Authentic Brands Group, The Brand Doctor

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\"RREver wonder where your once-beloved brand went when you no longer see it in your department store of choice? Did it get acquired, go bankrupt, or did it find a new home among one of the handful of brand management companies that buy a brand’s intellectual property? Authentic Brands Group (“ABG”) is the latter option, and could be considered a brand hospital, where iconic brands that lost their luster get dusted off. Their heritage DNA gets mined, restored and repositioned to be relevant today.

For ABG brand, Juicy Couture, it’s a return to its 90s athletic casual leisure wear Southern California origins (a harbinger of the Lululemon lifestyle success); for Jones NY, classic and timeless work apparel has been updated for today’s busy lifestyles and trends; and for Judith Leiber, all the quality of hand-set Swarovski crystals are reset in new exciting renditions under the vision of Dee Ocleppo Hilfiger.

ABG is relatively new to the licensing scene. Started in 2010 by Jamie Salter and backed by a $250 million initial investment by Leonard Green & Partners, and a more recent 2016 investment by Lion Capital, ABG is a brand management company that strives to acquire consumer brands with international awareness and global growth potential across multiple categories and channels. Today the ABG portfolio spans three verticals: Celebrity & Entertainment, Lifestyle, and Sports, with 28 brands ranging from Marilyn Monroe to Shaquille O’Neal, Aeropostale to Judith Leiber, and Tretorn to Hickey Freeman. In total, retail sales across 650 or so ABG licensing partners approach $5.5 billion, of which approximately 40 percent occur in international markets and 25 percent online. Distribution includes 2000+ ABG-branded stores, department stores, specialty stores and the individual brands’ ecommerce sites and pure-play online retailers.

Salter’s background is steeped in consumer brands; as CEO at private equity firm Hilco Consumer Capital he was instrumental in investments in distressed, as well as growth consumer-branded companies—and was similarly engaged at GSI Commerce. With nearly 30 years of experience in recognizing brand value and nurturing branded businesses, Salter and the ABG team are well positioned to help ailing department stores by carrying familiar (old) brand names in relevant (new) clothing with the potential to appeal across multiple demographics and price points.

Global Brands with Category Expansion

When looking at potential brands for the ABG portfolio, in addition to the brand attributes of emotion, lifestyle, legacy and equity, Salter says, “As a general rule, we are very concerned with whether the brand is global or not and if there is room for category expansion. Look at the brands we bought in the last three-four years, they all have international exposure, even Jones NY, known as a classic American brand. Then, we look at what happened to the brand; was the business model flawed? When you look at Juicy Couture, it over-focused on fashion to the neglect of athletic leisure trend, which as we all know has become mainstream. It was very clear to ABG that a return to its roots in tracksuits would drive Juicy’s success around the world.”

I was there when ABG’s president & CMO Nick Woodhouse accepted the FashInvest Brand Innovator award in December 2013, only two months after the ABG purchase of Juicy Couture from Fifth & Pacific (née Liz Claiborne). I was skeptical as Woodhouse discussed the development of a new Juicy Couture contemporary line for the international and U.S. wholesale markets, while executing Kohl’s distribution in the U.S. How, I thought, could the brand avoid tarnishing its fashion image with customers by selling into these two disparate channels? Four years—it seems like a millennium—later, I can see how. And it’s not only Juicy Couture that is in Kohl’s and Bloomingdale’s best-of-class global athletic brands, Nike and Under Armour are on the Kohl’s selling floor. Even if the product is dissimilar, if the price-value equation is strong, shoppers aren’t the snobs brand managers once assumed. The Great Recession of 2008, along with the transparency of the digital age, changed consumer attitudes. Shoppers are put off by inconsistent pricing across various channels for the same goods. Juicy Couture was a sought-after brand with great appeal, youthful and sexy, comfortable and flirty—and not too expensive. Its founders, Pamela Skaist-Levy and Gela Nash-Taylor, were early adopters of celebrity alignment—to grow brand awareness and create aspirational demand. But when too many department stores got the same goods and they competed with Juicy Couture-branded stores and outlets, the brand became over-distributed and a victim to severe price competition.

