This week, a bike is gaining buzz among affluent consumers; Tapestry is doing better than expected, but not great; and eTail Boston spotlights what’s weighing on the minds of fashion retailers.
After nearly 50 years in business, London-based Brompton Bicycles has found itself at the center of the cultural zeitgeist.
Healthy living is being prioritized, eco-friendly practices are being championed, and high-end “wellness” products — from Erewhon’s smoothies to Goop’s everything — have become status symbols. Plus, more people are traveling, moving to big cities and spending more thoughtfully. Brompton products speak to all of these consumer habits, not to mention vanity. As such, the company is leaning in, with product and market expansions and several new U.S. stores on the way.
Unlike most cycling brands that cater to “MAMILs,” or middle-aged men in Lycra, “Brompton appeals to active, healthy, sophisticated urbanites” who use its products to get around, said Juliet Scott-Croxford, president of Brompton North America. “They like good quality and convenience, but they also want to look good.”
First designed by founder Andrew Ritchie, to add ease to carrying his bike to his third-floor walkup apartment, Brompton’s signature folding bikes launched in 1975 and are handmade in the company’s London factories to this day. Brompton distributes 100,000 bikes to 43 countries annually, making it the leading folding bike manufacturer in the world. To date, it’s sold 1 million of its bikes, which range in price from $1,550 for a two-speed steel style weighing 27 pounds to $5,850 for a 12-speed titanium model weighing under 18.
Scott-Croxford joined Brompton in 2021 to lead its North American expansion, including building a foundation for growth, establishing a local team and setting up new distribution with a focus on “key cities,” she said. The company opened its first U.S. store on NYC’s Bleecker Street in 2018. A Washington D.C. store, in Georgetown, opened this April, and a West Coast flagship is set for San Francisco or L.A. in 2025. Tapping into UCLA’s initiative to reduce car traffic — with a campus bike-rental program, for example — is among opportunities being considered.
Brompton is also eying Boston as a future retail location. It aims to be the “ultimate city bike” company.
“So many journeys even under a mile are still made by car,” Scott-Croxford said. “It’s far nicer to move around [on a bike] — it’s better for your mental health and your physical health, and it’s more sustainable.” According to a 2021 study, traveling by bike instead of a car just once a day reduces the average person’s carbon emissions from transportation by 67%.
Along with owned stores, Brompton sells through its e-commerce site and several global retailers, including cycling stores as well as REI and Saks Fifth Avenue — Nordstrom looks promising as a future partner, Scott-Croxford said. Much like Brompton’s customers in China, its Saks shoppers see its bikes as accessories, or style pieces. Asian consumers see them as status symbols. And, as seen in the brand’s Instagram highlights section labeled “Aesthetics,” many customers position the bikes like art pieces in their homes.
Playing to that reputation, Brompton has partnered with several fashion brands on collaborations introducing fresh colorways to its signature bikes. Since 2021, those have included Kenzo, Barbour and Palace. Its next collab will be announced in September.
When folded down, Brompton bikes are a third of their size, allowing them to fit into a plane’s overhead compartment. They can also function as a rolling cart, which has opened the door for a new product category. The company has come out with a bag that sits on the top of the “cart,” adding to its functionality. It has collaborated with Liberty of London on bag styles, and additional products in the luggage category are being considered as future launches.
“I see ourselves breaking away from being only a folding bike [company] and becoming more of a premium lifestyle brand in the health and wellness space,” Scott-Croxford said.
About five years ago, Brompton’s board chose three markets to go after via standalone business units. Along with North America, they included China and Germany — China is now its biggest market. Building on its success in Asia, Brompton recently expanded to Japan, South Korea and Singapore with stores. And, based on emerging traction in the markets, it’s increased its focus on France, Spain and Canada. It will soon expand to Central and South America.
