The evolution of AG
Premium denim brand, AG, is evolving its ready-to-wear collection into a lifestyle brand – evolving from its origins as a jeans manufacturer.
Firmly established locally through around 110 boutiques across Australia and New Zealand, AG is also ranged through 23 David Jones stores and around five Myer stores. The brand has partnered with International Fashion Group for its local presence.
“We have a very clear strategy to become a full lifestyle fashion brand,” Robert Brown, Senior VP of International Sales for AG told Inside Retail Weekly on his recent visit to Australia.
Based in the US, where the brand has 12 full priced stores and three outlets, with two more planned within the next 12 months, this evolution is being accompanied by plans to extend its store presence within Australia’s neighboring countries.
At present in Asia, AG has one store in Japan, but is set to open 30 stores within the next three to five years in China. The first, due to open in the first quarter of 2016, will be in Nanjing. These AG stores will be operated with a partner.
“We are in agreement with a Chinese retailer to work to open around 30 stores within the next three to five years in China,” Brown said. “They will own and operate the stores, but we’ll be guiding them. Based upon the success of the Nanjing store, AG will then decide upon the other cities.”
Eco in mind
A contributing factor to the popularity of the high-end brand is its eco-minded focus. The company recognises that for a growing number of consumers, especially the younger demographics, sustainability is an important concern.
“I think the younger consumer is very, very mindful of what’s going on,” Brown observed.
“We’ve made some very strong, important changes in our company’s set-up because we’re mindful of those younger consumers who are actually paying attention to what’s going on in the world. These young millenniums are very conscious of what’s happening to the world and they’re looking to brands and to companies to actually be mindful of what they’re looking at.”
AG is the only brand in Los Angeles that is vertical. This enables AG to have firm control of the manufacturing processes, which has seen it use ozone technology, a process that reduces water consumption by over 50 per cent while using minimal chemicals and less energy.
“We have rolls of fabrics that come into our factory and then they leave as a finished jean, whereas many of our competitors actually work with contractors,” Brown said.
Since implementing the ozone process in 2010, AG has saved over three million gallons of water. AG also uses biodegradable chemicals, which reduces energy consumption by up to 87 per cent. In addition, many of its fabrics feature eco-friendly fibres, such as tencel and modal, which are 100 per cent natural and biodegradable. Tencel originates from Eucalyptus trees, which require zero cultivation and produce 10 times more fibre than cotton.
The eco-approach has been a work in progress from the direction of AG CEO and founder Yul Ku.
“He’s very mindful and the laws of doing business in California are very, very stringent,” Brown explained. “You walk into our production and the water that comes into the factory is crystal clear as it leaves. It’s quite mind-boggling the attention, in an eco-minded way, that our CEO has looked at our business.”
So much so that AG is having solar energy installed over its new car park at its factory in South Gate, south of downtown Los Angeles, which is scheduled to come online in the next couple of months.
“It’s a monumental investment. The energy we get from that will help drive the engine of the production.”
So what’s in store for the future of denim? Brown suggests that the technology and construction of denim as a fabric is going to continue to be an important part of how denim grows within the market and is embraced by the market.
“If you look at stretch denim from 20 years ago, it’s nowhere near as good as it is now,” he said. “Denim fabric manufacturers are constantly pushing themselves from a technical perspective to be able to produce fabric that can then be experimented on by designers. Designers themselves can then push the limits on what can be designed within denim.
“As a brand, we’re still very denim driven, but we are looking at other ways of interpreting denim and not necessarily in the obvious five-pocket way. When you look at high-end designers, they’re actually experimenting with denim as well.”
A recent collaboration with British model, presenter and fashion icon, Alexa Chung, opened up new initiatives for AG, further driving its evolution towards becoming a full fashion lifestyle brand. Chung teamed up with AG to design a capsule collection in the past two seasons in the last 12 months, shipping from January 2015.
“The way the consumer embraced that collaboration has driven us to ensure that we have new initiatives in the pipeline keeping the brand very modern and relevant, for not only the consumer but also our clients and, importantly, the media.
“When you’ve got all those firing on the same cylinder and you have strong product, the only way is forward.”
There has always been a strong focus on building AG’s US business and globally it’s a US$200 million business. So, are there plans in the pipeline for a standalone AG store in Australia?
“I think for the rest of the world, we’re still very much in a brand building moment, “ Brown explained. “We’re very conscious of how the brand has been built with retail partners and our goal is not to go out and undermine that.”
“In Australia it’s more about penetrating market and taking more market share ownership with existing clients and driving their business.”
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