In this piece titled “What is the measure of a good company?”, in the context of the clothing brand Brooks Brothers having recently filed for bankruptcy:
You could see the race to the bottom as the brand became more and more volume focused… But making great products and having a few great stores wasn’t what they wanted. They wanted volume. Maybe no one stopped to think about the fact that maybe Brooks Brothers wasn’t meant to be a two-billion-dollar brand. J.Crew and GAP do that kind of volume — why would anyone want to end up like that?
All of this comes down to: Why is bigger better? Why does multibillion in sales make your company great? Why is that the goal when you are already rich? Even if I had a few hundred million invested in a business I would feel a lot better about the unlikelihood of doubling it if I were just making great things.
We went from an era of small local brands upto the 1850s to some 175 years of a few large brands that used global wage arbitrage in their favour – the era of capital as a moat.
I think over the next few years we’re going to see the era of the long tail of a much laarger number of small, niche brands across all sorts of industries including clothing.
While brands in the previous era created leverage using the global supply chain, those in this era will use the Internet and that same supply chain.
As we have seen in our series on Lienar Commerce, the community-first model will eventually become the norm. This allows brands to thrive while still staying small.
Finally – if the creators of these new era brands are sensitive to and deliver what what the community wants and values, then those brands are likely to be more resilient to pricing pressure from large, more generic brands who have economies of scale in their favour. At its extreme, this may put less pressure on the supply chain and on the incentives to keep wages in third-world-countries as low as possible.