversification of interests is not uncommon in an industry where small, often niche brands lack the means to reach a worldwide market by themselves. However, with the popularity of streetwear on the rise in all four corners of the globe right now, surely it’s not long before we start to see the formation of some major corporate alliances who can help brands realize that for themselves. Whether the traditional retail conglomerates begin reaching out for a slice of something edgier than their current diet or an entirely new generation of brand collectives take this opportunity to create a new market force, ultimately street can only stay “street” for so long before someone steps down and invites it into the boardroom.
Posted by BKDAILYNEWZ