On February 10, investment company L Catterton, which manages the funds of the French fashion LVMH and the family of its founder, billionaire Bernard Arnault, invested $ 115 million in lingerie brand Savage X Fenty. The valuation of the entire business exceeded $ 1 billion.
A company founded less than three years ago by TechStyle Fashion Group and singer Rihanna received unicorn status. Revyuh studied the pop star’s business principles and what sets Savage apart from its Victoria’s Secret competitors.
How Rihanna became an entrepreneur
For 15 years, 32-year-old Barbados native Robyn Rihanna Fenty (hence the names of the Fenty brands associated with the artist) has built an ideal career in show business: nine Grammys, 250 million discs sold, hundreds of millions (and even billions) of streams and views on the Internet, more than 90 million followers on Instagram.
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At the same time, the singer worked on the icon’s reputation in another industry – fashion. Regular gloss covers, attending fashion shows of leading couturiers, friendship with opinion leaders provided Rihanna with an influence that it was a sin not to start monetizing. She did it a few years ago – in an alliance with powerful partner LVMH, which has a portfolio of more than 60 brands, including Louis Vuitton and Christian Dior.
In 2017, Rihanna and LVMH launched the beauty brand Fenty Beauty. In the first few weeks, its sales amounted to $ 100 million, for the entire 2018 – $ 570 million (The company did not disclose its financial results later.)
In 2019, Forbes estimated Fenty Beauty at $ 3 billion, and Rihanna’s personal fortune at $ 600 million. The singer became the wealthiest woman in the world of music, ahead of Madonna ($ 570 million) and Beyoncé ($ 400 million).
Business for $ 1 billion
After the successful launch of the cosmetics line, LVMH and Rihanna began to make clothes and shoes under the Fenty brand, but that seemed to be a bad idea. In October 2020, LVMH CFO Jean-Jacques Giony acknowledged problems with the brand’s positioning. The latest collection was released in November 2020, after which Fenty went to sleep. Bloomberg explains the failure by the fact that for Rihanna’s audience, things were too expensive, for the audience of LVMH brands – not luxurious enough.
On February 10, WWD reported that the pop diva and LVMH had decided to suspend the fashion brand until “conditions improved.” At the same time, cosmetics under the Fenty Beauty and Fenty Skin brands continue to develop in the ecosystem of the French concern. However, even more important news than the closure of Fenty was LVMH’s investment in another Rihanna project, the lingerie brand Savage X Fenty. Another major launch in 2018 was with the American company TechStyle Fashion Group. It grew out of the online store JustFab and developed several fashion brands on a subscription model with combined revenues of over $ 750 million. In addition to Savage, this is the eponymous women’s line JustFab, children’s FabKids, the sports brand of the actress and model Kate Hudson Fabletics.
Savage, where Rihanna holds the positions of CEO and creative director, unlike Fenty, initially aimed at the mass, not the luxury segment of the market. The bras of the brand, for example, start at $ 10, and a subscription that opens access to purchases at prices below retail costs $ 49.95 per month. This model was to the liking of buyers: even in the coronavirus year 2020, Savage, according to Fast Company, showed revenue growth of more than 200% compared to 2019 – more than $ 150 million. And LVMH’s investment means that analysts expect to continue this rally in 2021.
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How much Rihanna will earn on the deal (and how much her share is now worth), the parties do not disclose. In 2019, Forbes wrote that the singer owned 15% in Fenty Beauty, but Rihanna’s representative did not confirm the information. If these conditions are carried over to Savage, the star’s stake in the company should be worth $ 150 million.
Savage plans to invest in the development of offline retail. According to Fast Company, the partners are planning to build a real “fashion empire” in the lingerie segment.
War with the “angels”
Fenty’s direct competitors have been all the big luxury apparel and footwear brands, while Savage retail can focus on beating its main rival, Victoria’s Secret.
