Investing in fashion is a rough business at the best of times. One day you’re the hot brand that nobody can stop seeing on the runway and red carpet, the next you’re shutting down your stores and the CEO is out and ‘rebranding experts’ are taking the corner office.
In Vancouver, fashion had a brief moment last year in which it felt like, maybe, the next Michael Kors could be in the 604. A bunch of high profile fashion IPOs had rolled out and the taste for something not mining was high.
But then those big IPO dogs started shuttering mall locations and took the wind out of everyone’s sales (see what I did there?).
I’ve followed two Vancouver venture companies in the fashion space for a while in RYU (RYU.V), and Mezzi (MZI.V), and recently added a third in direct sales outfit Peekaboo Beans (NOR.V).
All three do things very different to the next, and all three will claim they’ve got the formula right. So let’s take a look and see who’s doing what, and whether there’s any more runway in the fashion sector (again, see what I did?).
MEZZI: CELEBS AND SOCIAL MEDIA AND ONLINE – OH MY!
Keir Reynolds’ Mezzi has become the former IR monster’s passion, and many have questioned whether that’s a good thing. Certainly being surrounded by stars and models isn’t a horrible way to make a living, but fashion is a constantly tweaking, constantly money burning, constantly finance raising punishment for executives, and Reynolds has certainly had his share of learning moments with his brand.
Originally established as a high-end, star-designer, just-in-time produced bag company with some built in phone charging and GPS tracking abilities, the company soon pivoted into a medium-end, designed-by-stars, produced in small batches bag brand, with a gun case sideline and a wooden sunglasses acquisition.
The bags are pretty dope, even a fashion-handicapped mouthbreather like me can see that. And while the gadgetry associated with it is less groundbreaking today than it was in 2014, with chargers being given away with cat food and GPS keeping our Pokemon hunts hot, there’s no doubt there’s been some decent brand building performed.
Where Mezzi got it right was by immersing itself in e-commerce and social media, to the point where you can’t visit their site without a chatbox opening up and an adorable Mezzonite asking if she can help you find what you need.
That hasn’t necessarily translated into huge sales, mostly because luxury bags were a huge thing a few years ago, and most women can only afford one or two of those, rather than a new one with each month, as can be seen in the lower end markets.
But Mezzi continues to tweak the model and appears to be doubling down, pushing into the celebrity endorsement space that Reynolds has often done well in.
In fact, while most companies will claim celebrities love them, Reynolds has a real track record of delivering big names to brands, so it would be silly to view his pledge as an idol threat (again! I’m on fire!).
Mezzi stock has been climbing in accordance with Reynolds’ vows that he’s just getting started, so it’s worth putting it on your watchlist.
RYU: GET THEE TO THE MALL!
If there’s one thing RYU boss Marcello ‘bingo bango’ Leone knows, it’s bricks and mortar retail. His family made its bones selling high end fashion on Vancouver’s Pender Street over several decades, so he’s not only well versed in leases and supply chains, he’s also eminently connected to Vancouver’s old money.
In RYU, he’s taken control of a beaten down former MMA brand that he’s retooled for the millennial athletic wear enthusiast, taking big name back room folks from companies like Lululemon, Arcteryx, and Under Armour in the process.
When I wrote about Leone back in the Stockhouse days, I suggested he was proper nuts, but nuts in the kind of way that gets people to follow you and often ends up being later cited as genius.
The pitch meeting I sat in with him was truly unique in every way, as well as impressive, and eclectic. From popping out halfway through the pitch to get everyone popsicles, to sending us home with socks, to standing over us, hand on shoulder, asking us to tell him what we ‘really’ feel about his company.
It was the kind of workplace that would either bring about a corporate gamechanger of unprecedented proportions, or stories of bizarre excess and megalomania in blogs devoted to fucked companies.
So far? So good.
RYU stock has not been buoyant, as the company rolled the dice on a Kitsilano BC pilot store that the big man claimed would change retail. I don’t know about that, but it’s sure nice, and the clothes, it must be said, are A1.
But.. stores? Who does stores anymore?
RYU, that’s who. Leone is adding to the retail mix, opening a new store on Thurlow and Robson (Vancouver’s highest foot trafficked area, and a direct challenge to a mega-Lululemon store nearby), with future stores coming to Metrotown and Park Royal South.
The Kits location doubles (or even triples) as a workout space, given freely to trainers and community groups who choose to use it.
From the Vancouver Sun:
“The store has three distinct spaces: an 800-square-foot area which trainers can use at no charge to work with their own clients; a 3,000-square-foot retail space with modular fixtures that allow for hosting after-hours classes and community meetings; and an 800-square-foot outdoor courtyard suitable for complimentary fitness classes.”
If you’re going to go with stores as a business plan, upgrading them to be community meeting places is a solid upgrade. But the question remains, are people even going to stores anymore?
Obviously yes, in a macro sense, but you’ve bought something on Amazon this year, surely. In fact, if I look back over my outgoings for the past month, I’ve bought clothes, food, games, auto insurance, travel accommodation and airfare, flowers, books and more online. If I think of how many actual stores I’ve been in, it’s Canadian Tire – and I had to go back to exchange something when they didn’t take the security tag off and it was busy and a drag and I hated it.
I’ve driven by the RYU store in Kits often, but never gone in, and can’t foresee a time when I will. I mean, if I needed change for the parking meter, maybe..
RYU’s stock is ailing and I have to think that’s in large part due to the retail strategy. Selling your stock through a store is by far harder work than selling a nice big batch to Nordstroms and letting them worry about getting customers in the door.
But you don’t become the next Lululemon that way. And that’s what Marcello really wants..
PEEKABOO BEANS: MOMMY AS A LIFESTYLE MEETS MOMMY AS A BUSINESS
I’ve written a lot about this company, especially considering I have no consulting agreement with them, but I’ll be honest – they weren’t included in the first draft of this piece. I had intended to compare retail to online sales in the fashion biz, then realized this crew of estrogeniuses were engaged in the same sector, but in a very different way.
Peekaboo Beans is a brand that isn’t cheap, isn’t in big stores, and isn’t licensing Dora The Explorer imagery. It’s the work of a mom who got sick of watching her kids clothes become too short and too beaten up, too quickly, so she set out to make something better.
Her clothes are highest quality, she doesn’t cover them in her brand name, they cost more than what you’ll find at Baby Gap but 1) They’re not made by babies, which is a nice change, and 2) they last long enough that you actually get more value out of them because as your kids grow, the clothes adapt to that.
But the really interesting bit? They don’t have stores. They’re not selling masses online. How they do their business is, a local mom who wants the clothes for her own kids signs up as a distributor, holds Beans parties with other mothers, and takes orders. The top sellers for the company do $200,000 in sales. The standard sales total from a Peekaboo party run around $750, almost double the industry norm.
Low cost, high social interactivity, responsible brand building (the company donates to playground projects), and a high level of community inspiring those in the network to eat, breathe and live it.
Peekaboo is not break even yet. But it has raised the money it says will get it there.
Public any day now.
IN CONCLUSION: I’d be reticent to dismiss any of these three companies in their efforts to lead the sector, though I’d also not be shocked to see either of the three fall into a struggle. The fashion business is hard work and often seen as a lifestyle business rather than a serious commercial endeavour, but even those who give it their all can come undone by market forces.
Personally, I like Beans more than Mezzi, and Mezzi more than RYU, but only because I have such an aversion to malls as a business. Nobody’s aiming higher than RYU, nobody’s putting seats on bums (see what I did again?) better than Peekaboo, and nobody is likely to be seen by more people than Mezzi.
One of them is going to own. At least one.
— Chris Parry