The Four Futures of the Platform That Birthed Luxury Streetwear
At the start of the 2010s, the two opposite camps of luxury fashion and streetwear rarely crossed-over. Luxury was exclusively for the elite older generation — it was preppy, expensive, serious. Streetwear and sportswear, on the other hand, were for everyone else. This generation of creators — who during this time, started becoming the most influential consumer segment in the luxury market, and whose definition of “luxury” itself shifted from price point to cultural credibility — had other ideas.
And then came New Guards Group, the Milanese mystery holding company that disrupted the entire industry and commercialized what would famously become known as “luxury streetwear.” The company — co-founded in 2015 and run by Davide De Giglio and Andrea Grilli — has birthed some of luxury streetwear’s most successful brands, including Off-White™, Palm Angels, Heron Preston, Kirin (by Peggy Gou), and Marcelo Burlon County of Milan. (Virgil Abloh still owns the trademark to Off-White™.)
More than just creating classic streetwear staples in luxury fabrications with artisanal techniques, the company adopted streetwear’s way of marketing itself, releasing products and communicating directly with consumers through digital channels that allowed for quicker feedback. Add fast-paced production and distribution capabilities to the equation — its production company works on 24/7 shifts to annually create over 200 collections for the group — and you have what co-founder Davide De Giglio calls “luxury fast-fashion,” catered to a young affluent generation that expects luxury at the speed of Instagram (the company says it’s able to go from design to delivery within three weeks). Its model paid off. In the year ending April 30, 2019, New Guards Group generated revenues of $345 million, up 59 percent year-on-year.
New Guards Group’s sharp ability to identify credible talent who already have big, loyal followings, paired with its internal infrastructure to launch, scale, and foster independent brands fast (from design and production to distribution and management) has enabled the company to grow its brand portfolio — it owns majority stakes in all its brands, with the exception of knitwear label Alanui — at an unprecedented pace, ultimately creating streetwear’s new paradigm.
Farfetch, the London-based online retailer and owner of Stadium Goods and Browns, purchased New Guards Group in August 2019, in a cash-and-stock transaction worth a staggering $675 million. The acquisition would enable New Guards Group’s brands to expand their direct-to-consumer sales via the platform. At the time of sale, 95 percent of New Guards Group’s total sales came from wholesale and franchise partners.
And this is only the beginning. With all eyes on New Guards Group’s next move, it’s evolving its strategy — most noticeably with the appointment of its first ever Chief Marketing Officer, Cristiano Fagnani, a Nike veteran of 20 years who was in charge of Nike’s influencer marketing, brand experience initiatives, and led some of the most defining fashion collaborations for the sportswear giant in recent years, including those with Virgil Abloh and Yoon Ahn.
In an exclusive interview with Highsnobiety, Fagnani lays out his plans for what’s next at New Guards Group, from new drop schedules to the expansion of the group itself.
The Company Will Grow, Fast
“There’s [always] a moment, and this is the moment for New Guards to shift gears,” says Fagnani. “After five incredible years, we’re now starting to consolidate the business and build the infrastructure to grow in a healthy way for the next five or 10 years.”
We’ve entered a new decade, new beginnings. So too for streetwear, which must evolve. Now, with Farfetch on board, New Guards Group is gearing up for this progression. Fagnani knows this — it’s why, since his appointment in January, he’s put new processes in place and gone on a hiring spree.
“One of my jobs is to structure the fundamentals, and open up the culture of the company. There are several brands in our portfolio that are at different stages of growth. Some of them, like Off-White™, are ready to become [bigger] companies on their own, rather than just one piece of the portfolio,” he says. “Others that are still small require some sort of organization to keep moving.”
But how does this manifest in practice? “For a company who was pretty much wholesale driven, now is the opportunity to add layers [by] building new stores, shift gears on .com, and establish and grow our presence on different channels and market places, geographically speaking,” says Fagnani, hinting at a bigger planned growth in Asia.
