Retail in Asia

In Trends

Are billion dollar brands a thing of the past?

Lululemon Shop - Retail in Asia

Lawrence Lenihan, CEO of Resonance, an early-stage fashion investment firm, predicts that there will no longer be another startup luxury brand that will reach $1 billion in revenue. 

In an opinion piece for Lean Luxe, Lenihan says the growth of the global fashion market has caused specialty brands and retailers to create many segments in the industry. And “by being more specific to their customers’ interests, values and aspirations, the bond and loyalty forged by these brands to their specific segment of customers has been unbelievably strong.”

SEE ALSO: Lululemon CEO says athleisure bubble will pop

Lululemon remains one of the best brands built in recent years, creating enormous amounts of value by cultivating a deep customer connection through specificity in market focus. Since its founding in 1998, it has become deeply intertwined with its customers’ lifestyle and activity. Wearing Lululemon speaks volumes for who you are as a woman — active, engaged, physical, spiritual and connected to your environment; the personification of the Yoga practice. It has grown to be a $1.7 billion company that has created $9 billion in shareholder value.”

With the Internet, “you are no longer constrained by geography or capital to reach your customer. Given the economics of the removal of these constraints, one can build a business that is really specific to a very specific group of target customers and not have to worry about there being enough of them in a given geographic location.”

“The Internet has also provided new brands with an incredible opportunity to launch their business at a fraction of the cost and in a fraction of the time it took before. Anyone can launch a business in the next few minutes on a platform such as Shopify (disclosure: Shopify is a FirstMark portfolio company) and thousands (maybe tens of thousands?) of new brands are starting each year because so many barriers to entry like establishing wholesale relationships or opening a store have been removed.”

(Source: Lean Luxe)