3) "HOUSE OF BRANDS" ARCHETYPES
The concept of building a House of Brands (HoB) has been around for decades. Luxury conglomerates such as LVMH and Kering or CPG companies like Unilever or L'Oreal have benefited from this strategy for many years. Their entire brand and business model (from marketing to supply chain) were built off the traditional brick-and-mortar infrastructure and the customer behavior that accompanies that. By necessity, they are aggressively shifting towards digital, whether organically building up capabilities and talent or acquiring them through acquisitions. However, successfully making this digital transformation (tech platforms, ecommerce CMS, data management, culture, talent, supply chain, logistics, fulfillment, production, etc.) is not trivial and will take significant time, resources, and investment.
As the acceleration of ecommerce—35-45% YoY growth (US Census%20in%20the%20same%20period.))—starts to stabilize and the industry enters into a new normal, there is an opportunity to leapfrog traditional incumbents by putting together a strategic portfolio of growing D2C brands that are omni-channel, direct-to-consumer, and cater to the evolving expectations of the next generation consumer (Millennials and Gen Z).
To understand the full scope of the opportunity, I will start with highlighting a set of key insights from both a consumer and business perspective. These trends will provide the foundation to understand the current and future dynamics at play as we think about investment themes that we want to build a portfolio around.
Then I will share a value creation framework that I've developed to think about where and how to create value through a portfolio of consumer brands. This framework helps to systematically assess the viability and potential for any investment thesis that is developed around building a HoB. Leveraging the framework, I will highlight a few HoB archetypes that currently exist and identify key levers where value has been created.
Lastly, to bring all of this together, I will link the insights, value creation framework, archetypes, and my perspective to recommend two emerging HoB themes where I believe there is an opportunity to create a HoB that could drive value. First, is the consumer mindset of: "I want quality products, at a good value, with a clear conscience." Second is: "I want control over the wellbeing of my mind and body." I will expand upon each theme by describing the opportunity, providing an initial (not exhaustive) list of potential targets, and show which lever of value creation is most prominent.