According to Scott-Croxford, Brompton’s community members are “hyper-engaged” and the brand’s biggest advocates. Along with serving as focus groups by weighing in on new products, they self-organize meetups and rides in global cities. Leaders across cities also step up to lead local events on behalf of the company. Community members, who largely engage with the brand and each other via the Meetup platform, have a 43% higher lifetime value than the average Brompton customer. They multiplied at the height of the pandemic, when community rides provided in-demand opportunities to socialize outdoors.
Catering to its community, Brompton has designed its stores to be clubhouses, with a floor of its D.C. store offering seating and coffee, for example. The company has also begun organizing group bike rides catered to different skill levels and demos, including women-only rides. Its guided rides in NYC often serve as training wheels for those scared to brave the city streets on their own.
Like its community members, Brompton’s stores have provided much-needed brand awareness in the states. In April, the brand ran an out-of-home campaign in Georgetown, aligned with its store opening. The ads’ placement and messaging played into the brand’s mission of reducing car congestion and promoting slower living. A brand awareness study showed a 7% increase among Georgetown residents this year, showing the effectiveness of city-by-city activations.
“Even though we’ve been around for 50 years, we’re effectively a startup [in the U.S.], so we’re hustling and being scrappy,” Scott-Croxford said. North America currently accounts for 12% of the company’s total sales.
Other marketing the brand has invested in has included performance marketing and influencer marketing, the latter with existing fans of the brand beyond athletes. It’s also begun teaming with corporations to support their sustainability efforts and employee wellness agendas.
Brompton is a privately owned company, with its current CEO, Will Butler-Adams, and Ritchie owning a majority of the business. In 2023, it received a $23.6 million investment from BGF, a VC company focused on purpose-led brands. It also has private shareholders who include family and friends, and staff members own a small percentage of the business.
According to Scott-Croxford, Brompton is pulling in $150 million in annual sales. It’s pacing to see 20% growth this year and is projecting 4x growth over the next five years. Facilitating omnichannel capabilities, like offering test rides and servicing bikes in both owned and third-party retail channels, will be key to long-term growth, she said.
Differentiating will also be important. Along with fellow folding bike companies, like Tern, Brompton’s competitors include Citi Bike, scooters, road bikes and even cars.
As such, “being scrappy” to win customers will no doubt be an ongoing strategy for Brompton North America. It’s worth noting that, according to Scott-Croxford, Erewhon is its head of marketing’s goal collaborator.
Currently, the average Brompton customer is a city dweller who cares about health and wellness or sustainability, or is a cycling aficionado with multiple bikes. Seventy percent are men, though women are increasingly shopping the brand. They’re 30-52 years old and have a “higher” net worth, Scott-Croxford said.
“The mentality of people living in cities is changing, plus there’s more investment going into building better infrastructure” allowing for bike travel, Scott-Croxford said. “People can look to us to be a life hack” — with health benefits and bragging rights being bonuses.
The red flags in Tapestry’s earnings report
On Thursday, Tapestry, Inc. reported its fourth-quarter and full-year 2024 fiscal 2024 earnings, revealing record annual revenue for the Coach brand, surpassing $5 billion, and a 1% year-over-year revenue boost for the company, to $6.67 billion. Following the earnings call, Glossy connected with Brian Brian Yarbrough, consumer discretionary analyst for Edward Jones, to dig into the numbers.
What’s your current take on the Tapestry-Capri Holdings deal?
“In a tough environment, Coach is powering through. Their margins are very impressive, they continue to take prices higher, and they have a lot of new customers. But, at the end of the day, Kate Spade and Stuart Weitzman are still in decline, and Tapestry is still committed to an acquisition of three brands [Capri Holdings-owned Michael Kors, Versace and Jimmy Choo] that are in a major decline — and they’re declining much worse than Tapestry originally anticipated. … Retail acquisitions rarely work out — there are a lot of problems with them. And, looking at Tapestry’s history of acquisitions, Kate Spade and Stuart Weitzman have been nothing short of disasters. It’s been a different management team since Joanne [Crevoiserat] took over [as CEO in 2020], but the brands are still in the same spot. To buy three brands that are showing even larger declines is concerning.”
