Assia Benmedjdoub looks behind one of the most surprising acquisitions of the year.
One month prior to the acquisition of Ginger & Smart, Alceon Group executive director Richard Facioni was seated at a restaurant in Sydney’s Woolloomooloo.
He was one of several industry leaders at Ragtrader’s roundtable on CX and the future of customer engagement. While the table was laden with fine local produce and wines, it was a different appetite that caught everyone’s interest: Alceon Retail Group’s palate for fashion acquisitions.
It gathered speed five years ago with the purchase of womenswear retailer Noni B, rolling on with Pretty Girl Fashion Group, Specialty Fashion Group brands and eCommerce buyouts such as EziBuy and SurfStitch.
Then came the unexpected: a majority stake in high-end designer label Ginger & Smart on June 4.
“We will be making further acquisitions,” Facioni said during that Thursday afternoon session on CX, but no-one could have guessed a bid for the boutique business founded by Alexandra and Genevieve Smart in 2002.
Their merchandise mix includes ready to wear, accessories, bridal, occasionwear and a sister collection called Akin by Ginger & Smart.
They operate just eight stores and a curated presence in 40 boutiques across Australia. For context, Noni B Group is Australia’s largest womenswear retailer with over 1,350 stores and 2,000 employees.
Facioni says the appeal of Ginger & Smart is four-fold: its leadership, brand IP, corporate social responsibility and perhaps most exciting of all: untapped international opportunity.
“Ginger & Smart hasn’t had the resources to really pursue international growth and with our support, the business will be looking to partner with international platforms and wholesale partnerships,” he says.
“Yes it isn’t high volume, nor should it be as it plays to a higher price point than our other brands, but it certainly has potential for higher volumes.”
The two parties commenced negotiations earlier this year, after the Smarts navigated options for a capital raise.
“We’d been in discussion for months,” Facioni recalls. “Alexandra reached out to me when she and Genevieve started thinking about bringing a partner into the business. I believe she heard about me through her network.
"Ultimately, we’re looking to invest in a portfolio of unique, desirable and scalable brands. Ginger & Smart ticks all those boxes. They are quality operators and a delight to work with. The people is so important in business. You get that wrong, you’re in trouble from the start.”
The specific terms of the agreement are confidential, however Facioni can confirm a controlling stake greater than 50%. The Smarts will remain as significant shareholders in the business and retain their respective positions; Alexandra as MD and Genevieve as creative director.
Together, they will look to drive sales from $10 million a year to up to $50 million through increased retail stores, concessions, eCommerce sales and a global wholesale strategy. The broader rollout will see up to three flagship stores per major centre, with the balance covered by department store concessions.
“We believe there is scope for a handful more stores in the major centres, as well as growing the David Jones concession footprint,” Facioni says.
“Digital is also a huge opportunity. Direct to customer online revenue is a very small part of total sales and I would think it should grow to at least 10% of overall sales. There’s also lots of opportunity through third party platforms, especially internationally.”
The US will be a focus for wholesale and direct-to-consumer sales, however a number of platforms currently being targeted also have a significant European presence. Facioni’s involvement will be at a board level, providing shared services and operational support to the business as a back-of-house partner.
As for the future of Alceon Retail Group, Facioni nods back to that Thursday afternoon.
“Definitely more acquisitions,” he says. “We’re currently in discussions with a number of other really interesting brands to partner with. We’re also looking at a couple of additional online platforms.”
Watch this space.