Street Trend Business Value Continues To Ferment, Who Is Next $1 Billion Street Tide Card?

In recent years, the trend of the streets has been invading the luxury goods industry at full speed. The culture that only existed in every corner of the city is becoming a carnival of the mainstream luxury brands and young consumers all over the world.

The boundary between street trend and luxury brand was officially broken. In 2014, Vetements, Off-White and Yeezy three entered the four fashion week, symbolizing the high-end class.

Until then, the street trend has never been on the agenda of mainstream fashion magazines. Luxury brands and fashion brands are always opposed to each other.

In 2017, it was regarded as the first year of the rise of street tide brands. First, Louis Vuitton suddenly launched a series of cooperation with Supreme. Carlyle group also invested in the brand with us $500 million in October of the same year, which means that the valuation of Supreme has exceeded US $1 billion, which further subverted the traditional luxury luxury industry rules.

Since then, the luxury industry has set off a cross-border boom in fashion brands. All kinds of joint series have sprung up like mushrooms. Off-White founder Virgil Abloh has taken the lead in Louis Vuitton as the creative director of men's wear. Balenciaga also has been widely approached by the Demna, Gvasalia, the founder of Vetements.

At the same time, apart from being associated with the streets at the product level, some luxury brands are drawing on the operation mode of street corner cards, reducing the number of products and improving the frequency of updates, trying to evoke more young consumers.

Take the example of "B Series" put forward by Burberry creative director Riccardo Tisci, the series products are limited to the limited time sale at WeChat boutique every month. Italy luxury brand Tod's is also trying out the new plan of "Tod's Factory", and introducing more series to adapt to the quick change of consumers.

The commercial potential of street brands also has been corroborated by data.

Bain said in its latest report on the 2018 global luxury fashion industry that street apparel is still a key lever for luxury brands to attract new consumers and achieve growth, especially in the current environment dominated by social media.

According to the report data, in 2018, global personal luxury sales increased by 5% under the promotion of high-end street fashion products, the commercial value of the street trend was as high as 263 billion euros, and the demand for consumers continued to rise.

According to Piper Jaffray's survey of 6000 16 year old American consumers last year, the Z generation's demand for clothing and footwear with street style has soared, and interest in Vans brands has reached a record high. Supreme, Champion and Tommy Hilfiger are also among the group's attention list.

Bain partner Federica Levato has said that the pformation of people's lifestyle and dress patterns has a great impact on the development of the luxury fashion industry. 15 years ago, work uniforms were regarded as formal dress. Now sports shoes and sportswear gradually replace the status of high-heeled shoes and Western clothes in the workplace. Although Vans and Converse are not linked to luxury, the influential fashion bloggers and celebrities are used to mix up with luxury goods, and also affect the purchasing decisions of young consumers.

Under this wave, street brands such as Noah, Palace and Stussy appear more and more frequently in the view of mass consumers.

Aware of the huge potential value of the street clothing industry, investors are naturally eyeing this area. Last October, Zheng Zhigang investment company C Ventures took the lead to invest $25 million in China's trend platform YOHO. In January 19th this year, it was also reported that the world's largest luxury collection group LVMH was interested in acquiring New Guards Group Holdings S.p.A of Off-White parent company.

Champion, another sports brand, has also been a beneficiary of the street trend.

The brand, founded in 1919, entered the $1 billion club in 2017, and sales continued to rise by 36% to 1 billion 360 million dollars last year.

As one of the largest and fastest growing sportswear brands in the world, although Champion's brand has been in existence for 100 years, it relies on the trend of the streets to revitalize itself again.

Thanks to the popularity of young consumers, Kanye West revealed at the end of last year that its YEEZY brand valuation had reached $1 billion 500 million, an increase of only US $500 million in the first half of 2018.

It is noteworthy that Kanye West was once deeply involved in the debt crisis in 2016 and sought help from Facebook founder Mark Zuckerberg, but failed.

