The scene was a luxurious Indian palace in the foothills ofthe Himalayas, and about 30 well-to-do friends from Britain were celebrating a 40th birthday. Having spent all morning by the pool, the group was summoned to the bar area for lunch. At which point, all of the men disappeared.
One member of the group was London-based photographer Adam Brown. As his pals scurried away to change out of their too-tight or too-baggy swimwear into attire more appropriate for lunch, Brown noticed that the women had simply added a shirt, shawl or dress over their swimmers. The females were chic and effortlessly elegant from sunlounge to sundowner. The males, well, not so much. And so, with no design experience but a clear vision of his potential customer, he set about creating a high-end, tailored pair of quick-drying shorts for men to satisfy every resort dress code.
Orlebar Brown, created two years later in 2007 with his then business partner Julia Simpson-Orlebar, was not only a new menswear brand. It spurred the growth of an apparel category known as beach-to-bar. With their side-fasteners and tailored cuts, Orlebar Brown’s swim shorts appealed immediately to style-savvy men happy to pay hundreds of dollars for swimmers that fit the image of the type of holiday that they would like to take – think St Tropez in its 1960s heyday. What Orlebar Brown is selling is something far more alluring than swimwear.
“Summer for us is not a season, it’s a state of mind,” Brown says on the phone from a lounge at Istanbul airport en route to the Turkish resort hotspot of Bosphorus. “Summer is a colour, a temperature, it’s the door opening on a plane when you’ve got your whole holiday in front of you. Our sales strategy is to follow the sun around the world.”
Private equity buys into swimwear
There’s not a lot that one can wear when underwater, which is perhaps why swimwear and beach wear has long been a land that fashion forgot. But the beach has emerged as an investment battleground. In 2012, Vilebrequin, another brand of beach-to-bar luxury mens shorts, was sold for €85.5 million by its private equity owner to NASDAQ-listed G-III Apparel Group. In 2014, LVMH’s private equity arm snapped up Australian brand Seafolly and has since bolted on South American brand Maaji. In 2015, retail private equity juggernaut PAS Group acquired JETS swimwear and in February this year, Crescent Capital Partners bought Tigerlily from Billabong.
Luxury giants Missoni, Paul Smith, Tod’s, Ralph Lauren, Burberry, Hugo Boss, Chanel, Dolce & Gabbana, and most recently Calvin Klein have added swimwear to their offerings. According to Global Industry Analysts Inc, the swimwear sector is set for 4 per cent growth per annum across the next five years, leading to an overall market value of US$22.7 billion by 2022.
Even more enticing, swimwear is being sold as a state of mind to market everything you’d want to wear when you’re on holiday. Fuelled by endless Instagram imagery, high margins, jet-setting fashion shows by luxury houses and increasing societal acceptance of dressing for the water even when you’re a long way from it, the broader resort wear sector is realising its growth potential.
Brown’s cult label typifies several of the sector’s hottest trends. Firstly, price is no barrier: a pair of Orlebar Brown shorts can cost up to $595. To say that this seems rather expensive for some togs misses the point. Until Orlebar Brown dived into the market, for some men, swimmers were simply not expensive enough. “I’ve never been embarrassed about our pricing,” Brown says. “There are 60 tailored pieces in one pair of our shorts, the waistband has six pieces in it alone. We offer two rows of stitching, all the hardware is made in Italy, the fabric comes from France.”
Secondly, a hero swimwear line has allowed Orlebar Brown to take a slice of the broader category of resort wear for men and women. The label mostly advertises its swim shorts, but it’s evolved into a full collection of chinos, shirts and even linen jackets, all sold through imagery that packages up summer, happiness, travel and the promise of good times and flat stomachs. Sixty per cent of Orlebar Brown’s sales are non-swim.
The third big trend is the sector’s serious investment appeal, case in point being Orlebar Brown raising £8 million from London-based private equity firm Piper Equity in exchange for a significant minority stake in 2013. “Adam is very clever in making people think ‘I could look like that, I could be that person on that beach, I just need to buy those shorts,” says Libby Gibson, a partner at Piper Equity. She adds that resort wear, both in terms of fashion focus and investment proposition, has jumped to the front of the fashion queue.
