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When it comes to channel strategy, celeb brand incubator A-Frame is giving mass-market retail its A-game. The move could give it—and other brands—a leg up, its CEO and founder Ari Bloom told Retail Brew, especially as a recession looms.
“I don’t think DTC is dead,” he said. “I think DTC alone is dead.”
Bloom is a retail biz vet, with his previous titles including CEO at retail tech brand Avametric and head of merchandising at both West Elm and Gap. Now, at A-Frame, he’s holding company with brands like tennis star Naomi Osaka’s suncare brand Kinlò, which debuted last year, and Gabrielle Union and Dwayne Wade’s baby care brand Proudly, introduced in April.
- Kinlò hit 2,500 Walmart doors, its first in-store distribution, in April.
In the process of building these brands and working with retail buyers and investors, Bloom noted that attitudes around retail are changing—whether you’ve got celeb backing or not—and some may need to prepare. Brands may have a tough six to 12 months ahead, he predicted.
Foot in the door: Bloom said A-Frame only introduces a brand if there’s national distribution in the works. “We don’t try to leave brands in the DTC channel for years on end, and then try to pick up 100 stores here, 100 stores there,” he said.
When A-Frame raised its $11.2 million in March, Bloom said VCs told him “straight up” that its omnichannel strategy was a selling point.
“If you talk to the VCs these days, there are very few that are even investing in direct-to-consumer brands at this point, because they’ve seen how hard it is to build the customer base,” he said, “Even if you can acquire the customers and to keep them in a profitable relationship—very difficult.”
Asking price: Within stores, pricing strategies are changing, Bloom said. Positioning its products with mass market partners is “even more important” given the “oncoming economic moment that we’re imminently approaching,” he noted.
- No products across its two brands exceed $20, Bloom noted, and Kinlo’s Walmart offerings range from $4.97 to $11.97.
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Over the last six months, Bloom said he’s “definitely noticed more of a selectivity” from retail buyers bringing on new brands.
“There’s a lot more rigor and a lot of discussion on price point right now—I think that’s something we didn’t see as much as six months ago,” he said. “I can certainly remember having retailer conversations where some of our brands, [they said,] ‘Can you position them a little bit higher?’ We are not hearing that anymore.”
- Retailers had previously asked him to price products more in the premium set of the $15–$20 range, rather than $10–$15, he noted. “They’ve definitely gone the other way since then.”
Packing ahead: Growing Kinlò’s retail footprint means the brand has “better economics” and “a little bit more negotiating power,” than DTC brands, Bloom noted. Plus, since A-Frame is a holding company, brands in its portfolio share services like manufacturing partners.
- “There’s a lot of shared economies of scale that we, I think, benefit from uniquely for brands at our stage,” he noted.
As retailers become price sensitive and commodity costs continue to rise, it ends up “squeezing a lot of margin out,” Bloom said, so brands may be feeling tight for the next six to 12 months.
“You have to decide how you manage that,” he said. “Are you lowering marketing spend? Are you lowering your team spend? Or are you accepting lower margins? And can you survive like that? And that’s not an easy thing to do.”
- A-Frame hasn’t had to raise prices (it actually hopes to keep dropping them, per Bloom, by evaluating elements like packaging costs). However, increasing cost of marketing in a crowded and competitive market could be a challenge for the company in the near-term, he said.
“As we move into this more difficult time, there’s gonna definitely be some casualties,” he said. “There are brands that are not going to survive and companies that won’t survive, mostly because of operational inefficiencies.”