Tuesday, 14 April 2015

Mergers & Acquisitions – Brand Building 101

In the past month or so there’s been a lot of talk about different brands in the fashion industry being taken over, or merging with other companies. Although it’s not an unfamiliar occurrence in any industry, two big names have come up in the conversation so far; the first of which is Karmaloop (an online retailer specialising in street wear), and the second is Net-a-Porter (an online retailer stocking luxury womenswear).

Having recently filed for bankruptcy, many different investors have shown their interest in purchasing the cult street wear retailer Karmaloop, but it’s Kanye West’s name which has attracted the most press. Those of you who have been paying attention in the fashion-sphere will know that West has recently been collaborating with super-brand Adidas, as part of what seems to be an on-going clothing, footwear and accessories collection. The Adidas x Kanye West Season 1 show was the most viewed fashion collection of the Fall/Winter 2015 season (beating out Chanel for the first time), and was a line that was positioned at the lower end of the ready to wear market (with Yeezy Boosts only setting you back $350).

Kanye West x Adidas Collection (Source: HIphopdx)

Although the purchase of Karmaloop by Kanye West and business partner Damon Dash has yet to be confirmed, it seems like a match made in heaven as West has previously declared that he’s looking to make his brand of fashion available to the masses, and having his own shop seems like a step in the right direction.

Despite the fact that controversy follows West wherever he goes, he has an undeniable passion for fashion, and a respect for branding that may turn Karmaloop around in a short span of time. When it comes to re-branding, the options are varied, but most of the time it involves stripping all the old associations away from the brand, and building it anew. For West, this could involve bringing in his Adidas for Kanye West line as an exclusive, and then curating the stock-list to support up and coming designers, as well as a complementary list of well-known street-wear brands.

Natalie Massenet – Founder of Net-a-Porter (Source: The Australian)

Putting the sale of Karmaloop aside, Net-a-Porter has also confirmed that it’s merging with rival online retailer Yoox, which has a unisex product offering, but a slightly less ‘luxury’ positioning in the market. Given the combined sales of these two online retailers (US $1.4 billion), the merger makes great business sense, as it aims to bring about greater efficiency in the online luxury sector by grouping resources and leveraging each brand’s strengths and assets. Yoox has been known for its logistical prowess, whereas Net-a-Porter has strong industry ties, and an unmatched stock-list of the most luxury of luxury brands. As mentioned by Net-a-Porter founder, Natalie Massenet, the merger results in the formation of “the world's biggest luxury fashion store…a store that never closes, a store without geographical borders.”

It’s going to be an interesting few months ahead for the online retailing sector in the fashion industry, so for now we’ll have to issue a ‘watch this space.’

Salil Kumar
Current student in the Master of Marketing program at the University of Sydney Business School

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