“If you look at the luxury brands like Zegna or Calvin Klein or Chanel, they’re all in swim now. But the broader resort wear category, that’s the big prize. That’s being driven by more casual dressing generally, people taking more holidays than they used to. It’s also driven by digital, which offers a much more global view of the world. People can imagine themselves in their OBs on the beach, even if they’re somewhere cold in England.”
A queue in Bondi
From afar, the motley crew of sleep-deprived, yet patientqueuers gave no indication of what they were queuing for. Frocked-up fashionistas lined up alongside the homeless; cashed-up international students waited next to wide-eyed Airtaskers; avid luxury merchandise on-sellers ostentatiously displayed their wads of $50 and $100 notes. This odd microcosm of fashion society played out in June, in the middle of the iconic Sydney beachside suburb of Bondi.
The occasion was the opening of a pop-up store housing a highly anticipated and utterly collectable Louis Vuitton collaboration with cult New York skate brand Supreme. The demand for the limited-edition capsule collection of $1400 hoodies and $6000 skateboards was so huge, the homeless and Airtaskers were paid up to $300 to queue overnight. Then hip tipped into hysteria when Justin Bieber popped into the pop-up on his surprise Australian visit. One week into its two-week run, the store ran out of stock and shuttered.
Louis Vuitton x Supreme pop-ups in New York and Miami had been mysteriously cancelled. But it was no mere chance Bondi’s went ahead. The suburb is a mecca for beach wear and its younger, edgier brother, skate wear. Some months earlier, Louis Vuitton’s global chairman and chief executive Michael Burke had visited Bondi when in Sydney on business. The decision was made to host this fashion event with a backdrop of one of the world’s most recognisable beaches.
It was a mark of the imaginative ways in which luxury fashion houses link themselves to the energy and atmosphere of the beach. Sydney’s most anticipated barefoot soiree is without a doubt the annual Hermès on the Beach party. In February this year, 650 guests were thrilled by a colourful print installation, skateboard ramp, giant floating seahorses, DJs on top of a lifeguard tower, virtual reality experiences, acrobats dressed in old-school lifeguard outfits, and a custom-built, 180-degree curved screen projection. And yes, there was a shoe concierge so the fashion set could dip their manicured toes into the 400-tonnes of sand dredged from Cronulla beach and transported to Sydney’s Carriageworks event space.
Before that, Louis Vuitton owned the beachside ball concept with its Barefoot & Black Tie parties on Palm Beach, Sydney. With a dress code of black tie on top, and board shorts (or female equivalent) on the bottom, the fundraisers for Cure Cancer Australia were a society hit, with tickets selling out before even being printed.
Former Louis Vuitton Australia chief executive Philip Corne started that event in 2002. Now the executive chairman of the Australian division of LVMH’s private equity firm L Catterton, which acquired a 70 per cent stake in Seafolly for $70 million, Corne says the water and feeling good go together. “If you think about it, if people were to come into money tomorrow, the majority would gravitate towards the beach house, the boat, the summer holidays,” Corne says. “It’s not for everybody, but the sun and the sea, that’s revitalising, it’s relaxed, and extremely chic. A day on the water can be worth two anywhere else.”
Corne says this happy state of mind and our desire to seek out positive, lasting memories of unique experiences is one of the factors fuelling swimwear’s growth, as a quality piece now forms the beginnings of a holiday wardrobe. “My personal view is that we’re in a time now where the consumer would rather have few things, better things that last longer, and invest more in memory and experience,” he says. “One small measure of that in Sydney is the number of cruise liners, compared to what we used to see. The airlines and airports are full all the time. And the beach lifestyle has always been there, and it’s not going away in a hurry – quite the opposite.”
Tigerlily makes a splash
Epitomising that lifestyle is Australian label Tigerlily, and personifying it is creative director Amelia Mather. The 35-year-old is the quintessential Sydney beach girl; she says she spends every spare weekend moment at the beach and like Jodhi Meares, her former boss and founder (Meares sold Tigerlily to Billabong in 2007), Mather owns zero bras and instead wears only bikini tops.
