The next billion-dollar streetwear brand
In a 2018 report, Bain & Company again highlighted streetwear as a growth driver for the luxury sector. Casual clothing “remains a key lever to attract new customers” to high-end brands, the consultancy noted.
The attention to streetwear is no longer casual. In late 2017, The Carlyle Group made an investment in Supreme that valued the New York streetwear label at $1 billion. It was an eye-opening moment for an industry destabilised by fluctuating economic growth, accelerating turnover in the creative and corporate ranks, and a retail landscape trying to adapt to a consumer rewired by the internet and social media. Brands that exist at the nexus of fashion and skateboarding — Palace, Supreme and Noah, to name just a few — have the cultural clout once reserved solely for high-end luxury labels like Gucci, Saint Laurent and Fendi.
Welcome to the age of the billion-dollar streetwear brand. Tracksuits and trainers are the new suits and brogues, the new status symbols are oversized hoodies and graphic T-shirts, and explosive growth is being forecast for brands once seen as niche.
That streetwear is now both a category and a trend perhaps explains its extended moment in the sun. But while some predict that demand for pricey casual clothing has passed its peak, the numbers tell a different story. In addition to Bain’s findings, the most recent version of Piper Jaffray’s semi-annual US teens survey found that interest in Vans is at an all-time high, while category champions like Supreme, Champion and TH/CK are top of mind among Gen Z.
“There has been an up, up, up trajectory,” says Katy Lubin, director of communications at global fashion search platform Lyst, adding that the dominant aesthetic in fashion these days is a mix of luxury, streetwear and sportswear, which “have all merged to become the dominating aesthetic driving fashion forward”.
What makes streetwear so appealing to investors? Mortimer Singer, chief executive of Traub, a corporate business development firm that also operates an equity investment arm, notes that Supreme’s core product offering is high-margin apparel like hoodies and T-shirts that are inexpensive to make but thanks to savvy marketing command high prices. A category that includes brands like Vans and Converse was never high-end by default, but manic consumer interest and savvy co-opting by the major labels means that streetwear now lives alongside luxury.
Supreme also completely controls its supply, giving it the ability to stoke up demand. That’s a model also relied on luxury brands such as Goyard, known for its extremely limited availability. Far from signalling a peak, Carlyle’s Supreme investment only seems to have spurred more money to enter the category: billionaire Adrian Cheng last October announced that his C Ventures was leading a $25 million investment round into Chinese streetwear platform Yoho.
What brands are most likely to match Supreme’s $1 billion valuation? We round up the likely candidates below.
4 Names to watch
1. Palace
Launched in London in 2009 by Lev Tanju, Palace's brand mixes the streetwear aesthetic and the scarcity business model à la Supreme. Its deep roots in skateboarding culture give it built-in authenticity. Palace's 2018 collaboration with Polo Ralph Lauren and cheeky marketing campaigns starring current menswear fixation Jonah Hill have helped push it further into the mainstream consciousness, and it is a new point of obsession for hypebeasts wary of Supreme now that it’s gone “mass”.
2. Noah
Launched by former Supreme creative director Brendon Babenzien in 2015, this is skatewear for guys who’ve grown up a little. Think tailoring mixed in with more casual, showy fare, all made from luxury fabrics in mills and workshops where, according to the brand, “tradition, expertise and human dignity take precedence over the bottom line”. Babenzien has chosen a retail distribution model that favours his New York and Tokyo stores, as well as direct online sales, over wholesale. There is also a pair of shop-in-shop spaces at both the London and recently opened Los Angeles outposts of Dover Street Market.
3. Kith
Kith is a dual-sided business. Founded in 2011 as a streetwear-centric retail store, founder Ronnie Fieg has now launched his own clothing imprint to hang along other clothing brands, a curated sneaker collection and a cereal “bar”. Today Kith has five stores and 1.7 million Instagram followers. The brand has also launched a women’s label.
4. Off-White
Louis Vuitton men’s creative director Virgil Abloh is the founder and designer of Off-White. The brand’s easily identifiable graphic design motifs (the oversize X, quotation marks) and sport-meets-street aesthetic helped land him the role of men’s creative director at Louis Vuitton. Off-White’s retail imprint is set to double to 40 stores in 2019, collaborations with brands like Nike, Rimowa and Converse debuted over the past two years, and Abloh topped the Lyst Hot Index, beating out Gucci and Balenciaga.
text by VOGUE BUSINESS
