COVER
One of the strengths of the Zimmermann brand is its wide demographic appeal . restrictions , M & A activity waned and then spiked again in 2021 , reaching 6,548 deals , 34 percent of them in the Americas . The expectation is activity will continue to build on a “ gradual and cautious ” return to pre-pandemic levels , KPMG partner Nicola Longfield said .
Understanding Zimmermann ’ s appeal Tapestry ’ s acquisition of Capri wasn ’ t the only billion-dollar deal done in August . Last month also included private equity firm Advent International ’ s acquisition of a 70 percent stake in apparel and swimwear brand Zimmermann . The terms were not disclosed , but Reuters cited “ sources close to the matter ,” who said the firm paid $ 1.15 billion , or 14 times Zimmermann ’ s core profit .
Valuations and payouts like Zimmermann ’ s would motivate any small luxury brand to drop everything , head straight to Wall Street and search for a buyer . Unfortunately , not every small luxury brand with a loyal customer base , high product demand and strong social media presence is an ideal candidate for an acquisition . Zimmermann ’ s recent success was , in fact , many years in the making .
Founded by sisters Nicky and Simone
Zimmermann in Australia in 1991 , the brand started out as a scrappy fashion label at Sydney ’ s Paddington Markets . After doing extensive market research and getting to know exactly which designs their customers engaged with most , the sisters employed a methodical approach , using specific details with their blouse and dress buttons , material , fabrics and prints .
High collars became synonymous with the brand ’ s dresses and shirts . Hand-drawn floral prints inspired by Monet helped establish , solidify and preserve brand equity . This commitment to staying true to the design DNA safeguarded the brand from potential counterfeiters and reinforced its upmarket position . What ’ s more , the brand continues to have a wide demographic appeal . “ You can see a 25-year-old wearing a Zimmermann dress to a formal occasion just as easily as you would see a 65-year-old throw on a gown to go to a black-tie . There is no other brand in the market that comes close ,” merchandising executive and consultant Divya Mathur said .
Another attribute that separates
M & A is a game of confidence and that evaporated for a bit last year .
Zimmermann from its competitors is its distribution strategy . While others may take advantage of collaboration opportunities , have many distribution channels and discount frequently , Zimmermann does the opposite . The brand has been working with its retail partners for decades , and has a true understanding of its customers . These factors – combined with a specific focus on apparel and not accessories – are what set Zimmermann apart .
Like Tapestry and other luxury fashion groups , market expansion is at the top of Advent International ’ s post-acquisition priority list . Zimmermann has 58 stores in the US , UK , Europe and China , but experts see it moving into markets such as India and Latin America , which already have strong demand , and improving its presence across Asia , while maintaining profitability .
So far so good for Tapestry and Zimmermann , but the question on everyone ’ s mind is whether the buzz around these two major M & A deals signals a boon for the wider retail sector , which it so desperately needs .
“ When a big transaction happens , often competitors say to themselves , ‘ We would like one of those things , too .’ It takes a lot of courage to buy a company , especially if it ’ s done with the intent of helping the company ’ s investors ,” Kestenbaum said .
While it may not be a gold rush , the future for retail deals is bright , and to quote Taylor Swift , it ’ s been a long time coming .
Hitha Herzog is a retail analyst , researcher and journalist .
September 2023 www . insideretail . us 19