Between big luxury powerhouses like Chanel and Louis Vuitton, Off-White™ is opening its first standalone store on London’s lux Sloane Street later this month, followed by stores in Milan the following week and in Paris next year. However, New Guards Group is better known for opening up new stores in places like Manila, Melbourne, or Kuala Lumpur — locations where it sees traction online, yet where almost no luxury brands have a physical presence. It’s something the company will continue, Fagnani says.
Their teams are evolving, too. Key hires have been made across digital marketing, merchandising, e-commerce, communications, product collaborations, and strategy. For the bigger companies like Off-White™, where teams from New Guards Group would earlier work across brands, independent teams are now being built to get to a point where it can independently function to grow faster.
“We’re at a moment of maturity where [we’re going] from being an entrepreneurial collective to a company with an aligned infrastructure,” he says. “You need to be consistent and committed. This is where new people will have a role to be able to focus on the consumer 24/7, 365.”
New Brands Will Be Acquired
Last January, New Guards Group bought the trademark and intellectual property of Opening Ceremony, closing all four of its multi-brand stores by the end of the year in order to develop and expand its ready-to-wear line from Milan, relaunch Opening Ceremony’s website on Farfetch, and create a showroom in Paris. The line will continue to be designed by co-founders Carol Lim and Humberto Leon, with Fall/Winter 2020 being their first season; however, it’s Opening Ceremony’s pioneering expertise in concept retail and local community building that New Guards is truly interested in.
The same month, New Guards took a majority stake in Japanese jewelry and apparel label Ambush, founded by Yoon Ahn and Verbal. At the time of purchase, Ambush roughly made $22 million in annual sales, with jewelry representing 30 percent of sales and half of all sales hailing from Japan. The goal with Ambush is now to expand more internationally, add new product categories, and open physical stores outside of Japan.
It’s just the latest example of New Guards’ ambition to become an even bigger international luxury player. Fagnani will be key in that mission. “Even brands who have reached a certain level can benefit from a burst that comes from an organization that’s able to accelerate growth through a network, skills, and expertise that we’ve built,” says Fagnani. “So, in that sense you can expect New Guards to be looking around for companies or brands that have the opportunity to shift gears at some point in their life. It’s what we’ll be focusing on consistently.”
So, what makes a good candidate? “We don’t really have a checklist. We’re new to the game, and the way we see the game is that it’s very open, so we aren’t just looking vertically to one part of the industry,” he says, adding that one thing that’s certain is that it will be looking at companies in other areas of the industry beyond ready-to-wear, as well as more businesses (like Opening Ceremony and AMBUSH) that don’t have to be created from scratch, like the brands it started with. “It’s not a formula you can repeat forever. I don’t see the next few years being as we had years ago. Now that the company has five years' experience, we can embrace businesses that are already developed and help them get to the next level.”
He also hints at the platform evolving in its direction. “We’re definitely moving towards, let’s say, fashion luxury and premium. I’m saying this with big respect, but people otherwise will expect us to do T-shirts and hoodies every day,” he says. “This is what we’re very good at doing, by the way, [but] that’s not what [gets us] to the next level.
It Will Change Fashion's Calendar
“[In the past], we've been covered because of our presence in the classic fashion system with its [seasonal] show cycles, look books, etc., and I think that was great. It helped all our brands to be seen and accepted in the industry, but, without disrespecting that lifecycle, we’re ready for the next step and see an opportunity to get closer to consumers,” says Fagnani. “We have to travel instead of them traveling to us.”
For decades, the seasonal model has remained the same — what’s changed in the past decade (and what the industry has been slow to react to) is that shows are no longer behind closed doors. “It’s a little bit nonsense. In the era where everything is public, I don’t think it’s really efficient to have your biggest moment of excitement [a runway show] attached to a collection that doesn’t come to the market for the next six months. It’s day-to-day engagement through storytelling; it’s no switch on, switch off [mentality] anymore.”
Those that aren’t changing now risk losing relevance. “That’s when the markdowns start in department stores,” he says. “We don’t want to see markdowns. We want a synergy that will allow us to have fresh products constantly and put our wholesale [stockists] in a position where they can sell out a lot of our product before the next delivery comes in.”
