Property developer LK Group’s acquisition of fashion retailer Brand Collective shows the future of retail is changing, with more non-retail companies buying out fashion businesses.
LK Group acquired Brand Collective, a retailer and wholesaler of fashion and footwear brands such as Superdry and Mossimo, from Anchorage Capital Partners for an undisclosed amount.
Founded by entrepreneur Larry Kestelman, LK Group is a Melbourne-based collective of 19 private companies that span industries from property to technology, and operates in Australia, the US, India, the Philippines, and the Dominican Republic.
Brian Walker, chief executive of Retail Doctor Group, says the acquisition shows the future of retail is “changing dramatically” as the shift to e-commerce and changing role of brick-and-mortar stores make fashion retailers more appealing to a wider range of companies.
“We’re seeing this in the United States as well, the future of retail is changing dramatically and by definition so too are the houses of retail,” Walker tells SmartCompany.
Walker says when a property-based company acquires a fashion retailer, it’s motivated by the desire to diversify risk and line up future tenants.
By buying a non-core business that operates in a different industry, companies can derive an income and a capital return base that provides a counter cyclical effect, he adds.
“So the classic channels to market are diffusing,” Walker says.
“We’re going to see more and more of these mergers and acquisitions of non-core business that are indirectly related.”
One of LK Group’s most notable shopping precincts is Capitol Grand South Yarra in Melbourne, which it developed to offer luxury retail outlets and residential apartments within the same complex.
Brand Collective has a portfolio of international brands and businesses from Hush Puppies footwear to Iconix. The business has 1,200 employees and operates across product design, warehousing, wholesale, retail and e-commerce in Australia.
Brand Collective reportedly has sales of about $280 million annually and is expected to boost LK Group’s exposure to footwear products by 50%.