Pop Apologists Episode 250: WTF Happened to Your Favorite Brands

Released on November 20, 2024

Hosts: Courtney and Chandler
Guest: Sammy Cohen, MBA from Berkeley and Rising Star in Financial & Business Content Creation

Introduction

In episode 250 of Pop Apologists, hosts Courtney and Chandler delve deep into the intriguing downfalls of several beloved consumer brands, including Outdoor Voices, Glossier, and Abercrombie & Fitch. To provide expert insights, they welcome Sammy Cohen, a burgeoning voice in the intersection of Wall Street and pop culture, renowned for her ability to demystify complex financial concepts and analyze the trajectories of today's most influential brands.

Outdoor Voices: From Athleisure Darling to Decline

Origins and Rise:
Sammy Cohen begins by tracing the origins of Outdoor Voices (OV), highlighting CEO Ty Haney's vision to fill a "white gap" in the athleisure market with technical, functional apparel tailored for women. "When she came out with the products, it was pretty much like right away a massive hit" ([04:51] Sammy Cohen).

Venture Capital Era:
The surge of direct-to-consumer (DTC) brands like OV was fueled by a period known as the Zero Interest Rate Policy (ZIRP), where venture capital flowed freely into unprofitable yet rapidly growing companies. "They were growing, eventually they'll figure it out" ([06:52] Sammy Cohen).

Signs of Trouble:
As OV scaled, expenditures on non-essential items—such as expensive flowers for stores and premium sparkling water—raised concerns about financial sustainability. An exposé in the New York Times revealed "they were spending tens of thousands of dollars every month on flowers that were in the stores" ([06:52] Sammy Cohen).

Leadership Struggles and Decline:
Internal conflicts emerged when Mickey Drexler, former CEO of Gap and J. Crew, was brought in as chairman to stabilize the company. Clashes between Drexler and Haney led to Haney's ousting during her maternity leave. "With consumer companies, it's extremely difficult to win them back once you lose a customer" ([13:35] Sammy Cohen).

Current Status:
By 2024, Outdoor Voices had shuttered all retail locations and was acquired by a private equity group, similar to the acquisition of Reese Witherspoon's Draper James. Sammy remains pessimistic about OV's resurgence: "In my opinion, no." ([13:35] Sammy Cohen).

Glossier: Navigating the DTC Shift

Founding and Success:
Glossier, founded by Emily Weiss, capitalized on the DTC model, creating a community-centric skincare and makeup brand. Its direct sales approach resonated well in the early 2010s, making it a favorite among millennials and Gen Z consumers.

Challenges with DTC Model:
As marketing costs soared and the landscape shifted towards omnichannel retailing, Glossier faced diminishing returns from its DTC strategy. "The unit economics really became out of whack" ([32:01] Sammy Cohen).

Strategic Pivot:
To adapt, Glossier began partnering with established retailers like Sephora, enhancing its accessibility and leveraging Sephora's robust shipping capabilities to compete with giants like Amazon.

Brand Extensions and Missteps:
Glossier's foray into Glossier Play in 2019, a line diverging from its minimalist aesthetic into more vibrant, glitter-infused products, was met with consumer confusion and logistical issues. "The companies did close it down basically within the year" ([37:04] Sammy Cohen).

Current Trajectory:
With a valuation of approximately $1.8 billion, Glossier is exploring acquisition opportunities, positioning itself for potential acquisition by major industry players rather than pursuing an IPO. "Glossier is not going anywhere. I think... they'll probably be acquired." ([40:25] Sammy Cohen).

Abercrombie & Fitch: Reinventing the Mall Staple

Historical Popularity:
Abercrombie & Fitch (A&F) was once synonymous with early 2000s mall culture, characterized by its provocative marketing and strong brand identity.

