Want entertainment business to have 50% revenue share in 3 yrs
New York City-based Authentic Brands Group (ABG) is a brand development, marketing, and entertainment company that owns a global portfolio of entertainment and lifestyle brands. Its global portfolio spans the entertainment, luxe, fashion, street, and active lifestyle sectors. Founder and chairman Jamie Salter speaks to Paulami Chatterjee about the company's expansion plans for the next few years and the new markets it is looking to explore.
What is the story behind formation of Authentic Brands?
We saw tremendous opportunities in brand ownership and licensing.What made our approach different from other licensing companies when we started ABG was our attention to storytelling through our products and commitment to authenticity.
The first celebrity brand we purchased was Marilyn Monroe. As one of the most recognisable woman in the world, Marilyn was a true influencer before the term even existed. She had a distinctive persona and a set of partnerships throughout her career and our team has worked tirelessly to maintain the authenticity of her brand while continuing her legacy. Today, Marilyn is the face of Chanel No 5 and has a full merchandising programme associated with her name, image and likeness that spans the fashion, beauty and entertainment spaces.
Another example is Muhammad Ali, an iconic athlete and activist who changed the world. He commands tremendous respect and we work very closely with his family. So we have the honour and the responsibility of telling his story through partnerships that we and Ali's wife Lonnie Ali feel he would be proud of.
What percentage of your sales comes from direct to retail business model?
ABG's brands generate over $10 billion in global retail sales annually. Entertainment (celebrity merchandise, photography, endorsements and content) makes up 25 per cent of our revenue and lifestyle (apparel, accessories, footwear, fragrance, etc.) makes up 75 per cent, but the goal is to expand entertainment to make up 50 per cent in the next three years.
We also manage the social media for all of our brands in-house. We have more than 150 accounts across Instagram, Facebook, Weibo and TikTok, with 269 million followers across the portfolio.
How has the online market disrupted brick and mortar? What new marketing strategies have come into play?
Despite all of the headlines today, physical stores are still important. Retail is continuously changing and developing, so it is up to companies to adapt and keep up with all channels. For Nautica, we partnered with Flipkart for licensing and distribution rights in India. With this partnership, ABG is bringing curated brand and store engagement to the market. Nautica will be sold online at Flipkart and Myntra, and the partnership includes the use of Endless Aisle, which streamlines the shopping experience by allowing shoppers to virtually browse product and use self-checkout in stores.
About 15 per cent of our business is currently on e-commerce. There is work to do there and we have plans to aggregate all of our data to optimise our business.
How many brands and influencers are you currently collaborating with?
ABG has a digital platform called Winston, which powers many of our social media campaigns. Through Winston we collaborate with content creators, curators, and connectors to develop and share impactful content across our branded accounts. Our Winston network features over 2,000 content creators with a combined following of over 150 million.
What do you look for in a fashion/apparel brand before acquiring/buying the rights?
Typically, there are three things we consider when assessing a potential acquisition:
(1) Healthy margins, expense structure and sourcing costs
(2) Robust brand perception, loyalty and global recognition
(3) Room for both category and territory expansion.
While taking a look at the brands, we have welcomed to the portfolio, over the last three to four years, Aeropostale, Nautica, Nine West and Vince Camuto. You will notice that they are all iconic, trusted names with international relevance.
Are there any new mergers and acquisitions in the pipeline? What are your expansion plans?
We are always on the lookout for new acquisitions and brands to add to our portfolio.
How is the latest investment of $875 million from BlackRock going to help you further your business?
BlackRock has scale, global footprint and capital that will open up new opportunities for us around the globe. They are essentially connected to every area of business where we are targeting growth. Though we gravitate to Western brands, we are looking beyond to other international brands with at least $500 million in retail sales.
What are brands doing to stay relevant in the times of economic slowdown, trade wars and rise in sustainability and circular economy?
We are always exploring the different ways we can build authentic and compelling relationships with consumers, whether that is through digital content or special product collections. For example, Volcom, one of our most recent acquisitions, is engaging younger generations with new collections that are size-inclusive and feature sustainable materials. Examples are swimwear made from recycled waste material and clothing made with recycled plastic bottles.
Which international markets are you currently present in? Which new markets are you exploring?
We are active in a variety of markets and are working on expanding our presence in each one. We recently opened an office in Mexico City dedicated to generating growth opportunities in the region and another in Los Angeles to fortify and expand our entertainment business. In 2020, we will be opening offices in Europe to service Europe, Middle East and Africa (EMEA) and India.
What are your major goals for the next five years?
Our global retail revenue is $10 billion now, but I would like to reach $25 billion in the next five years. We are growing at an organic rate of 5-10 per cent each year, so this is something we can achieve.
Do you plan to expand or invest in brands beyond America?
Most of our brands are global and we continue to expand our presence in key international markets with offices in New York, Los Angeles, Toronto, Shanghai and Mexico City. We will also be opening an office in Europe, servicing EMEA and India in 2020. In each region, we enlist local expertise to develop tailored approaches that bring each brand to life for our regional customers.
As we continue to grow, we look to acquire brands that have global appeal and the ability to expand into a variety of categories and markets.
What is ABG's in-house research and development (R&D) team currently researching?
A few months ago, we acquired Sports Illustrated, which will allow us to take storytelling to a whole new level. With Sports Illustrated, we are building an entertainment platform to adapt to the future of media consumption and, in the process, are discovering new ways to create shoppable experiences for our brands.
What are the various ways in which you market for brands?
Through marketing we build brand value and affinity with consumers. We believe that the best way to do that is through content. ABG's in-house team encompasses all aspects of the marketing process, which is centred around creative storytelling through brand campaigns, social media, influencer programmes, public relations (PR), events and experiences.
Another important aspect of marketing is collaborations. We partner with brands and content creators that help connect our brands with new audiences.Some of our most recent collaborations include Prince x Dave Grutman and Prince x Sean Wotherspoon, which coincided with the US Open. Volcom and Spyder are also driving relevance through partnerships with the US Free Ski and Snowboard teams. On the celebrity side, we recently launched a Marilyn Monroe apparel collaboration with Guess Korea.
What are your plans for Barneys New York?
We are building a business model that will adapt Barneys for the future of experiential luxury. Barneys is a brand whose name resonates with customers around the world. ABG will expand Barneys' international presence as a lifestyle brand and luxury retail experience.
The first order of business will be to reboot Barneys New York on the fifth floor of Saks Fifth Avenue's newly renovated New York City flagship. Barneys New York at Saks is planning to launch as shop-in-shops in key Saks markets in the US and Canada.
In addition to ABG's purchase of the Barneys New York IP, our plans following the transition sale include evolving the Madison Avenue location into a pop-up retail experience, bringing together an eclectic curation of boutiques, art and cultural installations and exhibits, and entertainment that fosters creativity and community.
We also have plans to bring Freds, the beloved eatery, to luxury destinations around the world.
The acquisition will maintain the current licensing agreement between Barneys New York and Seven &i Holdings, which operates 12 Barneys New York retail stores in Japan. The Japan stores will continue operations as usual. (PC)
