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How to Avoid Becoming a One-Hit Wonder

For every brand that is able to diversify past its first success, there are dozens more that putter out. Here’s a six-point plan for navigating what happens after a product becomes a bona fide winner.
Cult Gaia Ark Bags | Source: Courtesy
By
  • Lauren Sherman
BoF PROFESSIONAL

LOS ANGELES, United States — It took Cult Gaia designer Jasmin Larian more than two years to get consumers to notice the "Ark," a bamboo-cage clutch inspired by Japanese picnic bags from the 1940s. For outsiders looking in — or at least on Instagram — the style, which was first introduced in 2012, appeared to be an overnight success. However, it wasn't until the summer of 2016 that it started popping up everywhere: the kind of accessory that social media influencers, from Marais USA shoe designer Hayley Boyd to retailer Claire Distenfeld Olshan, were happy to buy themselves. No gifting required.

But with a flood of Instagram posts came the threat of ubiquity. "At the time, I had one product that I was pushing constantly," said Larian, who started Cult Gaia as a range of flower crowns and turbans made from deadstock fabric. (She phased out those products as they lost their edge.) "Our entire Instagram was that bag."

The fact that Cult Gaia’s initial success was predicated on a single hero product — the item that helps to define a brand — is not necessarily a bad thing. In an increasingly crowded market, a sharply executed, recognisable item can be a boon.

“The strategy of launching with a hero product can be an effective way of building a brand,” said Ari Bloom, founder of A2B Ventures. “You get famous for doing something well.”

And yet, a hit single doesn’t guarantee that the band — or in this case, the brand — will fare well in the long term. For every brand that is able to diversify past its first success, there are dozens more that putter out, becoming fashion’s version of a one-hit wonder. Cult Gaia, which derives nearly 80 percent of its sales from handbags, grapples with this every day. “It’s amazing we’ve gotten so many seasons out of this bag,” Larian said. “My paranoia and obsession with the idea that things aren’t going to go well means that I have forced myself and my team to work on creating a world beyond it.”

Whether a brand can expand beyond its first bona fide hit depends on how they execute what comes next.

Even brands that were able to scale a single product into hundreds of millions of dollars in revenue have proven that it’s difficult to sustain that success over time.

Consider Toms, which launched with a “buy a pair, give a pair” model in 2006 and generated more than $400 million in sales last year, according to Moody's. However, growth has slowed in recent years and the company, which sold a 50 percent stake to Bain Capital in 2014, has about $350 million in total debt.

In December, the ratings agency Moody’s downgraded Toms to Caa3 — a junk rating that indicates the company is a high risk to default — citing a “weak liquidity profile in the next 12-18 months, including negative free cash flow."

While Bain and founder Blake Mycoskie provided an additional $18 million in cash at the end of last year, the rating also took into consideration the fact that Toms has a "high fashion risk" because it hasn't diversified, as about half of its revenue comes from its classic slip-on "alpargata" style.

When asked about the Moody's rating, a Toms spokesperson wrote in an email to BoF that the alpargata shoe is what makes the brand "authentically unique." Regarding diversification, the company is "focusing on those brand identifiers and incorporating them into new silhouettes" like boots, sneakers and sandals. According to Toms, there has been "measurable growth in these styles," contributing to an increase in overall sales.

Whether a brand can expand beyond its first bona fide hit — be it Vetements’ patchworked jeans or Mansur Gavriel’s bucket bag — depends on how they execute what comes next.

As for Cult Gaia, sales of handbags are up 54 percent from last year in the wholesale channel, while ready-to-wear, a category Larian soft-launched in the fall of 2016, is up 400 percent. Still, 77 percent of the business is handbags, 13 percent is jewellery and 8 percent is clothing. A new category – shoes – is showing early traction.

Overall, Cult Gaia is on track to hit $15 million in sales in 2018. But Larian understands that the Ark's appeal may dip at some point. (It has already been copied with great frequency, compelling her to sue trendy shoemaker Steve Madden for $15 million in damages.) For now, she has extended its life by offering it in different colours and materials. Interest in her other handbag styles is also growing.

So how can brands at every scale, from indie startups to high-concept labels, avoid being labelled a one-hit wonder?

Plan ahead. Even if a brand launches with a single product, the founders should be thinking about what the next few products could look like. That idea may change as you learn more about your customer, but there needs to be some planning.

If a brand launches with a single product, the founders should be thinking about what the next few products could look like.

“Some people get lucky with a single product,” Bloom said. “But any brand needs to be thinking three-or-four steps ahead. Long-term solutions and value is especially important with the space getting so crowded. ”

Don't base a collection on the product, base it on a concept. If you become well-known for a super-soft v-neck t-shirt, focus on what makes that t-shirt special: its soft fabric. "Own your key characteristics," said retail advisor Robert Burke. Alessandro Michele's Gucci, for instance, had an early hit with the creative director's interpretation of the Italian house's classic loafer. However, Gucci's success is not based on a single popular item, but a larger idea that is communicated through a variety of items: Michele's magpie, fancy-dress wardrobe is made up of dozens of novelty knits and odd-bird embellished logo bags.

Test new products in direct channels. Retailers often fear the new: if something's working, they keep returning to it instead of taking a risk on the unknown. When introducing a new product or category, selling it direct first can allow you to build a proof of concept.

“Nobody picked up my first ready-to-wear collection, but I pushed it really hard [online],” Larian said. “We had to be successful on our own. If the buyer doesn’t get it, we’ll show them.”

Wholesale orders for Resort 2019 ready-to-wear were up 400 percent year-on-year, with major stores like Net-a-Porter and Saks Fifth Avenue signing on.

Limit distribution
. Tight distribution — being mindful of where you sell your product and how much of it you sell — allows you to not only minimise excess inventory at the end of the season but also better control the narrative around the product. Waitlists can create a (positive) frenzy. However, overly conservative forecasting can also mean losing out on sales.

“It’s a bit of a dance,” Burke said.

Diversify when you have momentum. Many brands only start putting together a plan to move beyond the "it" item until after that item is already in decline. A brand should begin moving on — or expanding — when other brands and designers begin copying it en masse. For instance, jewellery designer Rebecca de Ravenel's $275 "Les Bonbons" earrings are frequently knocked off by fast-fashion players and peers alike, and yet her collection maintains a certain freshness. She is playing offence through her launch of ready-to-wear.

Pull back before it's too late. Sometimes brands raise money and hire new employees based on the success of one item without considering that sales will eventually slow.

“It’s very tempting to keep going,” Burke said. “You have to know when to pull back so that you don’t run the risk of overexposure.”

Editor's Note: This article was revised on August 1, 2018. A previous version of this article said that Cult Gaia's "Ark" bag was introduced in 2013. This is incorrect. The bag was introduced in 2012.

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