Sneaker brand Greats is stepping up—to a new parent company. Steve Madden is acquiring the direct-to-consumer brand, which was founded five years ago in Brooklyn, the companies announced on Monday. Greats’ purchase is the latest example of a d-to-c player getting snapped up by a larger company looking to diversify its target consumer and learn from the digitally native business model.
The new deal is expected to help grow the Greats brand by using the infrastructure and financial backing of Steve Madden, which already owns brands such as Betsey Johnson and Dolce Vita, and licenses others including Kate Spade and Superga.
For Steve Madden, a company founded nearly three decades ago, having Greats in its stable could help win over younger, more digitally focused consumers. Both Edward Rosenfeld, chairman and CEO, and founder Steve Madden provided statements about Greats’ influence with “today’s more casual consumer” and “millennial men" in a press release.
In the CPG space, acquisitions by larger marketers of smaller d-to-c brands has been a growing trend in recent years, since Unilever’s $1 billion purchase of Dollar Shave Club in 2016. Similarly, Procter & Gamble acquired Walker & Co., the health and beauty products company for people of color, last year. Meanwhile, such major players are expanding their own d-to-c strategies by taking a page from the startup playbook; L’Oréal launched an at-home hair color brand Color&Co earlier this year.
Now, apparel and accessories brands are also getting snapped up. Underwear brand Lively, the fast-growing d-to-c competitor to Victoria’s Secret, was bought by lingerie company Wacoal Industries for a reported $85 million late last month. Experts expect the trend to continue as d-to-c brands seek out larger backers in order to gain more mass appeal.
“Many d-to-cs bring a unique and compelling proposition that sets the market on fire and grabs the attention and imagination of consumers—but then they begin to lose steam as they lack the infrastructure, funding and reach to break into the mass market,” notes Dipanjan Chatterjee, VP and principal analyst at Forrester.
For the year ended June 30, Greats generated $13 million in net sales, according to a release. Like its rivals in the d-to-c space, Greats has not confined itself to the digital realm; the company opened a brick-and-mortar store in New York City last year. Greats also sells at Nordstrom.
Steve Madden recently reported a 12 percent increase in net sales to $395.8 million for the second quarter, compared with the year-earlier period.
Hear more about the direct-to-consumer retail phenomenon at Ad Age Next: d-to-c on Sept. 9, where brands such as Billie and Allbirds will speak. Buy your tickets here.