“Swimwear is definitely emotional for me,” she says from her converted warehouse office in Sydney’s Alexandria, surrounded by vintage handmade bikinis and sundresses that help inspire her design team. “We’re wearing it on the weekend, or in times of leisure. We work so hard, and those times for us are really cherished. Swimwear is reserved for those moments and that’s what makes it so special.”
Under Meares’ creative leadership, the label made a splash on the fashion scene – quite literally. In 2000, Tigerlily launched at Australian Fashion Week with Czech supermodel Eva Herzigova, all glistening and gleaming from a water spray, wearing a $500,000 pearl-encrusted bikini. The next year, Kristy Hinze modelled a Tigerlily bikini encrusted with $1 million worth of diamonds, while holding a huge python draped around her neck. Meares was married to James Packer at the time and the entire Packer clan was in the front row.
Mather joined Tigerlily in 2003 and at just 21 years of age was charged with developing the clothing and apparel line for the label, taking the swimwear brand into the larger resort wear category. Fourteen years later she’s grown Tigerlily’s range of athleisure, dresses, onesies and kimonos to 70 per cent of sales, with swimwear the remaining 30 per cent. She puts part of that commercial success down to more casual dressing, resulting in a blurring of seasons and creating a product with consistent consumer demand. “All year round, everyone can wear clothing. We make it accessible to a range of age groups and shapes, and people want to buy into that Australian beach lifestyle wherever they are.”
Patrick Verlaine, a partner at Crescent Capital Partners, who became chairman of Tigerlily when CCP bought it for $60 million, says the private equity firm plans to sell that distinctive Australian identity to a wider audience, aiming to double the size of Tigerlily in the next two to four years. He’s planning more retail stores in Australia, a more targeted digital strategy, a new website, and most importantly, improving its foothold in the North American and European markets, and eventually South East Asia and South Africa. “Australian swimwear is very well recognised overseas; it represents the essence of Australia and yet has international appeal,” Verlaine says. “We see a great opportunity for Tigerlily overseas, where it hasn’t had the opportunity to flourish. If we didn’t see it, we wouldn’t have invested in it.”
Daniel Craig's swimmers
The first bikini made its debut at a fashion show in Paris in 1946. It was a Louis Réard-designed two-piece with a newsprint pattern, worn by French model and dancer Micheline Bernardini. But the bikini truly had its moment in 1962 when Swiss actress Ursula Andress, as the first Bond girl, stepped out of the Caribbean Sea in a white cotton bikini (with a fishing knife strapped to her hip, no less) in the James Bond movie Dr No. The Honey Ryder character not only made a star of Andress, but also of the bikini. No surprise, then, that following this spectacular silver screen entrance, the swimwear market took off.
The men’s market experienced a similar moment when actor Daniel Craig also emerged from the sea in the 2006 James Bond flick Casino Royale, doing seriously sexy justice to a pair of pale blue GrigioPerla swim trunks, which at the time cost a reasonable €65. As a result of early publicity shots, the trunks flew off the shelves before the movie was screened.
That pattern of screen to check-out is now a key driver of swimwear. But instead of the big screen it’s smartphones that fuel sales. Social media “influencers”, a vague term that defines anyone with a sizeable following on Instagram, are courted by swim and resort wear companies with free samples and – depending on their reach – money, to wear and tag their clothes.
Dale McCarthy, founder and creative director of new boutique swim label Bondi Born, says during the European summer holidays in July and August this year, her social media feeds were full of friends soaking up the sun on Capri and Mykonos. “Every day they’re in a new swimsuit, because you can’t be in the same one every day of course,” she says. “And you need a matching cover up with each swimsuit. So swim has certainly evolved into a significant fashion force category, largely because of Instagram.”
Bondi Born is one of the newest players on the block, firmly pitched at the female luxury market. With hero products priced around $300, the brand has ambitions of being stocked in every prestige resort in the world. In just two years, McCarthy has secured stockists from Cayman Islands to Côte d’Azur. Rather than starting local distribution in Australia, she went global first, being stocked in Harrods and Selfridges in the UK in her first year. The brand’s social media strategy is highly aspirational, with stylish shoots and Bondi Beach dreamscapes interspersed with fashion quotes from luminaries such as Giorgio Armani: “Elegance is not about being noticed, it’s about being remembered.”