Decline and Rebranding Efforts:
As consumer preferences shifted towards inclusivity and subtlety, A&F's overt branding became outdated. Under the leadership of Fran Horowitz, A&F undertook a comprehensive rebranding, removing conspicuous logos and enhancing product quality. "They completely just flipped the script on what they were providing." ([53:24] Sammy Cohen).

Successful Adaptation:
A&F's strategic pivot focused on understanding and meeting the evolving desires of millennials and Gen Z consumers. Initiatives like the wedding shop—offering affordable yet stylish outfits for various wedding events—helped rejuvenate the brand. "They really listened to the customer." ([55:17] Sammy Cohen).

Current Status:
Today, Abercrombie & Fitch stands as a revitalized brand with elevated products and a keen alignment with customer needs. Sales strategies, including attractive discount offerings, have made it a favored choice among consumers seeking quality and affordability. "They know that their customers are some degree of a millennial or a later Gen Z." ([53:24] Sammy Cohen).

Victoria's Secret: A Cautionary Tale

Past and Present:
Victoria's Secret once dominated the lingerie market with its exclusive fashion shows and narrow beauty standards. However, facing fierce competition from brands like Savage X Fenty and changing consumer values, VES struggled to maintain its relevance.

Leadership Changes and Potential Turnaround:
With the appointment of Hilary Super, former leader of Savage X Fenty, Victoria's Secret aims to revitalize its image through inclusivity and modern marketing strategies. Early collaborations with influencers indicate a positive directional shift. "I actually am bullish on. I think that Victoria's Secret can change things around." ([60:17] Sammy Cohen).

The Role of Venture Capital and Market Dynamics

Sammy Cohen emphasizes the significant role venture capital played in the rise and fall of these DTC brands. The influx of easy capital during the ZIRP era allowed brands to scale rapidly without achieving profitability. "It's the venture capitalists who gave them the money." ([25:19] Sammy Cohen). As capital became less accessible post-2020, the sustainability of such business models came into question, prompting many to reassess and pivot strategies or face decline.

Key Takeaways and Industry Insights

1. Founder’s Influence:
   The centrality of a charismatic founder, as seen with Ty Haney in Outdoor Voices, can be both a strength and a vulnerability. Their departure often leads to a significant shift in brand identity and customer perception.

2. Community is Crucial:
   Building a loyal community, beyond just selling products, is essential. Outdoor Voices thrived initially due to its vibrant community activities, but struggled to maintain this after leadership changes.

3. Adaptability is Essential:
   Brands like Abercrombie & Fitch demonstrate the importance of evolving with consumer preferences, investing in quality, and strategic rebranding to stay relevant.

4. Marketing and Omnichannel Presence:
   The shift from DTC to omnichannel retailing highlights the need for brands to diversify their sales channels and optimize marketing expenditures to maintain profitability.

5. Venture Capital's Double-Edged Sword:
   While venture capital can accelerate growth, it can also pressure brands to prioritize rapid expansion over sustainable business practices, leading to long-term instability.

Closing Thoughts

In this episode, Pop Apologists offers a comprehensive analysis of the meteoric rises and precipitous falls of several key consumer brands, underscoring the intricate interplay between leadership, market dynamics, and consumer behavior. With Sammy Cohen's expert insights, listeners gain a deeper understanding of the factors that drive brand success and those that precipitate decline, providing valuable lessons for both consumers and aspiring entrepreneurs.

Notable Quotes:

• "At Amica, we understand that looking out for each other isn't new or groundbreaking. It's human. Amica empathy is our best policy." ([00:01] Amica Insurance Representative) (Skipped in summary as per instructions)

• "I think collaborations are extremely important and can turn the company around if they're done right." ([12:54] Sammy Cohen)

• "If you're looking at brands, a community can often power a brand on its own." ([17:04] Sammy Cohen)

• "It's the venture capitalists who gave them the money. Because ultimately all of the ideas that they had, I think objectively were good ideas." ([25:19] Sammy Cohen)

Note: Advertisements and non-content segments have been omitted in accordance with the summary guidelines.