How to Grow a $100 Million Brand: Diversifying Your Offering | BoF Insights

BoF Insights is The Business of Fashion’s in-house consultancy. We partner with leading fashion and beauty brands and investors to help them sustainably grow for the long term. Get in touch to find out how we can support your business.

Khaite got its start in 2016 as a homegrown, New York-based womenswear brand with a fan base that celebrated its chic, “cool girl” aesthetic. Founder Catherine Holstein turned that buzz into a lasting luxury label with global reach and multiple product categories, including apparel, handbags and eyewear, surpassing $100 million in revenue in 2022.

It’s a textbook example of what to do after a brand establishes itself in its hometown, home country or niche community. After capturing that critical early buzz, a fast-growing label’s leaders must look towards diversification levers to translate that cultural heat into commercial momentum, and access a larger audience before they’ve saturated their initial market.

That task is harder than ever: Both direct-to-consumer and wholesale distribution are challenged, with increased costs of customer acquisition and financial challenges across multi-brand retailers. And with funding harder to come by, brands are further constrained by an inability to invest extensive capital expenditures into global expansion and the introduction of new product lines.

In conversations with BoF Insights, The Business of Fashion’s in-house consultancy, indie brand leaders and investors outlined a new approach to diversification across distribution channels, geographic markets and product categories in today’s environment. In part two of this series, BoF Insights breaks down the formula for transforming community buzz into lasting commercial performance via diversification, outlining the steps brands should take at different stages of growth to hit $100 million in annual sales.

The Ruthless Approach to Distribution

David Belhassen, founder and managing partner of NEO Investment Partners, which has invested in Victoria Beckham and Ami Paris among others, recommends indie labels prioritise direct-to-consumer distribution in the early stages of growth. Building the data-driven culture required to sustain an e-commerce business can be more difficult for mature brands that get their start in physical retail.

“I’m very, very focused on digital natives because it’s very hard, when you’re a wholesale play or a retail play, to [adapt] to digital culture,” said Belhassen. “It’s so data science driven . . . [so from] day one, the team and culture needs to be around that.”

Once brands have achieved between $10 million to $20 million in annual revenue, Belhassen recommends that they swiftly introduce wholesale. But they must be selective about the wholesale partners they choose to work with.

While relationships with a swathe of major wholesalers may have once served as a signal for a brand’s legitimacy, casting a wide net today may mean diluting focus and reducing the performance of the wholesale channel as a whole.

Brands that juggle multiple wholesale partnerships must manage a range of distinct cash and payment terms and split their attention across multiple doors, limiting their ability to curate memorable retail experiences and ensure face time and commitment across retailers.

Experts recommend that brands focus on relationship-building with two to three key wholesalers at most during the early stages of growth to maximise value. In practice, this means visiting wholesalers in-store to view products on the floor, working with partners to design displays that tell the brand’s story and building feedback channels for retail associates to relay customer commentary back to headquarters.

For some, channel curation means bypassing wholesale altogether. Polène has opted to rely solely on direct-to-consumer and own retail distribution to protect the brand’s core DNA.

“We love to manage a very clear DNA of Polène, not just adding points of sales . . . what we want is to build, to give knowledge to our clients. And the store [experience] is the best [way] to give knowledge,” said Mothay. “[The store] should always be like a small Polène world where [customers] can learn more about us and understand the brand more.”

Polène creates links between its distribution channels to further enhance performance across the full business, for example by leveraging e-commerce data to track product sales across global markets to gauge demand for retail expansion into new geographies.

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Expanding to New Geographies

Brands that successfully scale in today’s climate are prioritising strengthening their reach across their home markets before eyeing new geographies.

Take contemporary lifestyle brand Staud. The Los Angeles-based label began by offering ready-to-wear and handbags with customisation offerings, but pivoted towards a collections-based business following an enthusiastic customer response. Today, Staud is focused on building a global accessible luxury label — and to do so, it is currently looking to solidify its US presence.

“We want to create a global luxury lifestyle brand . . . [but] we’re starting domestically,” said Staud president Jon Zeiders, noting the company’s recent openings of two Hamptons-based stores. Staud also operates stores in Los Angeles, New York City, Palm Beach, Nantucket and Boston. Zeiders said that the brand is approaching $100 million in annual revenue.

A patient approach to global expansion is crucial as moving to a new geography necessitates significant investments of time and capital to ensure broader cultural resonance. Brands must appropriately tailor their product, merchandising and marketing strategies to each geography. By doubling down on their home markets, they can spend more time building out their core DNA before localising it to new contexts.

