One of the more interesting omni-channel retail transformation stories has been that of Vera Bradley. While other retailers have casually identified their target demographic as being the elusive - and misinterpreted - Millennial - Vera Bradley has focused on the idea of ‘it’s good to be a girl’’.
The chain has placed a heavy emphasis on its store presence, but with a push to bump up its digital clout and credentials. CEO Rob Wallstrom earlier this month pointed to progress on this front:
Online visits and revenue directly derived from digital marketing channels have improved solidly year-over-year. We are going to continue to optimize dollars into the digital channel. In e-commerce, we are focused on creating a best-in-class experience that is inspirational, engaging and friction-free. We are consistently adding vibrant content to our website and our marketing messages.
Such organic growth efforts are commendable, but the firm could also do with a speed boost via some tactical acquisitions, which is what we’ve just seen with the firm’s decision to take a controlling interest in a digital-native retailer, Creative Genius. For $75 million, Vera Bradley is purchasing 75% of the company, with an option to take the remaining 25% after five years.
Who is Creative Genius? It’s a firm that produces jewellery, such as string friendship bracelets, under the brand of Pura Vida. Its core products therefore fit neatly enough with the younger female demographic that Vera Bradley pursues.Wallstrom notes:
Pura Vida is a rapidly growing, digitally-native and highly differentiated lifestyle brand with uniquely strong products and amazing customer loyalty. The brand resonates with individuals worldwide, creating a community of fun loving, socially conscious and stylish advocates.
[Founders Griffin Thall and Paul Goodman], two Southern California friends, traveling through Costa Rica in 2010 crossed paths with two bracelet artisans who were living in poverty. And Griffin and Paul asked the artisans to make 400 bracelets to take home with them. Upon returning to California, Griffin and Paul placed the bracelets in a bowl at a local boutique. Within days, the bracelets sold out and customers were asking for more. Griffin and Paul quickly recognized the significance of these simple string bracelets.
They were more than just ordinary, locally crafted bracelets; they symbolised a movement, valuing the simple things in life. So, Pura Vida, which means pure life in Spanish and is a philosophy that encourages the appreciation of life simple treasures was born. And today, millions of people around the world wear the bracelets. And Pura Vida’s artisan community has expanded from Costa Rica to El Salvador, India and more. Over 650 artisans can depend on steady income and positive working environments, thanks to the support of Pura Vida customers.
That’s a nice colorful story and a worthy retail exemplar. But what Pura Vida represents for Vera Bradley goes well past the pretty bracelets., Wallstrom explains:
Vera Bradley can draw on Pura Vida’s expertise in marketing and e-commerce. Pura Vida has established high consumer engagement across social media and other online platforms. They are able to foster lasting relationships through a large group of passionate brand enthusiasts, select social media influencers and brand ambassadors. And these relationships translate into authentic, user generated content that represents high quality, on brand imagery that the company can repurpose as ads, email campaigns and its own social media content. Pura Vida has a very-disciplined approach to investments in other marketing channels that can cost effectively scale the brand.
We value Pura Vida’s unique positioning as a digitally-native brand with a loyal and growing consumer following. The Pura Vida brand has strong expertise in branded and social marketing strategies, as well as robust competencies in ecommerce and subscription model selling. Pura Vida’s award winning website immerses visitors in the brand its products and its social mission. Visitors become part of the Pura Vida community. Pura Vida has over 3 million social media followers across Instagram, Facebook, Snapchat, Twitter and Pinterest. There are over 1.3 million Instagram followers alone. They have over 1 million email subscribers and are highly ranked in Google search.
I think for Vera Bradley, the learnings that they've gained along the way, the digitally-native plan, their real strength and activating their social community, their brand ambassador program, I think there's some learnings there that we’ll be able to leverage back out, as well as really understanding, getting a better understanding of the West Coast consumer and how we can really understand their consumer better and what those opportunities might be for Vera Bradley as we go forward.
Pura Vida will operate as a standalone brand, he adds, under the command of its existing management team, although presence in Vera Bradley outlets seems likely:
Our real goal is to let Pura Vida really continue to grow. They are on a rapid growth curve. We want to make sure that they can continue to stay very-focused on that, and we want to make sure that we give them the space to continue to do that. We were obviously very attracted to the fact that their dominance was in e-commerce, digital subscription model. We felt that that was really a unique profile for them. And we think that will continue to be the primary distribution platform for Pura Vida.
They have also been growing their wholesale business. So, we think the ability to show up in targeted ways on the wholesale channels also an opportunity and help to acquire new customers very efficiently for them. And so, we do believe that there's also an opportunity to look at some physical presence for the brand in terms of the direct-to-consumer. So, that’s something that we’ll evaluate over the coming time. But the dominant distribution channel’s going to maintain kind of e-commerce and subscription.
Will there be more digitally-boosting acquisitions to come? Perhaps. This particular deal just seems to have come at the right time and with particular credentials. Wallstrom says:
They are very differentiated from everybody else we saw out there to be a digitally- native brand, growing like they growing, be debt free, be profitable, be in our space in this casual, comfortable, affordable space. We just thought was an ideal fit. And that's why we decided to make this move at this time, as we just thought that they were a very unique acquisition opportunity, and we wanted to take advantage of it.
An interesting move by Vera Bradley which can clearly benefit from the digital learnings that should come from Pura Vida. Association with the bracelet firm’s ethical credentials aren’t going to do any harm with Vera Bradley’s target demographic either. That said, the parent company’s own digital transformation efforts could do with being scaled up. It’s not a pretty picture when e-commerce sales actually decline, as was the case last year. This is a nice deal, but it looks like a tuck-in to the main 2020 transformation strategy.