In the first days of 2020 I published a case study covering the rise and fall of Mansur Gavriel. TL;DR–they kind of bungled their initial success and had to sell the business sideways to a private equity firm.
This was the piece that probably “put me on the map” in terms of my social media presence and ~thought leadership~. I wanted to revisit it here and update it to cover what has transpired with the brand since 2020.
First, I want to thank this week's sponsor: Inventory Planner by Sage. If you're still doing planning in a spreadsheet, you're leaving money on the table. Inventory Planner's software is informed by decades of retail expertise to help you maximize the ROI of your product assortment.
This is a great deep dive into themes I cover frequently here: how “hot items” can destroy a brand, how much merchandising strategy matters, and the pitfalls of mindlessly aping luxury brand codes.
Side note–when I published the original piece, folks who currently and previously worked for MG messaged me on LinkedIn to tell me how accurate the analysis was.
Founding & Initial Success–The “Hot Item”
The Mansur Gavriel brand was founded by two creatives— Rachel Mansur and Floriana Gavriel. They met by chance and spent two years discussing white space in the handbag market and workshopping their initial designs.
The brand launched in 2012 with two styles: a drawstring bucket bag and a top handle tote bag. These bags were different from anything else on the market circa 2012–the designs were minimalist and there was not a logo to be seen.
One distinctive design detail was a contrast-color coating on the interiors of some of the bags. For example, a black tote might have a bright red interior.
The bags succeeded because they met the moment; they rode a cresting wave:
The consumer was moving away from logo-mania. Reed Krakoff had recently been let go from Coach because he flogged the logo too heavily and failed to respond to this change in consumer sentiment.
Prices for designer goods crept up since the 90s. Carrie Bradshaw was spending $500 for a pair of Manolos in the 90s; by 2013 the price increased to $625 and today it exceeds $800. This had nothing to do with the price of raw materials, and everything to do with increased demand for luxury labels.
Instagram had just been acquired by Facebook. Growth through organic reach was still very possible on the platform, and MG’s art direction was very eye-catching and Insta-friendly. Few “established” brands dominated the platform.
Commerce and supply chains had not been fully democratized. If MG launched today, a dozen knock-off artists would spring up to take its place as soon as the bags started trending.
In 2012 knockoff artists didn’t waste time on grassroots trends, allowing the brand to grow more of a moat. Established players were also less likely to ape grassroots trends. Contrast that to today, when all the big luxury houses knock each other off.
For the next two years, the bags sold out consistently. This gave Mansur Gavriel the leverage to upend the traditional wholesale/brand agreement and demand that wholesale accounts front the money to fund the production of their orders.
Fulfilling wholesale orders is the riskiest and most capital-intensive part of an apparel or accessories brand’s business (second only to opening stores).
There is a three to six month gap between factory production and delivery to the wholesale account. The brand doesn’t get paid until 30 to 90 days after the goods are delivered, but it still needs to fund the development of its next collection during that time frame.
Sometimes the wholesaler will go under before delivery or receive the goods and refuse to pay, just because they can.
Because Mansur Gavriel wasn’t forced to tie up capital in this process, they were able to invest in other activities that would contribute to growth.
Good brand positioning + macro trends = “alpha” aka exceptional cash flow.
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How The Founders Invested Their Windfall
Mansur Gavriel’s founders invested this cashflow into a number of new projects:
- 2015: Women’s footwear collection, NY Fashion Week show & increased investment in production values for photo shoots
- Fall 2017: Women’s Ready to Wear collection launched
- May 2018: Men’s Ready to Wear collection launched
Additional handbag styles were introduced throughout this time period.
The founders fell into the classic “hot item trap”–they assumed that the elevated cash flow from their best sellers would last forever, and they assumed that consumers’ appetite for two bags indicated an appetite for whatever the brand produced.
A 2024 interview with the co-founders proved my 2020 hypothesis correct:
“They hit $35 million in annual revenue by the fourth year [2016], but the majority of sales were coming from the bucket bag. The frenzy would die down at some point, they knew that, but they believed everything they had built around the bag was strong enough to stand without it.”
In reality, no “hot item” lasts forever. Eventually, you will saturate the market and the consumer will move on. You can develop a “hot item” into a product family that has more staying power, but its role within your business will evolve.
It is also uniquely challenging for a bags brand or a shoe brand to successfully launch ready-to-wear.
The price a consumer pays for a handbag typically represents her highest “willingness to pay” within apparel and accessories. That is because handbags are more durable than shoes and clothing, and are more easily recognizable status symbols.
But handbags typically don’t represent the highest AURs within a designer collection. If you look at brands like Gucci and Dior, the price of a mid-range bag is typically comparable to the price of a sweater or a day dress. Evening dresses, outerwear and specialty bags have the highest AURs.
If Mansur Gavriel wanted to sell RTW to its existing customer base at scale, it would have priced the collection in the Everlane/Alex Mill zone (although this price point didn’t really exist c. 2017). Instead, it priced RTW at the “advanced contemporary” price point, where the modal AUR was $550-750.