Katy Lubin, director of Lyst, global fashion search platform, said that behind the constant integration of street sports and luxury fashion is the change of mainstream aesthetics.

Mortimer Singer, chief executive officer of investment company Traub, pointed out that the high profit margins of street brands such as Supreme are the key factors to attract investors. These brands have low manufacturing costs such as hoodies and T-shirts and so on, but get a high brand premium due to smart marketing strategy.

In the street, the tide brand has gradually become a "big business". Besides Supreme, the industry is concerned about who will be the next street valuer of $1 billion.

If Supreme is the overlord of the street tide in the United States, Palace is the British "Supreme".

Palace was founded in London in 2009 by Lev Tanju. Its Logo inspired by Penrose triangle, mainly sells sportswear such as Polo shirts, track wear and functional jackets.

Similar to the development of Supreme, the brand will cooperate with Reebok, Umbro and Adidas and other artists in addition to 4 series a year.

With the help of skateboard culture, street costumes aesthetics, joint name and hunger marketing strategy, Palace has attracted the attention of the global skateboard young people.

In 2017, Palace opened its first store in the Supreme stronghold of New York, which was once crowded with consumers on that day.

In 2018, Palace further penetrated the US market through cooperation with Polo Ralph Lauren. After launching, the series of products gained positive market reaction, ranking first among Hypebeast's ten fashion joint series in 2018.

However, Lev Tanju has always stressed that Palace is essentially a skateboard brand, and the goal of the brand is to make more consumers feel the charm of skateboard culture.

In order to highlight this DNA, Palace's 7 year skateboarding theme magazine and skateboard film "Palasonic" were officially released in 2017. The brand also reacted heavily to build the first London skateboard MWADLANDS.

Although Palace has not released any specific performance yet, and only two self owned stores, products are mainly sold through wholesale channels, but with the support of a large number of loyal fans, Palace has great potential for development.

Noah was founded in 2015 by Brendon Babenzien, the original creative director of Supreme. The brand Logo is a simple cross, mainly based on men's skateboard clothing, but the tailoring and design will be more casual and made of high-end fabrics. The purpose of the brand is "traditional, professional and human dignity above everything else", aiming to convey the correct fashion values to the society.

Unlike other street corner brands, Brendon Babenzien chose retail distribution as its main business mode. Currently, there are direct retail outlets in New York and Tokyo, and shop outlets in London and Losangeles's Dover Street Market. Its brand products will also be sold through the brand's official website.

As a fashion brand, Noah has been trying to resist many bad practices in the traditional fashion retailing industry, and has insisted on donating some of its profits to public welfare organizations. Its official home page is not much related to its products, but rather about the views and appeals of some practical problems.

In a recent article on consumption, Noah wrote, "we don't think we are a fashion brand. Even though most people define us like this, the fashion industry spends billions of dollars to make people desire and create insecurity for something that is not necessary, which is not what we want."

The article also emphasizes that consumers should think carefully when shopping, whether the premium they will pay after the cost of products will be spent, whether they will contribute to the improvement of the environment and life for the clothing workers and whether they will contribute to the public welfare organizations. Noah has been opposed to defining what is cool for consumers, but by supporting the public welfare through practical actions to express their attitude. Even if this will make the products more expensive and reduce profit margins, "we understand that Noah is not suitable for everyone, and our purpose is not to become the biggest Street brand."

NGG group was founded in 2016 by Claudio Antonioli, Antonioli founder of Milan luxury boutique, Davide de Giglio and designer Marcelo Burlon, and owns 53% of Off-White.

With the popularity of young consumers, Off-White sales surged from 2 million 600 thousand euros in 2014 to 56 million 500 thousand euros in 2017, which means that the growth of 21 times in just 4 years has attracted more and more interest in the market.

Benefiting from this, the Group expects total sales of 315 million euros last year, profits before interest tax depreciation and amortization of about 60 million euros, and cash reserves expected to reach 70 million euros.

