Fashion Brief: As future economic concerns mount, ‘on-demand’ products are winning.

In late 2020, 8-year-old Swedish native Axel Arigato sold his majority stake to Urazeo Brands for $66 million. At the time, the company was pulling in $40 million a year and had been profitable for two years. Company representatives declined to provide an update on current revenue and growth.

According to co-founder and CEO Albin Johansson, the company’s new support does not hinder the intended and short-term focus on safe bets. But the brand is not standing. Instead, Axel Arigato is further developing the product categories it does best – namely sneakers. In addition, it is increasingly building on its established brand and expanding into value-for-money markets, reaching a global level as opposed to the local consumer.

“If it’s not an international hub, it’s not the right market for us here and now,” Johansson said. “And because consumers will soon have less money in their wallets, they’re not going to research the category leaders. [options] The same way in the past. Now we don’t have to jump into new categories because we won’t be their first choice.

The fact that Allbirds folded its activewear category and Old Navy scaled back its extended-size offering, both launched in the middle of the pandemic, is a sign that consumers are not currently interested in off-brand categories.

He added: “Stability is very important in the future. [challenging] time [period], that will last for three months or two years. We have to make sure we are ready for this.

Amidst higher interest rates, rising inflation, a generally higher cost of living and stocks falling to lower prices, companies across industries are bracing for more shifts and a slowdown in consumer spending. Many major clothing brands have cut their sales forecasts for the rest of the year, and many experts believe that even the luxury sector, which has been relatively unscathed since the outbreak, will not be immune from the economic effects.

Started as a sneaker brand by Johansson and creative director Max Svard, Axel Arigato has since introduced products including ready-to-wear, outerwear and relatively affordable branded accessories. The brand is reminiscent of iconic streetwear brands such as Amime Lyonnais. According to Johansen, a “full-value brand” is the long-term goal. But now he is patient.

Axel Arigato’s biggest challenge in meeting product demand with adequate supply is also shaping its strategies. Even though the company’s manufacturing costs are at their highest since mid-pandemic, delivery times have not slowed, Johannes said. Bringing the supply chain closer to demand is a plan going forward. Currently, Axel Arigato manufactures in Portugal and exports from Sweden. And staying focused on the now is an important thing that will serve the brand well in the long run, he said.

Jeff Johnson, co-founder and chief product officer of NYC-based The Arrivals, supports Johansen’s theory that a strong product category backed by a strong brand is a business advantage that fits the times. Johnson said Arrivals also started eight years ago, focusing on “performance-based, fashion-conscious” outerwear. The take on outerwear has expanded to include Gorpicor fit styles that have the same material function as the quotas. Launched last year, the puffer pant is the first jacketless style to become a top seller. For 2022, the style re-introduced shades including lavender and emerald.

According to Johnson, the focus function alone makes the difference in today’s market. While many consumers are blindly shopping for discoveries at Amazon and other platform giants, there is another extreme of consumers who say, “Who is the perfect inventor for that one thing I need?” he said. In turn, the entrants and other brands are asking themselves, “What are we really trying to do? What are we really doing? And do those two things align with what our customers want? “

Brick-and-mortar retailers, too, are devising the path to shopping for those who know what they want, prioritizing elements of experience, Johnson said. “There are limited places where you can just go and find your major,” he said.

“There was an era where ‘everything was said and seen,’ but we are entering an era where everything is said,” he said. “Therefore, throwing out little whispers as a brand to the people you meet [is resonating]He said. According to Johnson, the newcomers have always been methodical in their long-term growth, avoiding flashy trends in their strategies. He pointed out that it is an independent brand free from the pressure of investors.

Axel Arigato, on the other hand, laid the foundation for the next phase of development in the first half of this year. This includes the creation of 66 new employees for a total of 215 employees, the opening of offices in Portugal and the Netherlands, the expansion of distribution to Germany and China, the second through Timal and the first hire in the US – they are building their focus. Wholesale business.

On the retail front, it’s important to secure “like-minded partners who care about the brand” as the company works to introduce itself to the U.S. market, Johannes said. In other markets, Axel Arigato has managed to dominate its presence through department stores. In Paris, it includes stores in Le Bon Marché and Galeries Lafayette, and will soon open in Printemps. It is also a managing position at Selfridges in London, KaDeWe Group stores in Germany and Level Shoes in Dubai.

“From a brand perspective, we are in a good place. But we must continue to control our narrative and our destiny,” Johansson said. “The more we expand [geographically]Our focus should be more narrow, to communicate [who we are]He said.

Where the brand is not conservative is in marketing and branding spend. According to Johansson, brands that pull back are at risk of “not being a brand anymore” because the brand is the foundation of the fashion business.

Axel Arigato’s expanding retail footprint and unique in-store experiences are key differentiators in the current landscape, according to Johansson. The brand has six independent stores, and Johansson is currently opening stores in Paris, London and New York. The goal is to follow the first NYC store with a second before expanding to cities including LA.

While the stores are located in international shopping centers, many related activities are organized for local residents. In each city where the brand has stores, the company hires people immersed in the local scene to manage the events. He hosted three events in June in Paris alone, including a concert attended by nearly 10,000 people. Music-centered events are common in seasonal celebrations around calendar events such as Pride Month. Each store hosts an average of 30 events in a typical year.

Making events specifically designed to deliver value to a customer segment is also a strategy employed by the destinations. Curated for 24 hours, limited edition products are released online or through social media. Later this month, Brooklyn-based concept store Sincerely Tommy will host a product launch party.

Outside of events, collaborations that reflect Axel Arigato’s ethos are a marketing lever the brand plans to pull in 2023.

According to Christine Claesi-Zumo, an apparel industry analyst at The NPD Group, the company is smart about being driven by “brand” based on consumer habits. “Desired products are winning,” she said. We live in tough economic times, but consumers aren’t reflecting the behavior we’ve seen in past recessions, where we’ve seen across-the-board declines. Consumers are becoming a little more deliberate and careful with their spending, and they’re falling head over heels for the brands they want.

Johansson says Eurazeo Brands gives equal priority to brand building. As such, Axel did not push Arigato to speed up his development. “I’m faster than they are,” he said. For Axel Arigato, he says the partnership has proven invaluable for the “access to knowledge and people” it provides.

In addition to keeping track of the supply chain, Johansson says that while working from home two days a week, streamlining the company’s internal communications is a logistical priority. He asked if the brand’s first-half revenue growth slowdown — 50% year-over-year in 2022, down from 90% pre-pandemic — was a sign of the company’s declining communications.

Finally, he explained that the company is currently prioritizing cash flow over profitability. Healthy cash flow supports inventory needs and investments needed for long-term stability without the risk of bankruptcy, he said.

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