“You’re selling people the brand of being at the chic end of Bondi, lying on a lounge at Icebergs,” says McCarthy. Has she seen increased sales as a result? “Oh yeah, the volume is up there. When people buy online, they are not just buying one any more. It’s now a number of pieces.”
Social media is key
Adam Brown has mastered the marketing value of the hashtag, with his #OBsaroundtheworld populating thousands of Instagram images of Orlebar Brown customers on holiday in Bali, Spain, the Amalfi Coast, Florida, Greece, Croatia, Turcs and Caicos Islands and beyond. Most of the tagged photos receive a reply from Orlebar Brown’s official account, often offering a free slogan T-shirt in store, conveniently inviting the customer back again into the retail environment.
The social media marketing back-end has been boosted by London-based Piper Equity’s injection of capital. More sophisticated IT and e-commerce systems, new staff, and expansion into the lucrative but competitive US and European markets have pushed the brand towards £18 million ($30 million) in annual revenue this year. It is sold in 105 countries, from the US Hamptons to the south of France, Harrods to Bergdorf Goodman, as well as via a thriving online store.
There are few better examples of social media propelling a brand into the million dollar revenue mark than Frankie Swimwear, founded by Melbourne-based Rebecca Klodinsky in 2013. Her turning point came last year when Kim Kardashian’s half sister Kylie Jenner wore a black Frankie bikini at her 19th birthday party. Significantly, she shared the moment, in the form of a bathroom selfie, with 96 million of her Instagram followers. That Jenner paid for the bikini herself added extra sparkle to Frankie’s brand appeal.
“Yes, Kylie paid for that, online from the e-store,” 27-year-old Klodinsky says. “As a result of the media interest, I had to track it in our system to prove she paid for it.” The result was pandemonium. “We sold out in 30 minutes,” Klodinsky recalls. “The style and colour sold out, every size sold out. We went from selling hundreds of bikinis every day, to thousands of bikinis every day. My girls were here in the warehouse until the sun went down, doing admin, back orders, social media.”
Frankie’s very affordable bikinis (from $40 to $92) have been worn by former Pussycat Dolls lead singer Nicole Scherzinger, model Bella Hadid, and pop star Rihanna. After four years of operation, annual revenue is $7 million. Its social media posts go for raunch appeal, as the teenie tiny bikinis showcase tanned and toned bodies on Australian beaches. Its Instagram feed has 219,000 followers.
Klodinsky decided to create the business after her teenage sister came home proudly clutching a $300 bikini she’d just finished paying off on lay-by. “I thought to myself, ‘Why is somebody lay-bying a bikini? It’s such a staple thing.’ But there was nothing on the market at a happy price. Back then it was either Kmart or Seafolly, and nothing in between.”
While an exact percentage is hard to pin down, the general consensus is the margins in swimwear (and lingerie) are higher than most apparel, partly explaining the reason why new independent labels are launching frequently. Tigerlily’s chairman Patrick Verlaine compares swimwear to new software. “A lot of the cost is in the actual design process and the materials we use are very high end,” he says. “Then the cost of reproducing is pretty much zero. The margins on the actual apparel are high, but there’s quite a big head office cost to generate those sales.”
Coco Chanel launched resort wear
Resort wear began, as so many things in fashion, with Mademoiselle Chanel. In the 1920s and 30s, well-to-do ladies sought opportunities for yachting and lounging at the beach and at spa resorts. The modern era’s ladies who lunch were the 1920s equivalent of ladies who lounge. The French Riviera was a hot spot for this annual extravaganza, and by default also the location of the first ever informal and unintentional resort wear collection catwalk.
Entrepreneurial as ever, Gabrielle ‘Coco’ Chanel saw the need to provide her clients with an additional wardrobe for their summer vacations. The garments were lightweight, practical, in a colour palette which was easy to mix and match, and in travel-friendly fabrics. It was effortless elegance.
