With Gymshark securing unicorn status last month, just eight years after it was founded by former pizza delivery boy Ben Francis, who could be next? Retail Week looks at the businesses that have the potential to become Britain’s next £1bn brand.
Gymshark secured unicorn status last month after it was valued at more than £1bn in a fresh funding round that led to private equity firm General Atlantic taking a 21% stake in the business.
The sportswear brand joins an exclusive list of fewer than 25 British companies to achieve unicorn status since 2001. But who could be next?
Revolution Beauty
Revolution Beauty has become the go-to budget makeup choice. Set up in 2013 by Adam Minto, a cosmetics industry lifer known as Mr MakeUp, it sells ‘mass-tige’ products – that’s mass-produced makeup that is marketed as prestige and sold at affordable prices.
And shoppers are snapping them up. Sales surged to £113.8m in 2018, its last reported financial year, while profits hit £13.6m.
Revolution Beauty has revolutionised the beauty industry as it focuses on ‘fast beauty’ – think fast fashion but with makeup. That means the company launches new trend-led products on a weekly basis.
The brand sells via its own website but also through retail partnerships. It is stocked in Superdrug, Boots, Asos and Beauty Bay in the UK, and in a range of department stores, beauty specialists and grocers around the world, including Ulta Beauty and Target in the US, Monoprix in France, and Lidl and Natura in Poland. International expansion is a key part of its growth plan and it is already sold in more than 35 countries.
The beauty industry may currently be suffering as many people continue to stay at home, however, the long-term growth prospects of Revolution Beauty are undiminished and it has a good chance of being Britain’s next £1bn brand.
Missy Empire
Following in the footsteps of Boohoo and Missguided is fellow Manchester fast-fashion etailer Missy Empire, which sells affordable clothes for 16- to 35-year-old women.
Set up by brothers Ash and Ish Siddique in 2015, Missy Empire was featured in The Sunday Times Fast Track 100 this year as one of the UK’s fastest growing businesses after annual sales rose 115% in three years.
The good run looks to have continued as Missy Empire expects sales to have grown from £13.9m to £25m in its year to March 2020, according to Business Live.
Like Boohoo founder Mahmud Kamani, the Siddique brothers have a background in clothing manufacturing. In fact, they only ventured into online retail when a major customer cancelled a bulk order of Christmas leggings, leaving them with stock to shift.
The brothers put the leggings on eBay and they sold out overnight, which led them to think they should build a business selling fashion online.
The Siddique’s manufacturing background ensures they can get products made cheaply in as little as five days.
Like rivals Boohoo and Missguided, Missy Empire works with celebrities and social media influencers such as former Geordie Shore star Vicky Pattison and The Only Way is Essex’s Chloe Lewis to help it build recognition.
It has 1.4 million followers on Instagram, which may be some way behind Boohoo’s 6.7 million, but it is fast catching up. It will also be looking to follow in Boohoo’s financial footsteps and will be eagerly eyeing its £4bn valuation.
Freddie’s Flowers
Freddie Garland, founder of Freddie’s Flowers, describes the online florist as “like the milkman, but with flowers”. The business operates a subscription model and delivers flowers to doorsteps on a weekly basis for £25.
Each box comes with an arranging guide and details about the different flowers in the delivery.
The idea of a £1bn online flower seller may seem outrageous, but PwC retail deals specialist Kien Tan insists it has legs.
“If you look at other billion-pound success stories, they often seem to disrupt markets. Look at Gymshark with the sportswear market that had been owned by Nike and Adidas, or Harry’s and Dollar Shave Club shaking up a shaving market that was dominated by Gillette,” he says.
“Flowers is another big market that is both ripe for branding and disruption. Freddie’s Flowers is disruptive, it has a subscription model – which is another common attribute of disruptive billion-pound brands such as Nespresso – and is Insta-friendly, which gives it the potential to grow cheaply via word of mouth.”
Freddie’s Flowers may be relatively small – sales hit £16.5m last year – but lockdown has given it a big boost. Demand has surged from stay-at-home consumers eager to brighten up their homes and customer numbers jumped 73% from 60,000 to 104,000 during this period when traditional florists and garden centres were closed.
The subscription model means many of these new customers will stay with Freddie’s Flowers long after lockdown has ended.
Cult Beauty
Another beauty business disrupting the sector is online retailer Cult Beauty.
The website, which sells hundreds of brands across skincare, makeup, hair, bath and body, and fragrance, was set up by beauty enthusiasts Alexia Inge and Jess DeLuca who were tired of buying expensive products that did not live up to their claims.
The pair decided to set up their own beauty website where they would curate what Inge refers to as their “beauty hall of fame: our own authoritative treasure trove of products that our customers could trust”.
Its roster of stellar brands established Cult Beauty as a trusted destination for discovering trends and must-have products. Revenue rose 31% to £104m last year while profits jumped 94% to £5.7m.
Inge believes that Cult Beauty’s curation is key to its success.
“We achieved this as a trusted multi-brand etailer with a focus on expert curation and reputation as the place to go for beauty discovery and incubating trends,” she says.
“Our customers keep coming back because they trust us to provide them with the best advice and cult products on the market”
Alexia Inge, co-founder, Cult Beauty
“We are incredibly proud that Cult Beauty continues to grow, while we see other retailers suffering as they throw more and more products at the already beauty-confused.
“Our customers keep coming back because they trust us to provide them with the best advice and cult products on the market.”
The retailer is pushing ahead with international expansion and launched seven country-specific websites last year, including Germany, Spain, Italy and France. International sales currently account for 59% of total revenue.
Cult Beauty hired JP Morgan late last year to look for a buyer or investors to fuel its growth. Inge told The Times earlier this year it is still “looking at opportunities that are out there”.
VPZ
Vaping shops seem to be found on every high street now as people swap tobacco for e-cigarettes. While this market is full of single-store operators, VPZ is the UK’s largest vaping chain with 150 shops up and down the country.
VPZ was set up by former smoker Callum Henderson after he kicked the habit by using e-cigarettes. Alongside his brother Connor, he opened his first store in Edinburgh in 2012.
It was originally called Vaporized but rebranded as VPZ last year to differentiate itself from the raft of other businesses with vape in their trading name.
The Edinburgh-based firm made the FT 1000: Europe’s Fastest Growing Companies 2020 following its 64% compound annual growth rate between 2015 and 2019. Sales hit £26.4m last year.
VPZ is targeting expansion across Germany, France and Spain, as well as more stores in the UK. The Grocer reported earlier this year that tobacco giant Philip Morris International has part-funded VPZ ’s expansion, although the vaping shop is still run as an independent business.
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