PARIS — How has Vetements chief executive officer Guram Gvasalia — despite his insistence on product scarcity — managed to expand the company, barely three years old, to within striking distance of $100 million?
Social media offers a clue as hefty as the brand’s oversized bomber jackets.
This story first appeared in the March 3, 2017 issue of WWD. Subscribe Today.
A year ago, shortly after it initiated its Instagram account, Vetements counted 5,000 followers. Today that number is north of 1.3 million.
Gvasalia flicks on the page’s data tracking on his iPhone to show almost 10 million impressions the past week, with the audience split 62 percent male and 38 percent female — roughly echoing the revenue ratios.
While traffic patterns vary weekly, the bar chart shows the largest audience for its feed of unvarnished, impassive fashion imagery is in the U.S., South Korea, Japan, the U.K. and France.
“Imagine if you have 5,000 people knowing about your brand, how much merchandise can you sell. With 1.3 million, it’s a different amount of merchandise,” said the peripatetic 31-year-old executive, who downs a shooter glass of ginger juice before lunch to power him through the day.
The brand’s women’s collection is found in about 200 elite doors — including Colette, 10 Corso Como, Boon The Shop, Isetan, Saks Fifth Avenue, Bergdorf Goodman and Dover Street Market — and its men’s wear, introduced only last year, is already in about 40.
While Gvasalia declined to discuss figures for the company, controlled by him and his designing brother Demna, industry sources told WWD it could generate between 80 million euros and 100 million euros at wholesale this year.
Demna Gvasalia’s hyper cool hoodies, logo T-shirts and boots with disposable lighter heels helped catapult Vetements to the forefront of the international scene. He has been electrifying fashion weeks here with brash, high-energy shows and pointing to a new path for fashion based on garments and wardrobe-building rather than seasonal themes or narratives.
The brand ignited a sweeping trend to streetwear-inflected design, catapulting Demna Gvasalia’s reputation and scoring him the role of artistic director at Balenciaga. He is to show his women’s collection for that Paris-based house on Sunday.
Vetements now shows its collection during couture week — one of many unorthodox moves that has reinforced the brand’s reputation for upending industry conventions.
For the spring collection, Vetements unfurled a collection built on collaborations with 18 well-known brands, including Manolo Blahnik for shoes, Juicy Couture for tracksuits and Canada Goose for parkas.
Guram Gvasalia noted he would continue partnering with Alpha Industries, Levi’s, Macintosh and Reebok, while conceiving a new surprise for the company’s next show in July.
Vetements also recently disclosed plans to uproot from Paris and install the company in Zurich, where an underground scene to rival Berlin’s festers, according to the executive.
An analytical type who keeps his Master’s thesis on Martin Margiela on his camera roll, Gvasalia insists he is simply following his instincts and logic as he moves the company forward.
In a wide-ranging interview, the executive spoke frankly about the industry’s over-production problem, why Vetements has no plans to launch e-commerce, and why he pays Demna exactly what he earns at Balenciaga, part of French conglomerate Kering:
WWD: Vetements is seen as a rule-breaker. What are some of the industry norms that bother you?
Guram Gvasalia: There is a huge misunderstanding of the word growth. Everyone speaks about the turnover, but no one speaks about the costs. No one speaks about what’s left after the investment. I can have a turnover of 2 billion, but it might cost as much or more as the turnover so you’re not having a profitable business. And the definition of business is having a certain return on your investment.
WWD: Do you see limits for the growth of Vetements?
G.G.: When I think about the word growth, I think about a child. Because I consider Vetements as our child. And then I’m thinking the child is growing. And once it reaches a certain age, and a certain maturity, it actually needs to stop growing. Because otherwise it will be a very ugly child. The same is with the brand, they’re always speaking about growing, but at the end of the day there should be a certain limit.
WWD: Any other glaring problems in our industry?
G.G.: The problem of the whole parallel market [retailers that place large orders and flip merchandise to other unauthorized sellers]. You have stores in small cities that are turning over $50 million, $70 million a year whereas a store in a big city can’t even do $2 million. It’s becoming ridiculous because today it’s not just in Italy. I know stores in the U.S. that are doing it. There are stores in Germany that are doing it – stores that we all know and respect a lot.
WWD: How do you account for this?
G.G.: Because we live in an age where people cannot think long-term anymore. And I thought it was just young people who cannot because they have screens that update every second, and they cannot plan 20 years from now, but I think a lot of business strategies have become like this. No one thinks about long-term structures, everyone thinks about today and making the sales today.
WWD: Can you tell me about the logic behind your policy of scarcity?