Self-Portrait, a contemporary womenswear label, first launched in London in 2013 and waited until 2020 before pursuing a major expansion to Asia. Sales have doubled each year between 2020 and 2022, amounting to £51.7 million (approximately $66.7 million) in 2022. Founder Han Chong credits the brand’s success in Asia in part to its highly localised approach to product design.

“When designing the collection [for Asia], we have to think of their lifestyle, their culture reference, the body shape,” said Chong. “In general, in Asia, they are slightly more petite. So [we need to adjust] the fit [and] the length. [The] colour of the pieces also needs to match to their skin tone. [We] need to understand that territory [and] what their reference is.”

Some investors recommend that brands do not begin exploring global expansion before achieving over $30 million in annual sales. Of course, this target may be lower when starting out in smaller markets further away from traditional fashion capitals, or higher when operating in larger consumer economies like the US.

Data plays a critical role in prioritising new global markets for physical retail expansion. Polène opened its first flagship store in its home base of Paris in 2020. The brand later opened a New York City store in 2022, then a Tokyo store in 2023. The US and Japan were its largest export markets for its direct-to-consumer business.

But today’s growing brands are simultaneously leaning on intuition to back up expansion decisions.

“[When] you choose another market, [choose] a natural one that makes sense,” said Belhassen. “When you travel there, you feel your brand really belongs.”

Brands that invest wisely are also testing and learning before entering new markets through permanent retail. Bode held pop-ups in Tokyo, Paris and New York throughout spring 2024 to promote its new sneaker collaboration with Nike and generate customer love in new territories.

“The purpose is contextualisation,” said Bode. “For us to be able to show up, even if the pop up is only three days, . . . [we are able to] introduce the brand to people that otherwise wouldn’t have been able to enter into a Bode space.”

The pop-ups also provide opportunities to build stronger relationships with potential global partners, further paving the way for future collaboration.

Launching New Product Categories

Brands will undoubtedly hit a scale ceiling if they rely too heavily on the buzz around a singular hero product. Those that push beyond this ceiling consolidate hype into carefully merchandised collections that are appropriately priced to appeal to a wide consumer group.

According to Stefano Martinetto, the culture surrounding a brand was previously the dominant force that informed Tomorrow’s investments — now, it’s product.

“You cannot rely on the ‘wow effect’ to have sell-through. You have to also create a product which is relevant at the price point you’re offering and offers differentiation for the customer,” he said. “Product is back at the centre of every consideration we and everyone else is making.”

For some brands, this might mean introducing a more accessible line or product category. Martinetto suggests that labels with cultural cachet should consider a secondary line that offers a simplified version of more experimental designs to introduce a shoppable price point, similar to diffusion lines in the 1990s.

“A lot of creative directors, more in the past than recently, have considered their own brand an art performance or a sort of portfolio for them to achieve status,” he said. “Now, for these brands to survive, they need the acumen of a super commercial collection [that respects the brand] DNA.”

Introducing high-margin categories like bags and leather goods that appeal to a wider range of consumers is another approach. Staud was ahead of the curve: the brand launched with ready-to-wear and chic, logoless handbags and expanded the product range by introducing a shoe line in 2019.

Investors, however, urge caution around expanding too quickly. NEO Investment Partners’ David Belhassen recommends indie brands do not pursue category expansion until they’re established in their hero segment and making at least $75 million in annual revenue, depending on the sector. Founders and creatives will encounter thousands of temptations to expand into other categories, but the most successful will learn to say no. “The biggest problem we see in small businesses is they’ve gone too many places, too many trials, too many directions for their size,” he said.

Once brands meet this threshold, category expansion choices need to be faithful to their DNA. Emily Adams Bode Aujla produced only menswear for several years before introducing a womenswear line. Female customers were shopping the men’s collection but jumping through hoops to understand how to shop products designed in men’s size and fit. The impetus behind the womenswear collection was more than just offering the men’s styles in women’s sizes, but translating the brand DNA to womenswear categories like lingerie to offer something new. Next, the focus is on launching a sportswear line called Bode Recreation.

By building out the customer’s full wardrobe in this way, it encourages them to come back time and time again. According to Nanushka’s Baldaszti, while categories like bags and shoes are “very different animals than ready-to-wear,” transitioning between them is much easier if house codes are clear.

Throughout the lifecycle of a brand, leaders may need to pivot and enter, or even exit, a product category. Maintaining flexibility and malleability is key.

“Anyone who tells you that flexibility isn’t a key success characteristic to scaling a brand probably hasn’t scaled a brand,” said Zeiders.

This article is part two of a series by BoF Insights that outlines today’s playbook to translate cultural heat into commercial success. Read part one here.

BoF Insights is The Business of Fashion’s in-house consultancy. We partner with leading fashion and beauty brands and investors to help them sustainably grow for the long term. Get in touch to find out how we can support your business.