In addition to Off-White, the group also has a potential brand matrix, including the trend brand Palm Angels, which is popular among young people, the designer brand Heron Preston, Unravel Project, Marcelo Burlon, A Plan A, and the Italy knitting brand in 2017.

It is reported that NGG group holds all subsidiary shares, but the specific ways of cooperation are different.

The group created an operation company for every brand, and all designers participated in the group. The group bought some franchises for 15 to 25 years. The distribution and production were completed in Italy and Portugal.

The group has various brand offices in Milan headquarters, but all brand products are designed and sold separately.

In such a management structure, brands run independently and designers do not need to go to headquarters regularly.

But in providing enough independent space for the brand, NGG group also creates group synergy in production and distribution.

Last year, the group opened several stores for Off-White, Palm Angels and Heron Preston in Hongkong. Claudio Antonioli revealed that the group usually chose to open shop with partners.

At present, Off-White has opened 6 stores in mainland China's Shanghai, Beijing, Tianjin and Xi'an, and has opened 3 stores in Hongkong. Besides Macao stores, its partners are I.T, a popular retail group with a wide retail channel network.

Kith is a street brand and a multi brand store. It was founded in 2011 by Ronnie Fieg. It originally started playing male sports shoes. It increased clothing categories a year later. In 2015, it launched women's wear and children's wear. Now it has 5 stores. In Manhattan, New York, it is a huge store with an area of 10000 square feet and a total of three storehouses. Besides selling Kith brand clothes, it also sells Adidas, Nike, Off-White and Chanel and other brand products.

However, unlike the brand based on skateboard culture, Ronie Fieg came from the shoe industry, from shop assistants to buyers. During the youth, they began offering footwear products to celebrities such as Jay Z, Missy Eliott and so on. They had a unique vision and aesthetic appreciation for the new fashion design. The upgraded shoes that he co created with other brands quickly sold out after being sold on the shelves. He confessed that he was a complete workaholic and understood the needs of consumers and the market very well.

By pushing the new and every Monday capsule series on the quarterly basis, Kith quickly attracts a lot of consumers who have a sense of freshness and personality.

In September 2017, Kith's spring summer series in 2018 launched a collaboration with 20 brands such as Off-White, Moncler, Disney and Nike and Adidas. It was released in New York fashion week and attracted great attention from the industry.

In addition to the above brands, Kith has also entered into partnership with luxury department stores Bergdorf Goodman, luxury brand Versace and fashion magazine Vogue.

The new series of cooperation between Kith and Versace has been put on sale in February 15th, and the brand 2019 spring summer series is released today.

At present, the brand is accelerating the expansion of the retail store network in the US market, with more than 200 employees and a total of 1 million 760 thousand fans on Instagram.

Vetements was founded in 2014 by the two brothers of Demna and Guram Gvasalia. With the products of yellow T-shirts and jeans with DHL Logo, it quickly exploded the fashion circle. It was popular among the millennial consumers, and realized the annual sales of 100 million euros in just three years.

In addition to its high price and scarce products, Vetements is famous for its series of cooperation with many brands. At present, its brand has more than 20 brands, including Schott, Reebok, Juicy Couture and Levi's.

For the rapid spread of Vetements, Guram Gvasalia admitted earlier in the interview that it had a great relationship with the hunger marketing of the brand.

He has said that the supply of Vetements is always lower than the market demand, so selling out is normal.

Guram Gvasalia also pointed out that nowadays young consumers are gradually influenced by the digitalization of their lives. It is difficult to accept traditional media and marketing methods. They pay more attention to visual impact, freshness and timely enjoyment. "It is very important for the brand to identify its customers in the market environment, rather than always targeting the first tier cities, and Vetements is betting on the millennial generation full of consumption potential."

In the face of the industry's doubts about the high price of Vetements, Guram Gvasalia responded, "if business can't make money, it can only be called interest."

