BRANDLESS ITALIC
Let’s start with an easy question. Which of these bags is sold by Prada?
- a Saffiano Leather Double Bag – RRP £2,500
- an Ella Everything Leather Bag – RRP £130
You don’t need to be a seasoned fashionista to answer the question. Obviously, the Saffiano is a Prada design while the Ella is available from Italic, an American fashion retail startup offering unbranded luxury goods made at the same factories that manufacture for the likes of Celine, Prada, Cartier, Gucci, Louis Vuitton, Christian Louboutin, Givenchy, Coach, Burberry, and Miu Miu. It’s worth noting that although the Saffiano and Ella are made by the same manufacturer, there are obvious differences in both the design and finish of the bags, especially to those with a discerning eye.
ITALIC INTENTIONS
Italic’s intentions are essentially three-fold
- to undercut the big brands by offering luxury to the middle 40% of consumers who desire quality but are frugal with their cash
- to support manufacturers who traditionally have small margins and profits even though they make the final product
- to cut the middleman out of the retail chain, whether it be a brand or a brand’s wholesaler
ITALIC BEGINNINGS
Italic was launched in November 2018 by Jeremy Cai, also a co-founder of the HR and recruitment platform Fountain.com. While recruiting is a far cry from fashion, Cai comes from a family with experience in car part manufacturing so he was aware of the challenges and opportunities that lay within. Cai said:
“The history of manufacturing has been about margins. Even though they make the final product, they barely make a profit.”
Typically, it is the brands that make a profit by applying a huge markup on goods from the factory and justifying these high prices through logos and branding. By cutting out the brand, going logo-free, yet using the same manufacturers as luxury labels, Cai believed that he could create a win-win scenario for customers and manufacturers. Of the latter, Cai said:
“Our manufacturers make several multiples more than they make with their current brand clients.”
Italic’s launch saw more than 100,000 signups joining the marketplace, consumers all eager to acquire a piece of affordable luxury in the form of handbags, eyewear, leather jackets or bedding. In 2018, Italic membership cost approximately £90 per annum.
ITALIC INVESTORS
Before its launch, Italic raised $13 million from investors including Comcast Ventures, Global Founders Capital, Index Ventures, and Ludlow Ventures. One investor, Daniel Gulati, a partner at Comcast Ventures, was particularly taken by Cai’s pitch as he believed it democratised luxury. Gulati said:
“The days of being able to markup a handbag one thousand percent are coming to an end, because more shoppers are putting an emphasis on value. Plenty of legacy luxury brands are losing relevance because when consumers care less about their brand, the value fades.”
ITALIC TODAY
Since its initial offering of leather goods, homeware and eyewear, Italic has expanded its product categories, now also offering skincare, cookware, luggage, pet toys and more. As before, Italic is explicit about where its products come from, although the names of the factories are usually anonymous. Italic has sought extensive legal advice to ensure that statements such as “made by in the same factory as Prada” do not have any litigative consequences. Cai states that these statements are facts, and while luxury labels don’t like the idea of their factories working with Italic, there isn’t much they can do. Many of the manufacturers work with countless brands and also compete with one another.
FREE FOR ALL
The Italic subscription model also saw its end in October 2021 when the platform opened its marketplace to everybody with no membership requirement. Of this move, Cai said:
“When we first started, we were pricing [products] at prices where we were losing money. We needed to compensate with membership.”
And the luxury-for-less retailer may also have seen COVID-19 as a blessing in disguise, seeing such rapid growth in 2020 that it was able to ditch the members-only model. Cai added:
“We didn’t need the membership to justify competitive prices.”
Italic still has an exclusive subscription costing about £45 a year. With Italic Bold membership, customers get early access to new products, discounts in the form of credits, a concierge service and more.
ITALIC VERSUS TRUE LUXURY
Will Cai’s brandless and logo-free venture work? Not completely. It’s unlikely that diehard Burberry or Gucci fans will forsake the respective signature check or iconic GG logo, irrespective of the saving. The aspirational luxury shopper desires to be part of an accepted group exemplified by branding and logos. On the other hand, many of the super-rich prefer subtle luxury, and are often proponents of logo-free merchandise that draws less attention
WILL ITALIC WORK?
There is undoubtedly a future for Italic. A case in point is Yanxuan, a China-based e-commerce site for brandless goods, where Chinese customers can buy products that come straight from the manufacturers of Ugg, Burberry, and Gucci. In a country where the consumer market is hyper brand conscious, NetEase, the owners of Yanxuan, generated $2.6 billion in revenue in Q2 2020, although only a portion of this turnover was derived from the e-commerce channel. And on home soil in the United States, the online resale market is showing positive growth with The RealReal having a gross profit of $49.8 million in Q3 2020. Discount stores such as TK Maxx are also performing well. For the UK arm of the retail chain, turnover rose 10.3% to £3.48 billion for the year ending February 2020. Net profits, however, were £84.4 million, down from the £103.4 million a year earlier.
THE PURSUIT OF ASPIRATIONAL LUXURY
But there have been, and always will be, those who see true luxury as being over-priced and aspirational. In the words of Eartha Kitt, who opted for an American luxury jeweller over exotic locations in the South of France:
I want a billionaire with a big, big, big, big yacht
Who can take me to Monte-Carlo, St Tropez and eventually… Tiffany’s