G.G.: We always supply less than the demand, so we’re always sold out. It’s easier to sell one piece less than the market wants, so you are sold out rather than to sell a piece extra, and it doesn’t sell. This is why we’ve been doing this and it’s been working so far. The point is if you go to see clothes on sale, it means there was more supply than there was demand.
WWD: What can be done to ensure more full-price sales?
G.G.: We don’t put all the merchandise in the market at the same time. If you drop too much product, you lose attention. If you put too much different product on the market at the same time, you lose attention. You want for a product to have time, for people to start speaking about, for people to start buying it. It’s like food, you know: You get course number one, course number two, course number three. If you put all the courses together you probably won’t be able to eat everything, because it will just get cold.
WWD: But how will Vetements keep growing, as its wholesale clients surely wish to?
G.G.: It’s going to grow in terms of the diversity of the product range. Demna started to look at stereotypes, and creating wardrobes for different people. So last season it was 38 different people with their wardrobes, and when you come to the showroom you had an extension of their wardrobes. So basically the collection grows, but it doesn’t grow just in quantity of the pieces. It grows in terms of the people who wear it. You can be a young skinny girl wearing Vetements. Mixing it with other brands, you can be her grandmother.
Also, we started doing bags this season with the same factory that works with Delvaux. We also did a collaboration with Montblanc. The pen is stainless steel and it can also be worn as a pin. The pen is something we will continue to introduce, and for me it’s very important to introduce lifestyle pieces.
WWD: How big is the company now?
G.G.: You know, you take the focus away from clothing once you start speaking about numbers. And the thing is today, we are not planning on getting any investors in the brand. We are a family-run business planning to stay a family-run business. We don’t have the brand for sale, so why do we need to put a price tag on it? I can tell you one thing: It’s a profitable business, and it has been profitable since season one. And for me, if business is not profitable you call it your hobby.
It requires 20-hour days to make this business happen and of course it needs to be profitable, to get a return on the investment, because we don’t only watch the sales, we watch our costs. And we don’t hire people that we don’t need.
WWD: Do you find the industry wasteful?
G.G.: I think we’re at a point of conspicuous production. Consider the whole situation with garbage in the world. We’re producing so much garbage in this world. And I don’t want to call clothes garbage; but for me, it’s wasteful. In a world full of garbage, we produce more and produce more, that at the end of the day, no one needs anymore.
WWD: Is Vetements considering its own e-commerce site?
G.G.: Regarding our direct e-commerce, we’re very loyal people and most of these online stores, they helped us to build this company. And it feels wrong to go there and take a piece of their pie away.
My top five e-stores represent about half of my business. The dimensions of the orders and the dimensions of the merchandise you can sell online, it’s insane. The main stores are in big cities and now there are so many people outside of main cities that are starting to be aware of fashion.
WWD: And what about a physical store, would you consider that?
G.G.: The biggest problem to have your own store is that you always need to have stock in your store. It means that you need to oversaturate to buy, and whether you want it or not in order for the store to represent the brand, you will go on sale. Because you will have to buy more than you actually need. And this goes against our strategy.
So I think if you’re a piano player, you should play piano. I think it’s best for us to invest our energy in creating the product, and understanding the environment, being ahead and coming up with good things, and not to involve ourselves in the retail business. Because this means you will need to grow in terms of people, you will need to grow in terms of investment, and it means changing the strategy. And I’m not sure if I want to have this huge company who doesn’t have an overview of what’s happening in it. I still want to keep the size where we can have the overview, that’s very important.
WWD: How do you account for the power of social media?
G.G.: Today, because everything moves so fast, no one wants to think long-term. They buy a hoodie, they put it on, they take a selfie and put it on Instagram and it brings them closer to a certain group of people and they feel a sense of belonging. This is what the world is looking for. Before it was religion, and the brands are sort of replacing it, even if it’s sad to say that. Look at Apple basing its entire structure on the idea of belonging.
WWD: Can you talk about the move to Zurich?
G.G.: I found a terrific space: 16,000 feet across four floors. It used to be a Phillips factory. It feels right and the atelier will finally have decent light. It’s about finding balance in life, for myself, for the company and for Demna. You know, six collections a year [for Vetements and Balenciaga] is a lot of creativity for one person. I want him to be able to breathe, and dream and paint. Demna has always been an incredible artist. His paintings are unbelievable. I sometimes think his art is even stronger than his clothes.
WWD: Is it true you pay Demna as much at Vetements as he earns at Balenciaga?
G.G.: I think it’s actually more. He has two jobs, but I don’t want him to have any priorities. We split in the middle [with Balenciaga] and we each get him for two-and-a-half days. It’s the same amount of work he’s doing and psychologically, for the same amount of work you should get paid the same and then you take care of it the same.