IR: When did Accent Group acquire the business and why was it a good fit?
LR: We acquired the business in 2018. It was a casual conversation with the then-owners, Leith [Testoni] and Jonathon [Yeo]. We decided it would be a great synergy for us to have another platform in the Accent Group business at the premium end of the scale on the sneaker side, but we also wanted to start our journey into apparel. That has since led to us acquiring other apparel retailers, most recently Stylerunner and then Glue.
IR: Besides expanding Subtype’s store network, has Accent Group made any other changes since acquiring the business?
LR: One of the key projects for us was accelerating our omnichannel positioning. At Accent Group, we believe physical and digital retail need to work together seamlessly, and our intention is to create a frictionless environment for our consumers at Subtype. The ability for Accent Group to bring the power of digital to a relatively small, boutique business like Subtype has been exceptional, and we’ve seen astronomical growth when it comes to our digital business. But our ability to keep up in a store environment has also been evident – outside of lockdown. We’ve seen a strong proposition of those two working hand in hand.
The second key project has been focusing on our own brand, Subtype Curated, where we can express new fashion trends that are relevant for both our Australian and New Zealand marketplaces through the lens of the Subtype business. We’ve been able to build the resources to execute a vertical strategy, which has enabled us not only to grow the business, but also to work at a faster pace with trends, and with consumer requirements as well.
IR: What does your offering look like in terms of categories and brands?
LR: The two key categories for us are our sneaker business, which the likes of Nike, Adidas, Yeezy, Fear of God and Common Projects dominate, and the ready-to-wear component, which is anchored by brands like Casablanca, Ader Error, Drôle De Monsieur and A-Cold-Wall. It’s about a 50-50 split between footwear and apparel, but we’re seeing significant growth in our apparel business, especially with stores open. Apparel is a larger part of the business in the physical store environment.
IR: How would you describe the Subtype customer?
LR: The majority of our customers are young, aspirational, finger-on-the-pulse, fashion-led consumers, with a strong understanding of brands and very individual styling. We pride ourselves on being diverse and inclusive in our connection with our community. We see a varied consumer base come to us in-store and online, and we have a strong Asian demographic shopping with us as well.
IR: Is that Asian demographic in Australia or overseas?
LR: Both. We have a strong base in Australia and we also have a good international following, mainly through the likes of Korea, parts of China, and Hong Kong. We see a good opportunity for the brand in those markets longer term, especially as we ramp up and move to an international digital business.
IR: How do you think consumers overseas discovered Subtype? Online, or on a visit to Australia?
LR: I think a bit of both. We definitely see a lot of international students visiting our stores. Pre-pandemic, that was a large portion of our business. Obviously, the pandemic saw them return back to their home countries, and [it led to] natural, grassroots, word-of-mouth [advertising] that enabled the brand to grow organically in those marketplaces. Equally, we’ve been able to show up online with brands that have really high search rates. Sneaker releases that are limited in supply and high in demand enable us to show up for that consumer [who is searching for them]. So I think it’s probably a number of things, but international students have been, and continue to be, a large share of our business.
IR: How do you see Subtype’s international business evolving from here?
LR: I think we would hope that within the next 12 months, we’ll be servicing the key international markets via our digital business, and within the next two to three years, we would definitely like to [have] a flag in the ground and a store in another market. We think that opportunity is probably through Southeast Asia, whether that be Ho Chi Minh City in Vietnam, or [somewhere] similar. That’s where we see the opportunity for the business to expand beyond Australia and New Zealand in the next two to three years.
IR: Would that be Accent Group’s first move beyond Australia and New Zealand?
LR: The group has aspirations with a couple of brands. We currently ship internationally via our digital business with Stylerunner, and there are aspirations across the group to take some of our banners [to] international markets. There are a number of banners right now that are on the cards for possible international expansion. But we don’t have any [stores] overseas, we’ve been very much focused on our home and local markets of Australia and New Zealand.
IR: On the digital side, would you be looking to launch a standalone e-commerce site for Subtype, or join a third-party platform like Tmall or Lazada?
LR: We would definitely be looking at [launching] our own international website. I think that enables us to control the content and how we show up as a brand. We don’t see Subtype as a brand that would be integrated into a marketplace environment.
IR: As a premium brand, what omnichannel services do you offer, or plan to offer?
LR: One of the things we trialled with great success through the lockdown period in Sydney, Auckland, and Melbourne was a call-and-collect service. Surprisingly, it has outstripped our click-and-collect business. That’s probably on the back of concerns around supply chain and [the appeal of] being able to jump on the phone and secure something quite quickly and get that instant gratification of being able to go to the store within an hour. It’s been really positive for our business. The other thing we’re doing in a trial phase at the moment, but we’re looking to make it a key part of our platform for our loyalty customers, is personalised shopping sessions, where a customer has an opportunity to book an hour session in one of our stores and get a number of added benefits within that hour of shopping with us – general service, further discounts, and other things that are relevant to the customer at that time.
