NEW YORK, United States and LONDON, United Kingdom - Some say that during a downturn, there is a flight to the high-end: buy fewer of the more expensive pieces that will stand the test of time and do away with impulse fashion purchases. There is also a rush to discounters: buy the same quantity of goods, but at lower prices which enables consumers to keep the newness factor, albeit at inferior levels of quality. Therefore, it is said, the middle market suffers.
Whatever is the conventional wisdom, if recent moves by some of the industry's most successful fashion executives are any indication, there is a significant opportunity to be captured in the middle market, which has lagged in recent years. They are putting their money where their mouths are.
In January of this year, Jane Sheperdson finally announced her next big move after transforming Topshop into one of the world's most innovative retailers. Sheperdson revealed that she had successfully executed a management buy-in at Whistles, the tired mid-market brand, in cooperation with the beleaguered Baugur Group, Whistles' major investor.
She told The Times of London of her plans to revitalise the offering. “I think I’m quite representative of a certain sort of woman who is darting round but hasn’t found somewhere that fully satisfies her, she said at the time. "And that’s what I would like to change.”
Along with her management team, some of whom worked with Shepherdson at Topshop, the fashion dynamo now owns a reported 20% of the business, and will share in the upside of the value she creates.
Then, in July, Robert Bensoussan of Jimmy Choo fame (and fortune) unveiled the latest investment by his company Sirius Equity, in L.K. Bennett, another dusty mid-priced label with a significant presence in the U.K. In an email memo announcing the transaction, Bensoussan said "that the business is divided equally between shoes and clothes. We plan to develop the company not only in the UK but internationally."
Not to be outdone, Tory Burch, the US label with an estimated $200m in sales, was featured in a front-page article in Women's Wear Daily revealing that Burch is looking for an investor with $300m to take a 30% stake in her business, valuing it at over $1 billion. Though the valuation may sound unreasonable, clearly Burch believes that she has hit on something with huge value and growth potential.
Indeed, many major U.S. and International retailers I have spoken to rave about the brand. Burch's Reva ballerina shoe, which is manufactured in Brazil, is perennially out of stock and still in huge-demand. And, while the Tory Burch collection tends to be found on the younger-skewing Contemporary departments of many US retailers, it has a slightly older following amongst 'Soccer Moms' and career women.
The Tory Burch brand is already far more modern and stylish than what is on offer at LK Bennett or Whistles, but all three brands do have two important things in common. First, they are all targeted at women in their 30's and 40's who aren't slavish to trends. Professional women often complain that they can't find clothing that is age- and role-appropriate. So much of what is available is targeted to twentysomethings with different lifestyles and body-types.
Second, they are each positioned in the middle-market, offering decent quality at prices that are perceived to deliver honest value. After years of fast-fashion purchases, consumers' closets are full, and the basic constraint of limited storage real estate means that purchases are being made more carefully. Some women, it seems, have tired of dropping $2000 on a handbag that is dated in a season or two. But, they are also finding that the latest season's copies from Zara are just not good enough, even if the prices are rock-bottom.
So, with the economic downturn putting a squeeze on spending, the smart money is apparently on a better-quality, mid-priced fashion offering. We'll see if the strategy works. Those career women may not be pressed for choice for long if Bensoussan, Burch and Shepherdson have anything to say about it.
Tory Burch photo courtesy of W Magazine.