W09 - Black History Month, Vestiaire Collective, Ralph Lauren, Jill Sander, Eve Lom
Luxury Business News Podcast
1. Black History Month: a step in the right direction?
2. BHM: New York Times article shows disappointing reactions
3. BHM: The 15% Pledge ; Estee Lauder new division to hold itself accountable.
4.Vestiaire Collective reached unicorn status after Kering investment
5. Ralph Lauren launches a rental subscription service ; DVF ends theirs
6. Sustainability: Sephora ; L’Oreal ; Stella McCartney
7. M&A: OTB acquires Jill Sander
8. M&A: Eve Lom acquired by Yatsen
9. M&As: Costa Brazil ; LVMH sells Pink shirtmaker.
10. El Corte Ingles will restructure. 3000 potential job cuts.
1. I wanted to dedicate the first 3 segments to highlighting some initiatives announced during Black History Month, which ran throughout the month of February. At a time when demand for equality, racial and social justice run high, and in the wake of last summer’s nationwide protests, a lot of companies in the luxury industry have been called out for their lack of diversity, inclusion and lack of concrete actions towards changing that. Throughout the month of February, the entire luxury eco-system showed their support, one way or another, through partnerships, talks, collaborations, product launches, incubation, content or donation. It shows that the industry was going into the right direction, but the question remains to see if this marks the beginning of profound structural changes that go beyond what some might perceive as high visibility / low impact marketing stunts.
2. Along these lines, The New York Times actually reached out to a wide array of companies in the industry, asking to answer a set of questions about their progress on the representation of black employees in executive positions as well as diversity and inclusion measures. The list of companies include 64 Fashion brands with more than $50m dollars in revenue and an instagram followings of more than one millions, as well as 15 major department stores and online sellers and fashion magazines. Only 4 of the 64 fashion brands answered: Tory Burch, Coach, Kate Spade and Christian Siriano. Others, including Thom Browne, Burberry and Calvin Klein answered at least half of the questions. Many European brands stated that they couldn’t report diversity figures due to legal constraints. The majority of the retailers declined to respond or ignored the request. This is a good indicator of where the industry stands. There is a strong understanding that this conversation needs to happen, and it is happening, but real changes will take longer to come into effect. Accountability and transparency are pre-requisite to D&I commitments becoming a reality.
3. On this point, I wanted to highlight the most recent creation by Estee Lauder of a new division in charge of overseeing its progress on a long list of diversity promises the group recently published. The new group is called Equity & Engagement Center of Excellence, and its objective is obviously to make sure that the group delivers on these commitments, such as increasing Black employment and requiring diversity in executive positions. With more than 48,000 employees, Estee Lauder plays a large role in moving the industry on the right path. the joins a large number of companies which have appointed Diversity & Inclusion officers, and created all sorts of initiatives. LVMH created an internal inclusion index in 2018. Kering was recently named the best place to work for the LGBT community by the Human Rights Campaign. Ulta named Tracee Ellis Ross as D&I advisor.
I wanted to highlight the 15 Percent Pledge. As a reminder, it was founded by designer and founder Aurora James in the wake of George Floyd’s killing. Companies which join the Pledge commit to dedicating 15% of their shelf space to black owned companies.
Many retailers have signed the pledge. Sephora was the first to sign, and others quickly followed, such as Macy’s, Bloomingdale’s, Bluemercury or Gap to just name a few. Sephora is also extending its commitment to help overlooked brands reach long-term growth, by including 8 new BiPOc-owned brands to its start-up accelerator program. Another recent initiative came from Stitch Fix which partnered with Harlem’s Fashion Row to create a grant program last year to support five Black-owned brands via mentorship and wholesale orders from Stitch Fix. Ulta will invest $20 million dollars in media spend to create more personal connections with LatinX, Black and other communities, as well as commit to carry more black-owned brands.
These are just a few examples among countless other measures put in place by companies, showing that they are putting money behind making things right, but as the New York Times article shows, there is still a long way to go.
This segment would not be complete without mentioning the strong rise in racial crimes against the Asian American Pacific Islander community. The nonprofit organization “Stop AAPI Hate” has been very active on this front and many brands or groups are supporting this cause.
4. The French resale platform Vestiaire Collective announced this week a 178 million euro financing round, valuing the company at over a billion euro and making it the 11th French Unicorn. The pool of investors include Kering, which took a 5% stake, as well as Tiger Global or Eurazeo.