He also disclosed that as of now, Vetements store sales increased by 50% over the same period last year, exceeding market expectations.

In last July's Vetements2019 spring summer series show, LVMH boss Bernard Arnault's youngest son Alexandre Arnault and supermodel Natalia Vodianova appeared in the front row of the show, causing the industry to speculate on LVMH or intentional acquisition of Vetements.

It is noteworthy that another identity of Demna Gvasalia is the creative director of Balenciaga of Kai Yun group.

6.AMBUSH

AMBUSH, founded by Japanese hip-hop M-FLO member VERBAL and his South Korean wife Yoon Ahn, is an experimental brand based on jewelry design. The original intention of the brand originated from VERBAL's dissatisfaction with the brand's style for him, so the two couples decided to design their own shapes.

The birth of AMBUSH is deeply influenced by the trend culture. Yoon Ahn combines western youth subculture with Tokyo Harajuku fashion and creates a rebellious street style.

With the insistence of two people and the strong sense of fashion and visual expression, the AMBUSH accessories represented by the "POW!" series are very recognizable because of the bright metallic color and exaggerated modeling. After the launch, the products are quickly popular among young consumers. Even Kanye West, Phillip Whilliams, G-Dragon, A$AP ROCKY and Nigo have become loyal fans of the brand.

In 2012, AMBUSH began to cooperate with Sacai, Maison Kitsune, UNDERCOVER, Off-White and PEACEMINUSONE. The product range extended to clothing and other accessories, and gradually became a tide brand of the whole category.

AMBUSH has also launched a series of metal wind makeup products with "Stay Gold" as its theme, and Shu Uemura, a beauty brand, trying to enter the beauty industry.

In 2017, AMBUSH successfully entered the finals of the LVMH young designer Grand Prix. Despite the fact that it did not win the award at last, the brand of the brand that started with accessories has attracted the attention of LVMH.

In 2018, Kim Jones, the creative director of Louis Vuitton original Menswear, immediately appointed Yoon Ahn as jewelry designer after taking over the creativity of Dior men's wear.

Why can this Asian IT Girl become a Dior jewellery designer?

At the end of last year, after the launch of AMBUSH and Nike, the Japanese fashion brand was further pushed into the public eye. One fur coat was even more than $900 in the resale market.

From personal influence, strong industry resources, interpersonal relationships to marketing capabilities, AMBUSH has gathered all the advantages needed to become a large-scale commercial brand. But in an interview, Yoon Ahn made it clear that she did not have the intention to develop into a big brand, and stressed that AMBUSH is a brand for young people.

7.A-Cold-Wall*

A-COLD-WALL* was founded in London in 2015, and its founder is DONDA Ross Samuel member, Kanye West's design studio. The designer was an assistant to Virgil Abloh.

Samuel Ross said earlier that the word "A-COLD-WALL*" was inspired by the British social class system and the status quo of the working class, meaning that everyone has their own ideas, and these ideas are like an invisible wall, which is a way of communication between people.

Different from other street tide cards, A-COLD-WALL* adds industrial elements on the basis of street elements, and combines aluminum foil and silk with latex PVC and unique "machine tool stains" elements. It persists in manual sewing, forming unique brand characteristics, and highly recognized by people in the industry.

Like Noah, A-COLD-WALL* aims to become a subversive fashion brand, and to become one of the representatives of avant-garde fashion brands, aiming to further break the barriers between upper class and lower class.

Through cooperation with Fragment Design and other brands, the influence of A-COLD-WALL* can be further enhanced.

It is noteworthy that, in order to enable more young consumers to get to know their fashion view, Samuel Ross has created a special brand called Polythene Optic, which is cheaper than A-COLD-WALL*. It caters to the needs of young consumers who love street culture.

Data show that the personal revenue of Samuel Ross between 2016 and 2017 reached 1 million 300 thousand pounds, and the income growth of the autumn and winter series in 2018 was 110% higher than that in the same period last year. The number of sales outlets in the retailers such as Barneys, Antonioli and Smets reached 52.