So, why did Tapestry’s stocks rise following the earnings call?
“The stock was up as high as 6-7% at one point [following the call] because there was [prior] concern about weak consumer spending impacting Coach, which reported [better numbers than expected]. But the stock will not work unless one of two things happens: the [acquisition] deal gets canceled because the FTC blocks it, or the deal goes through and then, a couple of years down the road, Tapestry can pull off turning these brands around and get the kind of synergies they think they can. Till then, it’s gonna be a struggle.”
What other issues did you notice in Tapestry’s earnings report?
“Tapestry talks about the millions of new customers they’ve got [6.5 million in North America alone, in 2024], yet their sales are flat. So you’ve got to wonder: What’s going on with the core customer? If new customers are transacting more often at a higher AUR, somebody’s leaving or not spending like they used to. Otherwise, [Tapestry’s] revenues would be growing more rapidly.”
Is the company’s placement in the “aspirational fashion” category dangerous in the current retail landscape?
“From 2001 to the Great Recession and a few years after that, Coach was extremely successful. Then Kors exploded onto the scene, followed by Kate Spade. Aspirational fashion became a more crowded space. While there’s overall growth in the category, there are a lot more players today. Coach is doing better than Kate Spade and Michael Kors, but [it only has] 2% growth with its flattest growth being in North America. And, in the end, you’ve got to have revenue growth to accelerate profit growth.”
How would you say Tapestry brands are faring, in terms of strategic distribution?
“For a long time, Coach has been less than 5% wholesale. The department store is a dying breed. With Coach having their own stores, they control their own destiny and they’re better off. The online channel — which drives about 30% of Coach’s direct sales — has historically been more profitable for brands, but that’s recently leveled out. Coach has done a good job with its better-performing stores. Back in 2014-2015, they had double the number of stores they have today. They’ve done a great job of closing stores and eliminating SKUs. But you can only take out so many costs. At some point, you’ve got to see sales accelerate to really grow earnings.”
What is Tapestry doing right?
“For its part, Coach is spending a lot on marketing and advertising and product innovation to put new products into the marketplace. That’s the best thing to do, but it doesn’t always translate to great sales.”
eTail Boston Spotlight: Influencers, direct sales and data lead brand priorities
Throughout on-stage panels and one-on-one interviews, several themes played out at eTail Boston this week. Among them: Influencers have become more influential than both brands and traditional media, brands are struggling to make their direct channels relevant, and the inability to best use available data is hindering the success of retail companies across the board.
As for the latter, Jennifer Braunschweiger, senior director of creative strategy at Zappos, pointed out that most brands don’t know which 50% of their marketing spend is working, for example. And Brendon Witcher, principal analyst at Forrester noted that, “if your thinking is wrong, your strategies will be wrong,” while stressing the need for brands to lead with “data as a strategy.”
On a related note, the 10-year-old Tiny Tags brand, self-described as “fine personalized jewelry for moms,” is currently questioning where to best invest its marketing dollars, founder and CEO Melissa Clayton told Glossy at the event. The self-funded brand, which will be expanding its affordably priced jewelry line to 875 Target stores next year, does $7 million in annual revenue.
After hearing fellow founders share the success of their brands’ affiliate commerce programs — which, they said, were driving 15% of their sales and growing — Clayton signed on with ShareASale. She eventually traded it in for the Impact affiliate platform, which she deemed more robust and transparent. However, Impact charges $1,200 per month, and to make any headway with publishers and influencers, enlisting an agency at $3,000 per month has been required. On top of that, Tiny Tags is, of course, paying commissions on each affiliate sale.
“As a small business, we’re now questioning, “Does this have the ROI we need?” Clayton said. Moving forward, she’ll be weighing the brand’s marketing investments, honing in on the payoff. Influencers, she guessed, have returned the best results as of late.
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