The fashion press immediately recognised this new category of womenswear would be ideal for cruising, hence the name “cruise wear”. (Through the decades, cruise wear has been used interchangeably with resort wear to denote relaxed, sophisticated, summer-friendly clothing.) Karl Lagerfeld upped the ante when he arrived at the house of Chanel in 1983 and has since made the “Cruise” collection a highly desirable, and profitable, mainstay of the annual fashion calendar. Chanel’s president of fashion Bruno Pavlovksy told Women’s Wear Daily in 2011 that “Cruise represents Chanel’s biggest and most important delivery of the year.”
Chanel was again the first to hold an official catwalk show for this spin-off collection in 2000, and with each year and each season, the themed shows have become grander. The locations are chosen for their strong resonance with either travel or the water, and have seen Chanel’s VIP customers, celebrities, and fashion press enjoying front row vantage points at spots such as Café Marly in Paris, Grand Central Station in New York, Santa Monica airport in Los Angeles, The Raleigh Hotel pool in Miami, Lido beach in Venice, Sénéquier café in Saint-Tropez and the Hotel du Cap-Eden-Roc on the Cap d’Antibes.
Dior dives in to cruise wear
While Christian Dior first presented his Cruise collection in 1948 in Paris to a select few, the category for Dior really took off when former creative director John Galliano staged a New York spectacular to launch Cruise 2007. Louis Vuitton came to the cruise party later with a runway show in Monaco in 2014, before acing the category with a show in front of Oscar Niemeyer’s Niteròi Contemporary Art Museum in Rio di Janeiro. Other luxury brands such as Saint Laurent, Stella McCartney, Gucci and Ralph Lauren have since followed suit.
The Australian fashion industry, too, has come to its aesthetic sensibilities and recognised resort wear as its best calling card globally. Over the past decade, local designers including Alex Perry, Collette Dinnigan, Camilla Franks and Kym Ellery have gravitated to the resort category. In 2010 Oprah wore a Camilla kaftan on the steps of the Opera House during her national tour, catapulting the Australian designer’s distinctive resort wear into the consciousness of a global audience. This year, at the very same venue, Dion Lee opened Mercedes-Benz Fashion Week with a collection of resort wear. Australia’s comparative success in swimwear – Zimmermann, Seafolly and Tigerlily – has helped set the broader resort category up for success.
And within the swimwear category, the key prize of consolidation is still up for grabs. While the performance and sports swimwear market comprises just a handful of recognisable brands (Speedo, Arena and the like), the lucrative leisure swimwear category is highly fragmented, with new independent labels constantly appearing and private equity groups on the lookout for more acquisitions and mergers.
Eric Morris, PAS Group managing director, says he is embracing this market challenge for the private equity group’s recently acquired swimwear brand JETS. “The swim market is a relatively immature sector of the industry. There are lots of small players and fewer bigger players with any level of scale, so obviously there is an opportunity,” he says.
Seafolly a 'swimwear superpower'
No wonder, perhaps, that L Catterton Asia plans to create a $US500 million ($657 million) “Sephora of swimwear” through opening more than 150 Seafolly and Maaji stores in the Americas, Australia, Asia, the Middle East and Europe, building wholesale sales in retail and online marketplaces, and taking the brands into the diverse resort wear categories of apparel, towels, bags, sunglasses and shoes.
L Catterton’s Philip Corne says the group aims to create a swimwear superpower. “Our antennas are really up and looking for opportunities all the time. Acquiring brands is the easy part. Successful integration of the business and being sure that business systems and management and strategy are aligned, that’s where the real work starts. Also, expansion into another country is not to be taken lightly. So we have the desire to pursue the ‘Sephora strategy’, but with carefully managed strategic investments that make sense.”
Even though Seafolly has managed to capture a third of the Australian women’s swimwear market, global domination is neither assured nor easy, as Corne admits. “My personal view is that Australia has so much to offer, in terms of what the world is looking for,” he says. “It’s a clean environment by anyone’s standards. It’s open; we have sand, sun, sea, thousands of miles of wonderful beaches. But we’ve got further to go than we think. It’s competitive out there. Seafolly has had a very good start in the US market, but it’s tiny compared with the actual opportunity.”
The AFR Magazine Fashion Issue is out Friday, August 28, inside The Australian Financial Review.
