Press commentary on the consolidation of the luxury industry and what unique challenges this raises for mid-tier, younger premium brands. Read the full article

On the inherent advantages that heritage brands enjoy:

“From an economic perspective, older brands actually make money, which is rare and nice,” said Richie Siegel, the founder of the retail analytics company Loose Threads. “But the contemporary side of the market is precarious. The middle-tier plays can often be the hardest sell.”

On how the shift to ecommerce affected once highly disruptive mid-tier brands:

Brands like Michael Kors, Kate Spade, Theory, Tory Burch and Vince hit their stride when customers who couldn’t afford premium luxury brands were eager to get their hands on product that felt premium, but sold for cheaper prices. It worked, and the brands skyrocketed. Then, the rug was pulled out from under them when customers moved online, digitally native brands emerged with trendier pitches, and the traditional channels for growth for both marketing and distribution failed to deliver on previously guaranteed gains.

“The formula for branding has always been: Make good product, put a good brand around it and then distribute it in good places,” said Siegel. “Distribution is a commodity now, and it’s been separated from audience; there’s no guarantee that distribution will lead to a meaningful audience. Not to mention, there are more products than ever today. Look at Vince: You can make similar products [as other brands] and deliver them at similar prices.”

It doesn’t help that investors have been distracted by the startups that have positioned themselves as modern fashion brands, relying on customer-driven design, sustainable supply chains, brand values and transparency.

“Press, word of mouth, attention, hype—that’s all gone to digitally native brands, whereas it used to sit around designers,” said Siegel. “That leaves traditional brands with fewer options when seeking investments or a sale, or at least an uphill battle.”

On how turning to investors can cripple mid-tier brands:

Private equity investors are an option, and according to Siegel, individual investors like to put their dollars behind promising brands even if they haven’t seen profits skyrocket. But that type of investment can put pressure on a middle-tier brand to meet unattainable expectations—a corner that young brands often get themselves stuck in when raising capital to get off the ground.