Magic 2020: What Is The Next Goal Of Fashion Investment

The epidemic has accelerated the iteration of brands. McKinsey, a consultancy, estimates that up to a third of global fashion companies, including brands and department stores, will not survive. Achim Berg, head of McKinsey's fashion consulting business, even said retailers and suppliers had to be ready for a "Darwinian elimination.".

However, "clothing" in clothing, food, housing and transportation is still a demand. Some Chinese investors say that many fashion financing plans have been shelved due to the epidemic, but investment in fashion has not been completely exhausted. The global value of 250 million US dollars, the world's third largest industry, there are still opportunities to create new, worth hundreds of millions of new brands.

Luxury second hand e-commerce vestiaire Collective got $59 million in financing in April this year. JD recently spent $100 million on strategic investment in supply chain group Li Feng. Bosie, a domestic asexual brand, received a round of financing of 10 million at the end of last year. Domestic fast fashion cross-border multi brand e-commerce sheen even plans to go public in the United States this year. All these examples show that the dark cloud of fashion investment still exists However, compared with before the outbreak, the mentality of Chinese investors has changed.

After the epidemic, the rule of the game is no longer to create a unicorn company. What Chinese investors want to see more is a brand with genuine materials.

Magic 2020, what do local investors like this year?

"2020 is a magic year. A large number of global overseas brands have production and sales problems, which also provides opportunities for domestic brands to grow. At the same time, the revival of populism and the enhancement of the sense of national pride and honor of a new generation of young people are also contributing to the development of domestic brands, "said Liu Fangwei, managing director of Fosun Ruizheng capital. Liu Fangwei believes that she is optimistic about the brand with original design and commercial balance in China.

The new local brands that domestic capital pays attention to are all using modern fashion language to excavate the essence of Chinese culture. However, the clothes designed by legumi and wuyam will be more in line with the traditional aesthetic style of the famous brand of Chinese fashion. Compared with the previous generation of channel brands and Taoxi brands, they have made popular clothes that young people want to buy for about 1000 yuan.

Liu Bo, partner of Qingliu capital, from another point of view, believes that today's brand practitioners in building the core of the brand in the final analysis to solve the "sense of belonging" needs of consumers. "To seek common ground and keep small differences, brand is the medium of expression for their" small differences ", while popularity is" common ground, "Liu said.

Liu Bo believes that after experiencing the development stage of dealer brand and Taobao brand, the flow is not only within the Taobao system, but also a new wave of Chinese brands has entered the D2c (facing consumers) stage. "Brands need to reach out to users with their products and content, so today it's really up to users to choose their own fashion," Liu said.

This way of contacting consumers requires the brand to consider how to be more flexible when setting its style. "Now consumers are more and more like trend followers, not brand followers. Fashion is a form of expression of fashion, and the extension of brand is mobile. They try to quickly wrap the ever-changing popular elements into their own brand domain, so that the radiated crowd can express" they catch up with the fashion "with consumption." Liu added.

At present, Liu Bo is optimistic about "the fashion brand with a clear core of brand". In addition, most of the other brands will be reduced to a peddler who plagiarizes popular fashion. This is the case of the dense fan and the particle fanaticism of capital investment. "Chinese young people have 72 subcultures, and the advantage of local brands is that they can be rooted in these subcultures to build the core of the brand," Liu said.

Will investors be optimistic about such popular overseas brands as marine Serre and jacquemus?

In addition to Chinese brands that can truly understand the subculture language of young people, overseas minority brands are also a direction that investors continue to pay attention to, but the investment logic behind them is not the same.

For example, in the eyes of Chinese investors, although marine Serre and jacquemus, who have cultural influence, have certain popularity in the fashion circles at home and abroad, they are still not "out of the circle". "What PE and VC want to see before investing is that the brand already has a certain" material ", including the commercial effect and the precipitation of brand value. Now, smaller brands are less attractive, and Chinese investors don't have that good digestion, "says Jimmy Chan, a senior fashion investment consultant.

Investors, in particular, want to continue to acquire Chinese brands. "For them, it's easier for them to build a brand story."

Chan summed up the investment logic of Chinese capital in the past few years. Mature brands with a sense of history can have a higher premium ability. As long as they have sufficient operation capacity, it is not difficult to push them into a wider Chinese market. Shandong Ruyi, known as the "Chinese version of LVMH", is a typical case. In 2018, after announcing the acquisition of Swiss luxury brand Bally and Israel men's wear group Bagir for us $600 million, the two brands did not make much action in the Chinese market. After that, Shandong Ruyi was unable to fully pay for the investment, thus encountering a crisis of trust.

