Offering a preview of how the company plans to execute on that vision Wednesday at the WWD Apparel + Retail CEO Summit in New York City, company co-founder and CEO Guram Gvasalia confirmed brother Demna‘s departure from his role as head designer in September, addressing the common misconception that brands are led by the singular vision of a lone creative chief.
Most fashion brands operate with a clutch of designers who may report to one person but work in tandem with other cohorts, from developers to warehouse employees and even workers who organize storefront window displays, he explained.
Vetements is building out a 30,000-square-foot co-working hub, large enough to create a sense of community for designers incubated within the space. The platform should be ready to launch next year, Gvasalia said, part of a broader program involving school presentations educating students about the fashion industry and offering scholarships to promising talent.
Designers often need a helping hand to reach the next level, Gvasalia said, bluntly adding, “talent doesn’t always come with money.”
Brands incubated in the co-working platform won’t be owned by Vetements, instead maintaining their their own independent structure. “We will be like a big brother,” Gvasalia explained, describing Vetements’ role as helping to “protect” young brands.
The hub’s designers benefit from the unbridled freedom to explore their ideas and creativity, while Vetements offers access to its production facilities, Gvasalia added. Factories, he said, typically won’t work with a young company to produce one-off garments or requests below their standard MOQ threshold, but will execute smaller orders if asked by Vetements “because they know we pay.”
Sticking to a financial strategy
Vetements has become a financial successful by maintaining the delicate balance between raking in cash and burning through it, too.
“The trick behind it is not about how much money you make, but about how much money you spend,” Gvasalia said, noting the streetwear firm’s net profit rate of almost 70 percent of sales is the result of not wasting money that could easily be saved.
Currently in 200 doors, Vetements works with retail partners to ensure they can sell through higher product volumes when its time to experiment with order increases. If $100,000 of merchandise has an 80 percent sell-through rate, then that particular store should only buy $80,000 of product on the next go around, Gvasalia explained.
Brands can also maximize profitability by maintaining a hard line on their payment terms. “You need to get the money before you send the merchandise,” Gvasalia said, which could mean securing a 30 percent down payment on orders, followed by a 70 percent payment before the goods are shipped.
Whatever the terms are, designers must maintain a “money first” mentality, Gvasalia stressed.
Young designers often make the mistake of agreeing to a change in terms before they fully understand what those new terms actually mean, not realizing that persuading a client to agree to its pricing can ensure the partner receives priority status on orders.
The Vetements chief likened this thinking to the cost of commercial airfare, describing how better seats, service and treatment invariably come at a higher cost. “It’s the same strategy we do for manufacturers,” Gvasalia said, noting that more than 40 factories fuel Vetements’ supply chain.
And the same applies to how quickly Vetements settles its accounts. “The moment we get an invoice, we pay the same day,” Gvasalia said, explaining that speedy payments ensure suppliers give the brand priority status and service even if other companies might have bigger deliveries.
Vetements is looking for ways to foster organic growth, Gvasalia noted, extending into new categories—such as shoes, underwear and sunglasses—as if they are small “companies” with their own distribution channels around the brand’s core ready-to-wear business.
In contrast to how direct-to-consumer brands often prioritize lightning-fast expansion, Gvasalia is a fan of growing slowly, steadily and intentionally, forging long-term relationships with high-value customers who engage inside Vetements stores. “Once you put your brand on every single corner, you remind people of your existence, but [you also] dilute the brand,” he warned.
That kind of thinking eschews the mainstream brand strategy of posting continuously and bombarding consumers on platforms like Instagram. Gvasalia likens that approach to a new film beginning its marketing campaign on social media. Moviegoers blasted with that same clip every day would likely lose their excitement to see the film in theaters, he explained.
And Gvasalia isn’t exactly convinced that having millions of social media followers actually translates to anything of value.
“Who cares how many activations [you have] at the end of the day? Show me your sales numbers,” he said.