Mediaboss Marketing

Jul 16, 2021

In the initial public offering prospectus for Authentic Brands Group (ABG), Jamie Salter, founder and CEO, describes how he came up with his companys licensing platform that deconstructs and reconstructs the traditional brand building model.

I came to realize that most brands were structured for a different erabefore the speed of digital and the complexity of global; antiquated, and ultimately difficult to retool as the market and the consumer evolves, wrote Mr. Salter in a letter to shareholders. Being best-in-class in every competency at every step of the value chain is an impossible task for most teams, but thats what defines success in the traditional model.

Mr. Salter, who previously spearheaded the formation of Hilco Consumer Capital, describes his company as brand owners, curators and guardians. The platform combines the operational and financial benefits of a traditional brand licensor with the brand development, marketing and long-term value approach employed by successful brand owners.

Under the model, ABG retains brand ownership and approval rights over marketing strategies, product development and use of data. Licensee partners bear the capital, manufacturing, inventory, markdowns and distribution responsibilities.

We are a licensing business and are purely focused on brand identity and marketing, Mr. Salter said. This unique approach allows us to:

One area of investment has been digital, where ABGs marketing capabilities serve as the basis for brand development.

ABG has completed over 30 acquisitions since being founded in 2010 including partnering with Simon Property Group and others to acquire stakes in Forever 21, Aropostale, Lucky Brand, Barneys, Brooks Brothers and Eddie Bauer. It has a 17 percent stake in J.C. Penney.

The company said it signs a core licensee partner agreement before an acquisition is executed, in most cases, significantly de-risking the successful execution of the intended strategy and providing upfront visibility into the future revenue, profit and growth potential of acquired brands.

DISCUSSION QUESTIONS: Does Authentic Brands Groups licensing model better set up brands to pursue digital and global growth than traditional models? How would you rate the models pros and cons for acquired brands and retailers?

"An aggressive strategy, indeed. But in reality, it needs the weight of time to determine success as none of the brands in the portfolio are that unique."

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Has Authentic Brands Group created a new brand-building model? RetailWire - RetailWire