Limited Distribution and Data are Key

One of the key differentiators of ABG’s strategy is a strong and comprehensive brand management ethos. Decisions aren’t made to make a quarter, in part reflecting its private-company status, but also in the long-term recognition that these brands are valuable and retain their value by selective distribution, which creates aspirational desire while at the same time protecting pricing architecture. Salter elaborated, “We are in it for the long haul and are committed to growing our brands through natural extensions and distribution channels. We don’t logo-slap and never will. No matter how enticing an opportunity is, we are more focused on strategic long-term partnership.” As a for-instance, Salter uses a hypothetical example with the Marilyn Monroe brand. A Monroe fragrance opportunity with a mass retailer might potentially provide 10x the royalty of the brand’s famous Chanel No.5 endorsement. But the partnerships with Chanel create a halo effect, which builds brand affinity and ultimately results in a stronger and more elevated positioning. “If you are in it for the short term, you will take the first option. But ABG is in it for the long run, we will own the brands forever, so it doesn’t make sense to take a short-term deal.

“Given the scope of the brand portfolio, harnessing digital intelligence and using it is increasingly an ABG competitive advantage. Our digital innovation group manages over 20 branded social media accounts in-house with a combined following of more than 211 million. They are constantly engaging with our customers, while extracting key demographic data, as well as hobbies, interests, etc. This helps us gauge what and where the demand is for new categories and brand extensions. We know when wide leg jeans are in and when millennial pink is the hot color. We see the trends much earlier because we are monitoring across many different types of brands.”

Building brand value includes creating content. Woodhouse explains, \”We are becoming a full-content machine with music, movies, television shows. We believe content is the biggest driver in brand development.\” This effort encompasses storytelling, social media and influencer activation. ABG has a Digital Innovation Group spearheading these activities, in addition to mobile applications and digital monetization. A Brand Experience Team is responsible for overseeing stores, international partner relations, brand asset management and brand/partner/consumer events.

I recently visited ABG’s NY headquarters where I saw the Jones NY collection, updated with sleek silhouettes and a minimalist Theory/Jil Sander look. A truncated color schema and long, lean lines; elegant, urban sophistication and timeless. Juicy Couture was a trip down memory lane, with its insouciant pink, fushia and black signature velours, with sparkling crown icons and Juicy written you know where. Judith Leiber is set for a significant relaunch this fall with new product designed by Dee Ocleppo Hilfiger, who has brought vigor and rock ‘n roll to precision-set Swarovski crystals to create Judith Leiber for today’s luxury customer. These bags will totally make any Kardashian sparkle!

Jones NY and Juicy Couture at Retail

Local NY channel checks found Juicy Couture on the second floor of Bloomingdale’s, amidst sports apparel. The merchandise includes a select assortment of tracksuits and felt great on the selling floor. The velour is better than most, a great tactile experience that begs the shopper to buy now-wear now. At Lord & Taylor on the 4th floor I had to ask around to find Jones NY. These retail partners aren’t giving the brands the best real estate, but they are giving the brands a chance. If the product is good—and it is—and if ABG can work its marketing magic, these brands can regain some of their former glory. There is more than an ebb of emotive tissue connecting women (and in the case of Juicy, young girls too) with these American heritage brands.

On Juicy Couture, Salter is the first to say, success is a team effort, “Not only the ABG team, also eight licensing partners on the product side and a dozen (licensing partners) on the distribution side.” Great quality product is fundamental to a brand’s success, so lots of time and effort is put into designing and showcasing product. “When we buy a brand it takes us about two years to put the right management and partners in place to take it to the next level. Juicy is running on all cylinders now.”

Less is more as far as distribution is concerned at ABG. Select distribution is key to brand vitality, over-distribution, the death knell. Salter said they felt strongly about Jones NY. Historically it was the go-to choice for the working woman, but available everywhere and under a number of sub labels and price points, it gradually lost its appeal. Today’s woman doesn’t choose the same “workwear” pieces she once did. By regionalizing the business, updating designs to reflect the modern woman’s lifestyle, tightening up distribution and launching new marketing campaigns, ABG believes this onetime $1 billion brand can make a comeback.

Burgeoning Global Middle Class the Opportunity

The ABG team is on its way to building a leading marketing and product/merchandise-focused brand management. The team of 140+ is steeped in retail, wholesale and ecommerce operating experience; they speak the same language as their licensing and retail partners. One of the biggest future opportunities for ABG as Salter sees it is to acquire bigger brands and, more importantly, international brands. The international part of the business is very promising with the expanding middle class around the globe. “Ten years ago we didn’t have the burgeoning middle classes of India, the Middle East, and Latin America. In Mexico, we have 130-140 ABG-branded stores. International growth afforded by great brands, that’s our future.”

ABG has a solid brand management approach and is using data proactively to anticipate consumer trends. Can they alone save department stores? Of course not, but they can be part of the save. There are many ways to get brands with emotional content to the consumer, and ABG is unencumbered with physical assets that make pivoting difficult. This is a promising business model and one of the disruptive forces in retail today.



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