More has been more for Authentic Brands Group.
The brand management firm’s ballooned rapidly by snapping up distressed IPs and then parading them back into the markets through licensing deals and co-branding efforts.
Friday saw a few public kerfuffles at some of its brands. The chatter begs the question of whether they’re temporary growing pains of a very large business or cracks in the patina.
First, Authentic, owner of several California-based apparel companies, cut off its licensing deal with Arena Group for the publication of Sports Illustrated. Arena missed on a $3.75 million quarterly payment to Authentic, triggering the revoked license, Arena said in a Securities & Exchange Commission filing.
The end of the license rocked the Sports Illustrated newsroom. Arena said in its filing it would lay off a third of its more than 100 employees, which includes a large chunk of the Sports Illustrated newsroom.
Friday also saw Lisa Andersen – the four-time World Champion surfer – posting a video of the Roxy logo being ripped off a surfboard. The post caption: “All is good.”
It was a not too subtle way of saying “the end” to a 30-year relationship with a young contemporary surf brand that was the first of its kind.
Sports Illustrated and Roxy are two seemingly unrelated events. The connection is Authentic Brands Group.
New Business Model
Brand management firms have never held the limelight in the press to the degree a luxury fashion house or buzzy up-and-coming brand has historically enjoyed. Consumers don’t care about the ins and outs of the licensing model; reporters have other stories to chase.
That is, until Authentic founder, Chair and CEO Jamie Salter quickly scaled his company. He had an idealistic strategy aimed at creating “a new breed of brand licensing company,” according to a 2021 draft registration statement when the company planned to go public. It withdrew the bid the following year.
That “new breed” brand management firm focused on farming out different aspects of the business – product development, logistics and distribution – allowing the owner of the brands to focus on picking the best licensee for the job.
What that’s looked like so far has been lots of logo slapping on questionable product and Frankenstein collaborations across the Authentic brand portfolio: Forever 21 x Barneys New York, anyone? Or, how about fabric and yarn sold at Joann from Juicy Couture – the late 90s Los Angeles brand that made velour tracksuits a pop culture phenomenon. It’s hard to say if founders Pamela Skaist-Levy and Gela Nash-Taylor envisioned Juicy-branded velour – currently on markdown – sold at a crafts retailer.
There’s also a recently launched membership site, authentic.com, that merchandises many Authentic brands’ products together in the online shop. Customers pay $5 per month for a 10 percent discount and free shipping.
Just Because You Can…
Authentic’s attracted attention with numbers: $29 billion in annual retail sales and more than 50 brands amassed since its 2010 founding. Salter also said this month during an ICR conference presentation Authentic is likely to IPO or be bought by a mega company like Disney or Shein in the next 18 months or so.
The numbers and projections have turned the heads of business reporters.
For any marketer, the events of Friday and a closer look at the reality of aggregating a bunch of unrelated brands under a single manager force the question: just because you can, should you?
Los Angeles-based Forever 21 stood to benefit plenty from that Barneys collaboration. But Barneys? Being shoved into a poorly lit corner of the Los Cerritos Center Forever 21 is a far cry from its former home on Wilshire Boulevard in Beverly Hills.
Andersen ripping off the Roxy logo – something she helped grow to hundreds of millions in revenue – isn’t a good look. What’s left of a brand once the ties to pop culture, influencers and a disciplined point of view dwindles?
In the brand management world, revenue comes from licensing deals. Marrying brands like Barneys, Forever 21, Roxy, RVCA and others owned by Authentic on anything from toys to perfume may work for a while. However, the market turns quicker than ever. Brands’ shelf lives are only becoming shorter unless they’re treated with kid gloves.
Brand Curators?
Those are concepts that seem to be understood by Salter.
He said in the company’s 2021 draft registration statement the word “brands” is in the company’s name because they “matter and always will matter.”
“We are brand owners, curators and guardians,” Salter wrote. “We don’t manage stores, inventory or supply chains. We don’t manufacture anything. We are a licensing business and are purely focused on brand identity and marketing.”
The philosophy implies branding is mutually exclusive from some of the less glamourous aspects of running an apparel business: logistics, retail and the like.
In fact, as more consumers cry for transparency in the companies they transact with, the factory seamstress and warehouse worker picking and packing product is just as important to safeguard as the designer or CMO at headquarters.
With workforces running in the thousands and partners in the hundreds, the complex chain of individuals handling all the rest of the work outside of what Salter sees as Authentic’s core focus are as critical as anything else. Controlling everything matters. And, if some of that work is farmed out, control still matters.
When companies leave a bad taste in workers’ or former influencers’ mouths, word spreads. That’s not so good for branding or business.
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