The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.
The Farfetch-owned New Guards Group (NGG), which also owns “It” streetwear brands Off-White and Palm Angels, has acquired the American clothing brand and retailer Opening Ceremony on January 13, as reported by BoF.
Opening Ceremony cofounders, Humberto Leon and Carol Lim, will remain as co-creative directors, focusing on collaborations and will continue to create their in-house label, while NGG will take over the production of Opening Ceremony’s in-house line and e-commerce development. The goal, according to BoF, is to release products at a faster pace and expand product categories.
On January 14, Lim and Leon took to Instagram in a series of posts to announce that all physical Opening Ceremony stores would be closing. According to the posts, the store’s New York, Los Angeles, and Tokyo outposts will all shutter in 2020.
Opening Ceremony is an NYC staple and for Chinese millennials, Opening Ceremony is regarded as a leading NYC streetwear brand. On Little Red Book, for example, users continue to post “It” items from the brand, from tote bags to Opening Ceremony’s iconic black box-logo T-shirts. The majority of the posts are from Chinese international students, who are considered trendsetters for mainland shoppers. However, due to the lack of direct distribution in China, young consumers access the label via Daigou or from friends overseas. The brand’s physical presence in China is limited to pop-up shops, for example, Opening Ceremony first held with Adidas in Shanghai in 2013, and most recently with Chinese sports brand Anta.
Opening Ceremony’s acquisition by the New Guards Group verified its cool status, as NGG has been snapping up hot brands since the beginning of the year. Just last week, it’s also acquired the jewelry brand Ambush. NGG was founded in 2015 and was acquired by Farfetch four years later for $675 million, now has become the hype machine for the dominant fashion e-commerce player.
What’s driving Farfetch to make so many acquisitions? “NGG’s growth comes from a gut feeling and understanding where a trend was going or what the talent is out there,” explained Giorgio Belloli, Chief Commercial and Sustainability Officer at Farfetch to Jing Daily. “But through our data analysis, we can spot new trends or new brands that may be coming up, validating some feelings that a brand could be the ‘brand of the future.’”
As the company’s portfolio expands, it seems that the New Guard Group itself may be the conglomerate of the future. However, the company could only earn this title with substantial inroads in China. And while China’s aspirations for Opening Ceremony and other NGG brands like Ambush have not been made clear, Farfetch and NGG’s China play seems ready to fire. The parent company’s arsenal of China-ready brands is steadily growing, while Farfetch itself is strengthening its digital presence in the region.
Overall, legacy conglomerates and brands find themselves racing to re-align their approach in China, but NGG holds an advantage in its key to “cool” brands and first-to-market opportunity. While leading brands introduced themselves to China 20 years ago, NGG’s brands are coming of age in China today and can adopt strategies accordingly. As the Chinese market matures, up-and-coming brands that represent new luxury only stand to grow, bolstered by a following of Chinese millennials and Gen-Zs who hold different definitions of luxury when compared to their older counterparts.
Farfetch’s know-how ensures NGG’s fresh brands with a digital leg up if they aim to grow in China. However, physical retail remains key in the region, particularly for new players. While multi-brand retailers in the West are facing Armageddon, the retail opportunity for multi-brand in China is still fresh. And while NGG holds digital strength, there is an opportunity for a physical leg in its China playbook. Although unlikely, a reimagined Opening Ceremony in a leading city like Shanghai could be the perfect fit to fill this gap and position New Guards Group to drive the rise of new luxury in China.