Australian sportswear brand 2XU attracts foreign interest
In December, L Capital Asia, the Singapore-based investment fund backed by the world’s largest luxury goods conglomerate LVMH Moët Hennessy Louis Vuitton, acquired a 40 per cent stake in the high-performance sports brand for an estimated $75 million. Since then, 2XU’s Hawthorn offices have seen an influx of finance and luxury executives from across Asia. They’ve been talking about how best to achieve 2XU’s global ascension, planning sales of $1 billion within the next 10 to 13 years.
“2XU wasn’t a brand that was developed in Australia purely for Australia. It was established with a desire to be a global brand from day one,” said CEO Kevin Roberts. The nine-year-old company is L Capital Asia’s third Australian investment in two years, after also taking stakes in R.M. Williams and Jones the Grocer.
Fifty per cent of 2XU’s sales come from its sports version of “couture”: high-tech compression garments sold to 57 markets, including elite athletes in 43 NBA and NFL teams and even the US Marine Corps. But driving the biggest growth is its more recent expansion into mainstream consumer sportswear, a global market that international market researcher Euromonitor expects to develop to $US300 billion by 2017.
2XU’s success in attracting foreign interest is a sign of how far the Australian fashion industry has come in recent decades. On the eve of the 19th Mercedes-Benz Fashion Week Australia, which starts next weekend, it’s worth remembering just where Australia was positioned on the global apparel map when the event launched in 1996.
While Australia was – and remains – the world’s largest supplier of apparel wool, the fashion industry was primarily focused on replicating northern hemisphere designs for the local market. Aside from Coogi knitwear and a handful of young, export-focused designers – case in point, Collette Dinnigan, who started showing in Paris in 1995 – the only serious global players were selling swimwear and surfwear. Indeed, in the hands of their new offshore owners, Speedo and Quiksilver would emerge as the world’s No. 1 swim and surf brands.
Beyond international merchandise sold at department stores and specialty boutiques, only Louis Vuitton, Chanel and Versace had invested in opening freestanding boutiques.
The Spring/Summer 2014-15 MBFWA takes place against a radically altered retail landscape to that of 1996, one that is now populated by nearly every major international fashion retailer. Most notably, fast-fashion behemoths such as Zara and, from April, H&M, are opening bricks-and-mortar stores at breakneck speed. As the world’s two largest clothing retailers, boasting $39.4 billion in combined global sales, they can beat the locals at the copycat game more quickly, cheaply and sexily.
Inevitably, there have been local business casualties. But there have also been record profits at the Country Road Group and Premier Investments, triple-digit sales growth in the online businesses of David Jones and Myer, and 19 per cent sales growth at Sass & Bide (now owned by Myer).
Sass & Bide and Zimmermann both launched at MBFWA and have now opened their own international freestanding boutiques. They are regulars on the international runway circuit, joined by newcomers such as Dion Lee, whose most recent New York Fashion Week show in February garnered extra media coverage not just for his signature sports-luxe aesthetic, but for the “Australianality” of his tailoring inspired by convict-era workwear. For his models’ footwear, Lee showcased a collaboration with another uniquely Australian brand, R.M. Williams.
So many Australian designer brands are currently focusing marketing resources on international runways that the schedule of this year’s fashion week is for the first time heavily dominated by unknown and emerging designers.
To capture the attention of visiting international buyers they will need original voices – something that organisers of the first Australian Indigenous Fashion Week are confident they can deliver. Taking place immediately following MBFWA on April 11 at the Sydney Town Hall, AIFW will showcase the work of 30 Aboriginal and Torres Strait Islander businesses.
Meanwhile, Australians’ seemingly insatiable appetite for online shopping has seen our relatively tiny population of 23 million emerge as a top-three market for some of the biggest international fashion e-tailers. At least one has recently been on the hunt for authentic Australian product.
In Australia to speak at the Melbourne Fashion Festival Business Seminar, Farfetch.com founder and CEO José Neves spent 10 days in Sydney and Melbourne, scouting for at least 50 Australian designers and multibrand retailers he plans to add to his offer of more than 280 international designer e-boutiques.
Farfetch.com, for which Australia is the third-largest market, doesn’t buy merchandise. It acts as an online curator for designers and retailers, managing the back-end logistics and taking a commission on sales.
“Globalisation works both ways,” Neves says. “That’s where I think there’s an opportunity for Australian fashion also to become global. Like everything in life, the internet can be a threat, but it can also be an opportunity.”
Companies such as 2XU are proving that Down Under designers are more integrated into the global market than ever.
This article was first published in the print edition of The Saturday Paper on Mar 29, 2014 as "Fitting in to global markets".
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