Monday, November 12, 2007

a fading (bathing) ape.

(Joshua Masayoshi Huff)

Today's post requires you to actually do some reading. Don't worry, it's interesting:

Portfolio.Com A Bathing Ape Article

I think A Bathing Ape is a company really worth reading up on--they're fascinating, really. The problem is that the streetwear blogs are:

a) poorly written
b) overly congratulatory.

(Evidenced here)

So, here it is: BAPE is a company that got big because of its anti-establishment business model. It took on the same approach that Louis Vuitton took on--manufacture in developed countries where one can charge more because labor is higher and, theoretically, "more skilled".

Then, the company sells it's items in select locations in major cities and marks up prices in order to build on exclusivity.

The problem that Louis Vuitton came across? The Japanese were flying to Paris to buy Louis bags, because the bags were 40% cheaper in France because of high Japanese tariffs.

With the expanding middle and upper classes in America, more and more people are able to "afford" Bapes $300 hoodies and $80 t-shirts. This does not mean that they are able to fly to NYC to buy the shirts, though.

And this is where BAPE is shooting itself in the foot. Fine, they want to be exclusive--but they just aren't capitalizing, and this is going to bite them--hard. BAPE was established in the early '90s and was distributed to friends and family--shirts were printed in runs of 25-80. The company started to grow too, and the exclusivity keep the prices where they're still at.

The problem, though, is that people's willingness to pay meets BAPE's selling price. And, within the past two years, the company has exploded--Clipse, the Neptunes, Jay-Z and Kanye all shout-out the brand in songs and wear the clothes at photo shoots. You don't get better exposure than that--and it's all free exposure. The company doesn't advertise--they charge customers for their catalogs.

But you can't have that kind of product placement without having actual product. The brand has one US store and one UK store--the rest of the operation is Japanese. With the ubiquity of the aforementioned artists in the last two/three years, the company has certainly become an American household name.

Yet, my three trips to their NYC store were met with no stock--absolutely nothing in my size. It's just insane that a company would not capitalize on the market. Nigo does not want the brand to be a fad, so he's refusing to put the product on.

What's happening, though, is that people are buying bootlegs. Nothing new here--there will be bootlegs forever. The problem is that the company's brand is being diluted--BAPE's all-over hoodies have become part of every high schooler's clothing arsenal. Most of the time, the kids are sporting fakes--not because they can't afford the real thing, but because they aren't in NYC or aren't able to find a real one. The band does not allow selling through online retailers--ebay may have a few, but most of the Bathing Ape product on ebay is fake.

The brand is being diluted BECAUSE of it's exclusivity. If the real thing was more available, fakes would be less prevalent and the brand would not be suffering from overexposure. However, demand has skyrocketed because of hip hop shoutouts and product has stayed relatively small to avoid relegating the brand to eventual fad status.

The fact is that the band is everywhere--fake or not--and that the only place it has to go is down. It's just a risky business move to rely of exclusivity for so long--especially when people have the willingness to pay (Q, in the business world profit equation) for a product. The price of the company's goods aren't going to kill it--the lack of product is.

Nigo wants the company to last--and fine, it's been around for 15 years. The fact is that you strike while the market is hot--you sell when there's demand. The company simply isn't doing that, and it's going to be something they regret. Fine, Nigo is filthy rich--but he had a chance to be even richer while maintaining the brand's culture. Instead, he essentially pushed it to become a disposable fad by refusing to give the product to the customer.

In short:
the price isn't killing the brand
counterfeiters aren't killing the brand
exclusivity--what the brand prides itself on--is killing the brand.