Buying into the brand
When the owners of BrandAlley UK decided to sell the designer sales website, marketing and PR director Melissa Littler put her money where her mouth is and, with the rest of the management team, bought the company.
Two years is the average tenure of a marketing director before they are off to a fresh challenge at a new company. But Melissa Littler, marketing and PR director at BrandAlley UK, the ‘flash sales’ website with 3 million members, has committed to being in her role at least five years from now, and has already done a stint of the same length at the company.
Littler is part of the team that completed a management buyout (MBO) of the company early this year, taking on the business from News International and BrandAlley France, its joint owners. It means she is now wholly in control of its marketing strategy, covering the brand, customer relationship management (CRM) and customer acquisition for the site, which sells clothes, homewares and accessories from the likes of Prada, Gucci and Jimmy Choo.
“BrandAlley France [and BrandAlley UK] got to the point where we were two totally different businesses,” she explains. “Our brand positioning became much higher-end than theirs: UK customers wanted more of a brand experience, but in France they were more high street.”
Meanwhile, News International was somewhat distracted with the hacking scandal. “We weren’t core to its business and it had issues of its own to sort out,” says Littler.
But it was not simply a case of the management team preparing its own bid for the business, it also had to prepare it for the sale.
“It came to the point where it had to be wholly owned by one of them or not at all,” says Littler. “So we were either going to be sold wholly to News International, wholly to BrandAlley France or to someone else.”
The BrandAlley UK senior managers were not only the prospective buyers, but also the team responsible for making it an attractive business. Littler had to spend time working out if she wanted to commit her own money and dedicate herself to the brand for at least five years – and also what she would do if it was sold to another bidder.
“You’ve got to go into that process knowing that, if you sell the business, you walk away if you’re not happy,” she says. “It’s black and white. It crystallizes your thought process incredibly quickly.”
Going through the process meant the team had to consider what it would or would not compromise on, such as the use of the name, stockholdings and office space. It also meant honing the marketing strategy.
“Investors want to know what your marketing strategy is, but everything boils down to revenue and how much you can grow the business over the next five years. It doesn’t matter how you do it,” Littler explains.
Most of the bid meetings happened in the City of London over the Christmas period, when Littler was ostensibly on holiday.
In the end the owners went for the management team’s bid – reported to be in the single-digit millions – because the team knew the business so well and could take on the company quickly, meaning fewer costs would accrue. Rob Feldmann continues as chief executive, while former Investec managing director Bruce MacInnes is chairman and Feldmann’s father Marc is another backer. They are the major investors in the business with Littler, a buying director and a logistics director making up the rest of the shareholders.
Littler says she was disappointed to be the only woman around the table during the process of presenting the business to potential buyers.
“It was so male-dominated – among all the lawyers, accounts and bankers I was the only female in every meeting, to the point where it tempts you to revert to being a stereotypical woman on purpose,” she says.
But she adds that any nerves she had remained well-hidden. “All the challenges that as a woman in business you feel you face, you face in those meetings on top of all the pressures,” she says. “But not one man in there would have realised that.”
Now that the business is separate from its French namesake, Littler can control the company’s marketing plans completely. Previously, the business had been under the influence of the parent company’s strategy, which focused largely on acquiring new customers rather than nurturing relationships with existing ones.
“It was a volume game,” she says. “But I tried to drive home that it’s a question of quality and what we do with those customers when we’ve got them.”
Of the 3 million members the site has – people have to sign up to shop – the brand is in contact with roughly half at any one time.
BrandAlley UK is still operating on French IT systems, but will have its own platform by August. This means that CRM will be more efficient, segmentation more accurate and the experience people have on the site more easily trackable. A new website will launch and the company expects to be able to deliver overseas next year. An office move is also on the cards – at the moment it is housed at News International’s offices in Wapping, East London.
Crucially, the new system will mean the company can provide better data back to the brands that sell through its website. So Marc Jacobs – presently selling handbags through the site for £749, down from £1,339 – will be able to see more information about the people who have bought them.
“Brands love it because it introduces a whole new set of customers to them for their full-price sales,” says Littler. “We drive new customers to them and help them get rid of excess stock, so they can sell more at the full price.”
The team presented its bid to fashion brand partners as part of the MBO process.
“They bought into the vision, which is to make BrandAlley a bigger, better experience – we want to be an online department store with the right member experience,” says Littler.
But are designer brands wary of putting their stock on sale with discounts of up to 60 per cent? It seems that many are becoming less so, with Mulberry selling through the site recently, as well as Aquascutum and Vera Wang.
“We’re having conversations with a few brands [that don’t currently sell via the site] – you can never have too many designer handbag and shoe brands,” Littler says. She will not reveal which companies the site is in talks with, although Burberry would seem an obvious target.
Financially, the business is yet to make a profit, but it is on track to break even in Q4 this year. It grew by 14 per cent last year, with a turnover of £34m.
Littler says she has acquired a sharper business mind from having been through the MBO.
“Every meeting is something new that you hadn’t quite anticipated or understood,” she explains. “It was totally out of my day-to-day life as a marketing and PR director to go into a banking environment and have those quite serious conversations.
“Going through the sale process and presenting the business is really interesting. I feel like a better businesswoman for going through it.”
2012 – helps lead management buyout of BrandAlley UK, backed by private investors (2012 turnover £34m)
2012 – wins Specsavers Everywoman prize for online retailer of the year
2007 – founder member of BrandAlley UK, as marketing and PR director, bringing the private sales model into this country. Responsible for acquisition, brand development, CRM, social media, mobile, PR
2004-2007 – senior client partner at agency Arc Worldwide
2000-2004 – senior account director at agency Proximity
Doing what is best for the company
“The key thing in an MBO is what’s going to be best for the whole company, in our case a team of 70 people. The last thing you want to see is it being broken up. Bids can come in from companies where they would either leave the business whole, merge you into another, keep the name or not keep it.”
Presenting a bid to the owners
“You have to know the business inside-out and you have to be really confident in the way you present yourself. But don’t forget the day-to-day. The business has to keep running smoothly: you have to be prepared to do the day job and the MBO becomes the evening or weekend job. It’s hard work and you have to prepare yourself mentally and physically because it’s intense.”
Keeping the culture of a business after an MBO
“We didn’t want to lose the culture or the great people we have at BrandAlley. My big worry was that by moving forward ourselves [in doing the MBO], somehow we’d lose that and not be able to keep that spirit intact, so you have to invest time in your team to bring them on the journey with you. You launch [the MBO] to the company cold and you have to take time to bring people along with that vision.”