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MARKET INSIGHTS

How Retailers Use Sub-brands to Drive Growth

October 4, 2022
How Retailers Use Sub-brands to Drive Growth

When UpWest launched in 2019, the direct-to-consumer retailer wanted to create “Comfort for Good.” UpWest offers sustainable apparel and home goods with a focus on community. “We think of the brand through the lens of purpose,” Jamie Schisler, Chief Comfort Officer, told Leap last year.

A sub-brand of Express Inc., Upwest has seen impressive growth over its first three years. In the first quarter of 2022, sales increased by 68%. For UpWest, physical retail is vital for boosting sales and customer acquisition. The brand opened fourteen stores to date, with four more slated to open by the end of the year. (Leap powers four of those locations.)

Express is just one example of a trend: parent companies growing their market share with sub-brands. For retailers, these secondary brands drive significant revenue growth. With the ability to reach new customers and expand into additional categories, sub-brands help retailers better meet consumer expectations.

Let's explore why sub-brands are on trend, and how retailers can leverage physical retail to drive sales and build brand equity.

What is a Sub-brand?

A sub-brand is a secondary brand associated with a parent company. Sub-brands exist across industries, including auto, apparel, electronics, and food and beverage. Some examples include:

  • Madewell is a sub-brand of J.Crew.
  • Amazon owns Audible and Ring.
  • Focus Brands includes Auntie Anne’s, Cinnabon, and Jamba Juice.

Often, customers are unaware of the connection between parent companies and sub-brands. Although a sub-brand shares similar values as its parent company, it has a different brand identity. A sub-brand will have a different logo, color palette, imagery, target customer, and messaging.

The façade of a Madewell store. The storefront is painted white and the windows have orange and blue paint. The windows read, "You looks so good."

Why are Sub-brands Trending?

While the concept is not new, sub-brands are on the rise. Several retailers have made notable expansions to their business with sub-brands, including Abercrombie & Fitch (YPB, Hollister Co.), American Eagle (Aerie, Todd Snyder), and Victoria’s Secret (Pink, Happy Nation).

In 2022, sub-brands play a crucial role in addressing retailers’ challenges. Here are three key reasons retailers see success with sub-brands:

1. Sub-brands unlock new revenue streams.

With sub-brands, retailers can drive revenue without compromising brand identity.

First, sub-brands enable retailers to reach a new niche or market. Converse, a sub-brand of Nike Inc., is a lifestyle streetwear brand known for its classic sneakers. Although Nike and Converse share a passion for athletics, Converse’s style appeals to an edgier market.

Companies also use sub-brands to differentiate products. This past March, Abercrombie & Fitch Co., launched YPB, an activewear brand that stands for Your Personal Best. While A&F could have included the activewear collection as part of its core offering, YPB will target new customers outside the retailer’s customer base.

And sub-brands offer an opportunity to expand into new categories. Bath & Body Works began as a product line sold at Express. As a result of its success, L Brands (its parent company at the time) expanded the line into a sub-brand. Bath & Body Works allowed the company to expand into personal care and home products.

2. Sub-brands create deeper connections with specific audiences.

Today, retailers look to new customer engagement and loyalty strategies. With sub-brands, companies can better connect with customers based on distinct interests or values.

Aerie, a sub-brand of American Eagle Outfitters Inc., has seen success with its #AerieREAL Life campaign. Launched in 2014, the lingerie brand wanted to create a community of positivity and inclusion. The campaign features diverse models and bans photo retouching. #AerieREAL resonates with consumers, driving impressive growth for the brand and its parent company. In 2021, American Eagle Outfitters Inc. generated over $5 billion in revenue.

Similarly, Hollister launched Social Tourist in partnership with Dixie and Charli D’Amelio in May 2021. The gender-inclusive apparel brand allows teenagers to “explore their style” and connect with their favorite TikTok creators. Earlier this summer, Social Tourist opened its first physical location on Melrose Avenue in Los Angeles (powered by Leap). With the ability to connect with a younger audience, Hollister can drive engagement and lifetime customer value.

3. Sub-brands test out new ideas.

Finally, sub-brands provide an opportunity to explore new concepts without compromising on brand identity.

In 2009, Lululemon launched Ivivva to expand into young girls’ athletic apparel. Although unsuccessful, Lululemon learned that the concept performed stronger when linked to the Lululemon name. The brand has since applied its learnings as it expands its Men’s and Mirror concepts.

As part of its mission to be an advocate for women, Victoria’s Secret recently launched Happy Nation. The brand offers size-inclusive and judgment-free loungewear for young adults. As Victoria’s Secret redefines itself, Happy Nation is an opportunity to test new messaging.

Launching a sub-brand with Leap

Leap’s all-in-one platform enables retailers to launch, operate, and scale sub-brands. Retailers can accelerate growth in key markets by opening fully-branded stores in premium locations.

With end-to-end retail management, the Leap platform enables retailers to focus on product development and marketing. By powering real estate, design, operations, and omnichannel logistics, Leap reduces the risks and costs of physical retail.

Leap’s comprehensive dashboard provides qualitative and quantitative insights to drive strategy. And by leveraging Leap’s CRM, retailers can boost customer acquisition and engagement.

Connect with our team to learn how Leap can help you launch and scale your sub-brand today!


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