After almost 47 years of dominance in the lingerie market, the legendary brand, part of the L Brands holding, began to systematically leave the industry. One of the reasons was a marketing strategy that focused on outdated patriarchal ideas about how men want women, and not women themselves. Compounding concerns were reports of misogyny and sexual harassment at the company, as well as CEO Leslie Wexner’s close relationship with sex-trafficking financier Jeffrey Epstein (who committed suicide in prison in 2019).
From 2016 to 2018, Victoria’s Secret (VS) market share in the US fell from 33% to 24%, Business Insider reported. The popularity of the famous show of “angels” – models in VS lingerie also declined. In 2018, only 3.3 million people watched the Victoria’s Secret Fashion Show, the worst performance in the company’s history. In 2019, the show was canceled for the first time in 18 years.
The departure of Edward G. Razek, marketing director and creator of the Victoria’s Secret Fashion Show, from VS in 2018 was also indicative. He left the post shortly after an interview with Vogue, in which he stated that the brand will not hire transgender people or plus-size models, “because the show is a celebration of fantasy.”
Sexuality in the #MeToo era
Rihanna initially built her brand in the spirit of the times: Savage postulated openness to people of all genders, shapes, and ages. The brand features transsexuals, pregnant women, plus-size people, breast cancer survivors, and other models that are difficult to imagine among the Victoria’s Secret Angels with their deliberate sexuality and patriarchal conformity.
At the same time, in the era of #MeToo (a social movement against sexual harassment and abuse), it is not easy for Rihanna to promote a fairly sexy brand. But Savage has an advantage over its competitors: the brand clearly separates its own sex-positive and someone else’s “sexual” positioning.
Other fashionable lingerie manufacturers, such as ThirdLove and Lively, emphasize comfort over sexuality in their promotion. Rihanna competes both with them and in the territory traditionally staked out by Victoria’s Secret.
She is the “face of the brand,” and “she’s unapologetic” says Christiane Pendarvis, Savage president adding “What she does is for herself and not for someone else. That’s what we try to embody at Savage: Giving that power and control back to all women.”
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At the same time, Pendarvis emphasized that the brand’s assortment includes not only sexy lingerie sets, but also products such as comfortable tops without underwire, bras with cutouts and unlined T-shirt bras: “We don’t shy away from sexuality—it’s part of the female identity. But we want to give women the freedom to define it however they choose. For some women, they might be a product that is more casual and comfortable. And it might change over time, or even over the course of the day. How she wants to show up with a partner may be different from how she shows up lounging around the house on a Saturday.”
Amazon fashion show
For Savage’s business, it is important to focus on online promotion channels. The brand is just getting ready to go offline and has passed the first three years of development, fully focusing on sales through the website, social networks, and its Amazon storefront. The company has a partnership agreement with the world’s largest marketplace. And while many manufacturers complain about the onerous terms of cooperation with Jeff Bezos’ empire, Rihanna believes Savage benefits from being on the platform.
The most striking episodes of this “win” are the fashion shows rethought by the singer. Rihanna pioneered the idea of annually broadcasting the Savage fashion show through Amazon’s Prime streaming service.
Immediately after the show, the products demonstrated by the models become available for purchase on Amazon. At the same time, only a part of the brand’s collection is presented in the marketplace, so customers still have an incentive to visit the Savage website and register there for bonuses and discounts.
With the coronavirus still rampant and many consumers uncomfortable in physical stores, the Savage team has yet to reach a consensus on when to debut in retail. In addition, the experience of other Internet players who unsuccessfully went offline is alarming, primarily Rent the Runway – the clothing rental service has closed points of sale due to the pandemic.
But if, thanks to LVMH’s investments, the brand nevertheless comes out at retail, the points of sale will surely reflect Rihanna’s concept, representatives of the brand assured Fast Company. According to the plan, the stores will also have men’s departments – in 2020 Savage launched a capsule collection of silk boxers and tuxedos, and it proved so popular that the company decided to include such stuff permanently.