New Guards Group acquired Opening Ceremony, which aims to capitalize on the company’s brand awareness while eschewing the retail stores that made it famous.

WHAT HAPPENED: New Guards Group, the Farfetch-owned brand platform, acquired Opening Ceremony’s intellectual property and secured a design contract with its two founders to focus on its private label merchandise. New Guards will move the brand’s manufacturing to Italy and its website to Farfetch.

WHY IT MATTERS:

  • While the acquisition allows Opening Ceremony to expand internationally, it should stay focused on the New York City market. Opening Ceremony can attribute the bulk of its success to its New York City origins and being in the right place at the right time. While Opening Ceremony is known worldwide, its business isn’t proven globally and expanding internationally takes away focus on its business in key urban markets. Famed Seattle retailer Totokaelo ran into a similar issue when it opened its first store in New York City, where it tried to replicate its model. But what made the brand special in Seattle didn’t translate to success in New York City, an issue Opening Ceremony will need to be mindful of as it expands.
  • Opening Ceremony is the latest addition to a long list of boutique third-party retailers that have either gone bankrupt, sold for a small amount of money or significantly scaled down their operations. Opening Ceremony’s distinct ability to merchandise under-the-radar brands alongside legacy players enabled the retailer to cultivate a loyal following. But social media shifted the fashion consumer’s focus away from stores like Colette, Totokaleo or Opening Ceremony and onto a number of digital platforms from Net-a-porter to Farfetch itself to media companies like Highsnobiety and Hypebeast. Discovery alone is no longer a viable value proposition for third-party retailers.