But Chinese capital is not entirely unreliable. For the revival of the brand, Fosun Group is more determined than Shandong Ruyi. Fosun purchased French luxury brand Lanvin with 120 million euro in February 2017, and Wolford of Austria underwear brand with 55 million euro one month later. Fosun invested Italian jewelry group Damiani and its luxury jewelry brand Salvini through its Yuyuan shares in July this year.

However, J. crew and Brooks brothers, which are troubled by bankruptcy abroad, also have profound details. Why are they not favored by Chinese investors? Nikko Chen, managing director of business development and strategy of Fosun Group, analyzes that it is difficult to restructure such brands. Unless all the non-performing assets of the brand can be stripped off and only high-quality assets are left, it will be too complicated to resume such brands.

"If you only see the assets of the brand itself and just tell the story, it is far from enough. A brand with stories is valuable for its culture and art. When the opportunity is right, it will not be too complicated to restart a historical brand, but it is a challenge to operate well. At present, the management of many brand asset packages in the market is not good, especially in the rapid decline period, it is difficult to reverse the trend. There is a certain momentum and inertia in the speed of decline. Only when the signal of turning point appears, the trend of performance reversal will be better, and greater opportunities will follow. So brand turnaround is often the hardest, "Chen said.

So for the above-mentioned young brands with high-quality brand value, such as marine Serre, jacquemus, the row and Victoria Beckham, it is better to stay away from the profit-seeking capital market.

Even in a good market environment, the growth rate of capital requirements is still not conducive to the development of the brand. Known as the originator of fashion street fashion, hood by air (HbAS) moved its headquarters to Milan in 2014 with the funding from the new guards group, the parent company of off white, which was later acquired by farfetch. Virgil abloh, who was also in Milan at the time, was also involved in the design of the series of HbAS, but the brand found that the excessive rapid growth made them feel uncomfortable, and later the brand terminated its cooperation with the new guards group. Meanwhile, sirloin, a designer brand invested by Japan Broadcasting Group and founded in 2016, also lost due to capital. Due to the fact that its niche setting does not conform to the brand matrix of the group, the cooperation between the two sides also ended last year.

For the smaller fashion brands, before finding the balance between business and fashion, premature financing will make the brand development lose its direction.

What is the next goal of fashion investment?

Vend? Me global partners, who helped dries van noten find Spanish buyers, believes that the Chinese market has become more and more important after the epidemic, and whether it has the ability to do well in the Chinese market has also indirectly affected the promotion of brand M & A in the international market. "We think that China's market is very big, but in fact, the competition in this market is also the most fierce in the world. Therefore, the team and difficulty in making profits will also be taken into consideration." Chen added.

Liu Fangwei believes that overseas brands entering China should have a very clear local recognition, especially in the way of playing channels. "China has always been at the forefront of the world in terms of channels, distribution and communication, with various playing methods and diversified platforms. In addition, a large number of platforms in China are of ecological scale, which also leads to the fact that brand play can not only rely on simple funnel form marketing promotion, "Liu said. "I think what foreign brands should do in China is to grasp the method of playing traffic in China and control the logic of Chinese market flow. Therefore, for China, there are some opportunities for many small and beautiful overseas brands to make content data driven in China. "

In the field of fashion clothing brand, it is really necessary to pass through the operation flow to penetrate the noise and avoid the risk of investment in start-up brands. At present, what capital wants to see is that a brand will mature rapidly in three or five years and become a brand worth five to one billion yuan. Such a brand can target the young generation of middle-class consumers, who pursue a high cost-effective exquisite life. It should have the potential to become a favorite tea in the clothing industry.

Before the epidemic, brands with media fever could dominate the investment direction to some extent, but after the epidemic, the influence of Chinese investors will determine everything. Chinese investors realize that the original rules of fashion industry will be broken and the overall pattern will be reshaped. Therefore, in addition to chasing a single brand with commercial liquidity, capital actually pays more attention to the investment at the channel end. Liu Fangrui thinks that the problem of how to improve the trading efficiency of intrastar is the case of how to improve the efficiency of the global trading platform.

"In terms of global goods pricing, there is no good logic for global brand matching. Therefore, in the cross-border field, how to level the matching efficiency between goods and people is what the top half of the brand pyramid will do. For example, I invested in intramirror services for downstream buyers, or "small B", who reach some of the most sensitive people or channels in the fashion field with their own traffic. Therefore, in terms of some product channels, they are even better than domestic brands with a dealer network. " She said.

Of course, fashion, which is developed by the left and right brains of creativity and commerce, will not become the dominant channel because of Chinese investors. Brands that can really "break the game" need to be able to match the design with the channel. They do not rely on a single marketing channel, but can find suitable marketing and sales space from both physical retail and online.

Liu Fangwei also believes that Chinese investors should be more patient in the future to invest in the field of clothing, shoes and hats consumption. In fact, Liu said that the difference between brand premium and other brands in the past ten years is much higher than that of other brands.