Side note–brands that start with womenswear basically never sell menswear at scale; this was another costly diversion.
Failure To Evolve
More interesting than what the brand did, was what the brand did not do–invest in eCommerce as a demand generation channel.
The brand launched an eCommerce site in 2014, but it was basically a drop model–you signed up for emails and tried to get a bag when new inventory was released, but each drop sold out almost immediately.
The brand did not run Facebook ads using the prospecting playbook most of us are familiar with until it was sold to a private equity firm (see next section). To be fair, few brands did; most fashion brands were laggards in this regard.
The brand also failed to evolve its positioning in the handbag category to keep up with the market. By 2015-16, other brands had started to hone in on MG’s niche.
Brands like Danse Lente and Staud launched bags in the $300-500 range, while MG’s offerings remained in the $600-1,000 zone. These brands were also savvier Instagram marketers; the platform had become more competitive and “post pretty, curated images” was no longer enough.
At the same time, traditional luxury brands hopped on the “micro bag” trend, honing in on the top of MG’s AUR range.
By 2015, Mansur Gavriel was no longer selling out of stock immediately. And by 2018, the brand started to run seasonal sales on its website–something that would have been unthinkable just a few years ago.
Sale To Private Equity
In September 2019, the privately-owned Mansur Gavriel sold a majority stake in the business to the private equity firm GF Capital Management.
Because it was reported that Mansur was seeking a minority investment a year prior to the sale, it is likely that this was a survival move. The brand had run out of cash, and the founders’ only option was to cede creative and managerial control.
Since the sale, the macro environment has only become more challenging for independent brands. If you’re not selling status symbols or something functional (which, let’s be real, eventually becomes its own type of status symbol), it is hard to become a nine figure brand. And that is the type of outcome institutional money is seeking.
The founders stepped away from the brand after selling their stake to GF Capital Management. The brand cycled through two CEOs and two CMOs before the co-founders returned to the business in September 2023.
In those intervening years, management invested more in the traditional eCommerce playbook: running seasonal sales on the website, giving the site a UX facelift, and leaning into Meta ads prospecting and “performance PR”.
Annual sales still hover around $35 million. With the founders back onboard, the brand is pursuing an approach to design that is more creative-led and less merchandising-led.
The brand still faces existential questions–what is the exit strategy? Will they attempt to sell to another, larger PE firm? That is unlikely to happen unless MG can recapture some “brand heat” and the rapid sales growth that goes along with it.
There is definitely white space in the market for simple, well-made accessories–”classics with a twist” that aren’t plastered with logos. I actually bought a pair of MG ballet flats last year (on sale). They’re great!
But “creativity” isn’t enough to scale a fashion brand to nine figures in the current consumer environment. And that is because the DTC-knockoff industrial complex is more powerful than ever.
Innovative, relevant design and slick art direction are simply not a moat. Founders need to take the momentum from a “hot item” and transmute it into a lifestyle.
What Can Fashion Brands Learn From This?
Here are 5 lessons we can learn from Mansur Gavriel's brand trajectory:
1. Don't progress from stage 1 to stage 2 of growth prematurely. Mansur Gavriel produced two "hot items". Almost immediately, they started to invest in phase 2 marketing activities (expensive campaign shoots, runway shows).
But there was no underlying "lifestyle" to market, beyond a visual identity. For that reason, these tactics fell flat and sales plateaued.
2. Visual Identity =/= "Brand". A brand is not a collection of "things the founder likes". Look at the most enduring US-based brands in the fashion space: Ralph Lauren, Thom Browne, etc.
These brands are more than an aesthetic. They've connected with the culture and worked to evolve that connection over time. They tap into deeper desires than to simply "look cute". And their product assortment is more robust than a single hit item.
3. Most women have different "willingness to pay" per product category. Most women are going to spend more on bags and shoes because they last longer and you can wear them every day.
They won't buy apparel from the same brands where they get bags because it is simply too expensive. The woman who buys a head-to-toe Gucci look is RICH. The woman who buys a Gucci handbag might have saved up for years to make the purchase.
4. All waves crash eventually. Culture changes and trends have shorter lifecycles than ever. You cannot rest on your laurels from a product development POV.
A "hot item" broadens your brand's audience. To maintain this mass adoption, you might have to pursue design ideas you're not comfortable with. The other option is to stay the course from a design POV, and stay small.
But you can't have your cake and eat it too–mass adoption of niche ideas. Customers come for the product, not because they value you as an arbiter of taste...unless you're firmly in phase 2 of growth.
5. PE can't do fashion brand turnarounds. Fashion brand turnarounds are risky, even when you have the best team in place.
PE-funded brands typically can't afford top tier talent. The funding model is risk-averse and doesn't understand marketing investments with a payoff window longer than seven days.
PE can improve the operational efficiency of a hot brand, but it can't guide the turnaround of a stalled brand. Stop trying!