It is reported that this year's A-COLD-WALL* and Off-White cooperation series is about to be released. The first independent flagship store will also be opened, or the brand will be pushed to a new peak.

8.Stussy

Stussy is a street brand that was born earlier than Supreme. It was founded in 80s of last century by Shawn Stussy. It is a brand based on surfing, graffiti and skateboard. It is known as the "American street corner brand" by the industry. Even the founder of Supreme James Jebbia has been a salesperson of the brand.

The brand Logo originated from the handwritten signature of Shawn Stussy. At first, he only signed her signature as a doodle on the surfboard, and later became one of the brand symbols.

In 1985, Shawn Stussy began to expand its business from surfing to skateboarding, and gradually moved towards the fashion market. It integrated the elements of skateboard, work clothes and school uniforms into its design concept and created a unique aesthetic style of American sportswear, which is still being emulate by many brands.

At the end of the 80s, sales in Stussy less than ten years amounted to US $5 million, and in 1991, we opened the first physical store in New York. After a year, the brand stores opened in California and Tokyo, Japan, and the annual revenue rose accordingly, reaching 20 million US dollars in 1992.

Since the entry of Supreme and other rising stars and the trend of the street to hip-hop music, resulting in intensified market competition, Shawn Stussy sold its brand to its friend Frank Sinatra Jr. in 1992 and quit the brand.

After the takeover, Frank Sinatra Jr. quickly reorganized the team, and continued to cooperate with Bape, NEIGHBORHOOD and other brands on the basis of Shawn Stussy skateboarding and surfing culture to increase brand audiences as much as possible.

At the same time, under the recommendation of Teng Yuan Hao, the godfather of Harajuku in Japan, Stussy successfully entered the Japanese fashion circle, which was at the time when the tide of Japan swept through Asia, which greatly enhanced the brand's international influence.

At the end of 2012, Stussy opened its first flash shop in Shanghai through the CLOT storefront store founded by Edison Chan. Its classic American street fashion attracted a lot of Chinese consumers interested in skateboard culture.

In the European market, Stussy is expanding with the Slam Jam company founded by Luca Benini.

Under the stimulus of globalization strategy, Stussy's performance success rebounded, reaching 50 million US dollars in 2015.

However, we need to be alert that a T-shirt can easily be framed several times or even more than ten times the selling price. Once a niche brand is now popular, it is very similar to the bubble economy.

Some analysts believe that under the catalysis of Internet and social media, the development of street brand will soon reach its peak or face the risk of losing the essence of "cool".

Warren&Campbell has pointed out in the research that the more subcultural groups prevailing in anti mainstream culture, the more they feel that it is particularly cool to break through the norms of social norms in a correct way, that is, street wave consumers originally aim to be unique. After jumping off the niche framework, the street trend brand is no longer unique. This may be why Supreme still has no large-scale shop expansion after its valuation reaches 1 billion dollars. Yeezy brand also shows signs of declining sales volume after the increase in production.

Another analysis is that the sudden pformation of luxury brands to accept the street tide brand is actually a "dimension reduction strike". Through joint name, the continuity of product renewal is maintained, and consumers' pursuit of novelty is also satisfied.

In fact, you can see from the just concluded international four fashion week that the wave of the street trend in luxury brands is slowly fading away. After the intensive joint names of the past year, the mainstream luxury brands such as Louis Vuitton, Dior, Burberry and Balenciaga have begun to calm down, stop blindly pursuing the pace of the millennial generation and the Z generation, and try to find a balance between the trend and the aesthetic appreciation of the middle class.

Bubbles are usually found only after bursting. So the Logo trend and the frigidity of the luxury industry are now in the past. In this era of consumer preference, there is no trend in the past. The luxury brands with dozens or even hundreds of years of history are well versed in this.

Author: Zhou Huining