And so, the CMO has a plan. Over the last couple of months, Fagnani and his team have been working on a seasonal “editorial calendar” for each of the brands, that sets out a clear schedule of product and bigger collection releases, aimed to align different teams inside the individual brands a lot better by specifying what drops where and when.
“[Currently] it’s a find-and-seek exercise for consumers, where once in a while there will be a drop or collaboration, and the goal is to be in a place where, at the beginning of the season, we [share] an agenda of the season,” Fagnani explains, adding that the calendar will include the planning of everything from specific product drops to the marketing activations and campaigns that surround them and put the product in front of the consumer. “It might sound obvious, but to build a cohesive approach for the season by aligning the pipes between brick-and-mortar retail, digital, our social platforms, storytelling, and events [is difficult].
It’s a big shift, Fagnani admits, saying the benefits aren’t just a novelty for the consumer, but also prevent too much cross-over between seasons, which until now has proven inefficient. So, what’s the plan for brands like Off-White™? “I think especially for Off-White™, we'll go into this new cycle of seasons. The show or presentation will become the highlight of what you will be seeing, product- and story-wise, for the following months to come. And we’ll reverse the energy that comes from the [show] into the market place immediately,” he says.
This means that, where there are currently eight seasons a year per brand (four for each gender), there will now be just two in total — Spring/Summer and Fall/Winter, men and women combined. For each season, however, there will be three to four deliveries, each with individual storytelling and marketing around it. It’s a way to lower the amount of product at any given time on its channels, creating more scarcity and, ultimately, urgency to purchase for you, the shopper. It will also allow the brands within New Guards Group’s portfolio to be more reactionary to what’s happening in youth culture in real time with its product and communication.
Its Global Brands Will Become More Localized
This new schedule is part of New Guards Group’s mission to include the consumer a lot more in the building of the future of its brands, in what Fagnani calls “being more culturally [and locally] communicative.”
“I think it's now important to offer the brand to the consumer in different places with slightly different glances. And if a brand or a company wants to expand and be globally relevant, it needs to find a way to connect geographically, everywhere,” says Fagnani. “Brands have the responsibility of picturing the future, driving consumers emotionally and physically to places that they haven't seen before, to chart the uncharted.”
And so, the shift to become more locally communicative will include everything from the e-commerce websites from its owned brands soon becoming available in multiple languages to entering and growing both its physical and digital presence in key markets like Asia, Latin, and South America for all its brands, where it will be looking to create more local experiences and activations with those communities. Unlike many other luxury stores, New Guards Group will take a different approach where, as often seen with Starbucks, individual stores will adapt to the mood of the cities where they’re located.
The way in which it communicates with local audiences will equally be important. Growing on Chinese platforms like WeChat will be a starting point. “We’re going to put some effort into it to be in charge of the content and acknowledge what is needed for this platform, not just as an afterthought after we’ve managed Western [platforms]. That’s a big shift,” he says. “I think it’s a matter of respect and it also builds some efficiency, [but] we have to learn to speak that language so we’ll have to make an effort to fill the gap.”
The CMO, however, is highly aware that products themselves will always be at the centre of any brand-consumer relationship. “At the end of the day, the transfer of product is a testament of this relationship, because that’s what they want from you,” he reflects. “There’s also an element of honesty from brands in aligning the storytelling of the brand with the commercial outlet and making them organically connected in a way so there are no lies or other intentions other than being transparent, connected, and available.”
That might sound too transactional at first, however, Fagnani understands it’s this directness that both the consumer and the business need. “It puts the company and the brands in the closest position in the conversation to consumers. And being closer to consumers allows you to then listen to them better, service them with their needs, and engage with them in a conference that isn’t just attached to a single transaction, but creates an ongoing relationship in the long term."
“It’s why we call consumers members. Members of the bigger organization that have the brands at its centre,” he says, referencing the participation of a brand’s fans in the upcoming storytelling and activations created around products. “Part of it resides in the product’s craft, quality, and excellent manufacturing. Part of it resides on the storytelling that comes with it. All these things need to come together, and when the product is put in front of the consumer, you can’t lie about it, so why not connect all the dots and make it more linear, more transparent?”