As a reminder, the resale market is booming and expected to reach 60 billion dollars by 2025. Just like many other online platforms, vestiaire collective’s business accelerated throughout the pandemic and they actually reported that transactions on their websites doubled in 2020.
Luxury brands are starting to tap into the second-hand economy after ignoring it for years. This economy is built on the brand’s equity and it is only natural that they’d want to capture their share of that market. It also presents an opportunity to capture a certain clientele, which can remain within the brand’s eco-system and ultimately be converted to first-hand product purchases.
5. Ralph Lauren launched a rental subscription service. Called “The Lauren look”, the service costs $125 per month and allows users to rent looks from the most recent Ralph Lauren collection. Products can either be returned to receive new garments, or purchased at a special members price. Users can also receive styling tips from Ralph Lauren’s in-house experts.
Once a piece of clothing has reached its rental capacity, it will be donated to Donating Good, a non-profit organisation which provides clothes to families in need.
Along similar lines, DVF announced this week that it would be shutting down its rental service, formerly called DVF Link. Without giving an explanation for this decision, DVF’s execs mentioned that the brand still has a large presence on Rent The Runway.
4. First of all, L’Oreal expanded its mandate to develop eco-friendly products by adopting a “green sciences” approach to research and innovation. It will also increase transparency around formula ingredients. By 2030, the French beauty giant committed to have 95% of its ingredients coming from renewable plant sources, minerals or circular processes.
Along similar lines, Sephora is making a push for clean color cosmetics, by adding 5 new brands to this category, bringing the total to 16 clean brands. The new additions are Westman Atelier, Merit, Saie, LYS and Freck.
Finally, Stella Mc Cartney opened a pop-up store at Bloomingdale’s flagship store in New York. The installation focuses on sustainable products, not only from the designer, but also from other conscious brands. It is a way to showcase all sorts of new materials and technologies, such as vegan vegetable coating or recycled lining from ocean plastics. Each item is vegan and PVC-free.
7. German fashion label Jill Sander was acquired by the Italian group Only the Brave, which also owns Diesel, Marni and Maison Margiela amongst others. Founded in 1968 in Germany by Jill Sander, the eponymous label was first acquired by Prada in the 90s before being sold to a Japanese conglomerate in 2008. OTB is taking full ownership now. Jill Sander’s fashion house is known for its minimalist approach to fashion, and the industry has praised the work of its new creative direction since the appointment of designers Lucie and Luke Meier in 2017.
8. The acquisition spree continues. . In beauty, the 35-year old skincare brand Eve Lom, was acquired by Chinese beauty company Yatsen. Before this transaction, Eve Lom was owned by Manzanita Capital, which also owns Byredo, Diptyque, Malin & Goetze, Kevin Aucoin, Space NK and Suzanne Kaufman. While details of the transaction are not known, it is rumored that Eve Lom might be valued at $200million dollars.
Yatsen is a Chinese company founded in 2016 and is rapidly growing a portfolio of beauty brands, either by acquisition of in-house development. It is dubbed the “Chinese l’oreal” and now has more than 200 brick and mortar stores in China. It recently IPOd on the New York stock exchange and raised $600 million dollars. One of the home-grown brand is called Perfect Diary and it quickly became a beauty giant, and reached unicorn status.
9. Finally, still on the M&A front, brazilian beauty brand Costa Brazil was acquired for an undisclosed amount by the brazilian biotech manufacturer, Amyris. Francisco Costa, founder of the brand, will become Amyris’ chief creative office.
On the fashion side, shirt maker Pink was acquired by Nick Preston, an executive who worked at JD sports and House of Fraser before that. As a reminder, the brand, formerly known as Thomas Pink, has been owned by LVMH since 1999, but despite being relaunched 2 years ago under a new executive team and new creative direction, LVMH announced last December that it was shutting down operations. Interestingly enough, the acquisition includes only the Intellectual Property. It doesn’t include the stores or eCommerce website.
10. Spanish department store El Corte Ingles plans a restructuration which might cost at least 3,000 jobs. Founded in Madrid in 1940, El Corte Ingles is one of Spain’s largest employers, with more than 63,000 employees. It was hit hard during Covid, with a loss of more than 510 million euros in the first months of the pandemic. The group explained that the restructuring was necessary to better align with the consequence of the pandemic, and the shift to online sales.