IR: Can you tell me how Subtype’s store environment contributes to that premium experience?
LR: Each of our stores has a different design. We start [by] landing on a theme or colour that’s relevant to that city. So, for example, Melbourne is very much around steel and a darker colour palette, based on the [idea of an] urban jungle. We brought in a lot more gold [colour] and used a lot of marble in the store in Sydney, and Auckland is the ‘City of Sails’, so we have a blue theme running through that store and a graphical execution. In Adelaide, we used a claret-red colourway to signify the wine region, and we’ll use a sandy colourway in our Brisbane store to signify the surf and coast for which Queensland is known.
In each of our stores, we try to have a key feature as well. In Melbourne, we have a staggered rock platform for our latest sneaker releases. In Adelaide, we created a table to execute our footwear on whose design is inspired by a wine barrel, and we’ve got the golden leaf trunk in Sydney. We try to [create] individual relevance in each of our store designs that signifies the local community.
IR: Looking at the Brisbane store specifically, when will it open, how was the location selected, and what sort of opportunity do you see in the local market?
LR: We will open in late November this year. We see a great opportunity in Queensland. We feel the market is significantly under-serviced in the street and sneaker space. It’s always been overlooked as a fashion market, and we see a good opportunity to service Brisbane and the surrounding areas, down to the Gold Coast, and showcase brands that are not available in that market. In terms of location, we would have loved to be in the CBD, but we always try to stay off the main malls, because we want Subtype to be in areas of surprise and delight, so people go and find the stores and seek them out. Edward Street was a good opportunity for us in Brisbane. It’s the first time we’re going into a new building versus a historical building.
IR: Are you approaching the maximum number of stores you plan to open in Australia and New Zealand?
LR: We’re at the top end of our store count from an Australia and New Zealand perspective. We definitely had our sights set on being able to service each of the major capital cities. We don’t have a store in Perth yet. That’s something that is on the radar, but we definitely see the international environment as the opportunity [to grow].
IR: Sneaker resale is a growing trend in Australia, with the launch of StockX and eBay’s authentication program. Do you see that impacting Subtype, or is it something you see Subtype getting into?
LR: It’s built around supply and demand. Yeezy and others provide only limited product in the marketplace, which puts pressure on the demand and means that shoes are worth more than what their recommended retail price is, after their launch date. That has provided a platform for people to treat sneakers like the sharemarket. From a business perspective, we don’t have an appetite for Subtype to get involved in the sneaker resale market. We’re definitely looking at how we can have a positive impact in a circular economy environment with footwear, and how we can have a more authentic approach to that. That could be through rental or other things, but the resale market is not something we are looking to do business in or really support. We like to try to service the true sneaker enthusiasts who are going to wear the product rather than service the resale market.
IR: What do you think is driving demand for sneakers in general?
LR: Working from home has enabled people to take a more casual approach to their work attire. Those that were wearing brown shoes, or leather-based shoes, before are now seeing that sneakers look better and can be outfitted in a more premium way than what the traditional work outfit would have looked like. So I think sneakers have benefited from the Covid impact in that sense, and I think sneakers are high fashion now. It’s no longer about heels and other exaggerated footwear lines, it’s definitely about sneakers. We don’t see this slowing down, we see it getting bigger, and that’s a great thing for Accent Group, because a lion’s share of our investment is in sneakers.
IR: Traditionally, sneakers have been marketed more towards men than women. What’s the gender breakdown in your business?
LR: We have about a 50-50 gender split in our business today, but the growth rate in women’s sneakers is far greater. Women, especially in the Australia and New Zealand market, are adopting sneakers as part of their wardrobe. It’s becoming an item that they can wear not just around the house or down to the cafe, but also to dinner, to parties, and even to weddings. I think the explosion we’ve seen on the female side is only the beginning and is going to get bigger. In both our Subtype and Hype DC businesses, we’re very much focused on making sure we serve that female consumer head to toe.
IR: Does that entail reflecting female consumers more in your marketing?
LR: We don’t want to be put into one particular category – that we’re either a male or a female store. We like to show the diversity of our consumer from a gender perspective in all of our communications. There’s a lot of unisex footwear out there, and a lot of brands that offer footwear to both genders. In every one of our marketing campaigns, we try to expose that, and we generally use female and male ambassadors in all of our communications.