Page 34 - December 2021 / January 2022

RLI RETAIL INSIGHT

Is The Future Of Retail

In Assetless Brands?

Tobias Nanda, President of Brands at Gordon Brothers takes some
out to explain how well-known brands can secure stability through
the assetless brand business model.

e have all read gloomy media reports around the
future of retail and mourned the loss of too many
Wfond brands in recent times. The assetless based
company model (ABC) offers an innovative and fresh approach that
can help brands survive and thrive in this environment. Interestingly,
transitioning from a traditional brand to an assetless brand is actually
more evolutionary than revolutionary, and is more accessible than
many management teams and shareholders may think.
A Proven Example
A recent example of this transition is when we bought the iconic
Laura Ashley brand. In all aspects, it has proven to be a universally
positive experience. Shifting Laura Ashley to the ABC model allowed
us to reimagine the brand for a new generation, retaining the existing
core customer while speaking to a new generation of consumer.
It is important to appreciate that there is no need to sacrifice the
essence of any brand in this process. Instead, staying true to Laura How To Make The Transition
Ashley’s brand DNA has been crucial to our success. For brands considering assetless status, there are some key areas
Laura Ashley is a well-known and beloved brand on a global scale that will help to inform the decision process and safeguard success:
- a UK heritage brand with devoted fans in the US, Europe, Asia, Find an expert with the right experience - While this may mean
and Australia. It was also already established in numerous categories, conversion or selling an equity stake, the right partner will provide
including homeware, fashion, and hospitality. Laura Ashley was a experience, knowledge and an existing network to leverage.
lifestyle brand before lifestyle brands were buzzworthy! Identify the underlying value of the brand - Be realistic. How
Why Does It Work? strong is your brand? The ABC model works best for mature brands
Consumer-facing companies face a cyclical market that fluctuates with intellectual property and assets to leverage. Suppliers will need
with the economic environment. Layer on top of this the structural to believe in the power of your brand equity.
changes we are witnessing as shoppers move more online, and Develop a business plan for the ABC - Really think through your
the consumer space is one that is fraught with risk. Carrying strategy, not-to-mention the nitty-gritty of transition. There is a
significant operating overheads and buying lots of inventory while high-level hurdle to overcome. Be realistic about the timeframe,
betting on future events, doesn’t allow for downturns and prevents investment and need for an experienced partner.
nimble operations. Restructure the assets - Carefully take the brand and all its
The ABC structure creates stability through flexibility. It requires associated assets – customer lists, URL, patents – and move it to a
minimal overhead by leveraging manufacturers and licensing partners, new company that doesn’t carry huge operational costs and doesn’t
facilitating quick reactions to change and safeguarding survival. In my take inventory positions.
opinion, the ABC model enables more branded consumer companies Relaunch the brand - Implement your business plan by signing up
to thrive for longer periods, benefitting all stakeholders. with licensees to bring new life to the brand.
The ABC also enriches the market overall, offering consumers What’s The Biggest Challenge?
more choice. We all have brands we feel connected to; some of Moving to an ABC model requires a unique combination of art
them are healthy, others not. This model can support those brands and science.
and allow them to live on and grow. The science is important as you need to assess the brand’s
What’s In It For The Brands? distribution model, what they’re selling, where they’re selling, gross
The clearest advantages are scalability, flexibility and speed. ABCs margins, and so on. The gross selling margin must be high enough to
don’t have to invest in the infrastructure that’s typically required to validate the ability of licensees to pay the royalty rate. This does not
achieve this; they just need to find the right partner. This can reduce work for low margin brands.
a standard three-year lead time to only 12 months. In terms of art, a certain amount of judgment comes into play.
ABC status also allows brands to grow outside existing territories. Is the brand strong enough to live by leveraging the eco-system?
Brands are increasingly global. If you look at the top 100 brands in Would some level of disruption damage the brand equity? Are there
the world, all speak to a global audience. This kind of reach is difficult operations that are integral to the brand that need to be retained?
and expensive to execute using the traditional model, as it requires It all needs to come together and teams like Gordon Brothers are
people on the ground, offices, logistics, and warehousing. Perhaps experts at executing these transitions.
most importantly, the same brand messaging doesn’t work in every In Summary
country and needs to be tweaked accordingly. Taken together, While the ABC model is still in its infancy, there are enough
global expansion is cumbersome and risky. Alternatively, ABCs success stories to validate the strategy. We have been developing
work with local partners who understand specific markets. This local the principles of this approach since 2004, delivering success through
knowledge reduces both risk and cost. Bench, Ben Sherman, Polaroid, Sharper Image, Linens ‘n Things, and
Longer-term, this risk-reduction and reduced lead-times into Laura Ashley, among others.
new categories and territories leads to more innovation and ABCs are not going away. They have evolved through hard work,
experimentation. Brands have the space and flexibility to not only thought and experimentation and will be an important part of the
succeed, but to try, fail, learn and go in new directions. brand landscape for years to come.

34 RETAIL & LEISURE INTERNATIONAL DECEMBER 2021 / JANUARY 2022