Retail Ecommerce Ventures has acquired eight retail brands since its inception in the fall of 2019 — Pier 1, Stein Mart, Dressbarn, RadioShack, Linens ‘n Things, The Franklin Mint, The Book People and Modell’s Sporting Goods — and is hungry for more.
REV, as the Miami-based company is known, buys the intellectual property of liquidated or distressed retailers, with the perspective that the businesses being bought had unsustainable brick-and-mortar operations but brand names that are widely recognized, still relevant, and can be parlayed into healthy e-commerce businesses. Considering the consumer flight to shopping online and the decline in mall traffic have been compounded by the pandemic, there’s no shortage of opportunities for swooping up down-and-out retailers.
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“We’ve got acquisitions on the horizon — I cannot reveal the targets,” Alex Mehr, REV’s cofounder and chief executive officer, told WWD. Long-term, “I have a target — like about 100 brands,” he said.
“We do it deal by deal. We are not a fund. We are an operating company. When we see an opportunity, we make the case and we have an inner circle of accredited, high-net-worth individuals and family offices.”
Mehr, a PhD in mechanical engineering, former NASA scientist and entrepreneur, also cofounded and sold Zoosk, the dating website, for $258 million to Spark Networks in 2019. The same year, he formed REV with business partner Tai Lopez. They also founded an education platform, MentorBox, with 60,000 paid subscribers, and a health food online store called FarmersCart.
Authentic Brands Group is another company that buys up distressed retail brands and has a growing portfolio that includes Brooks Brothers and Barneys New York. A big difference is that ABG buys the brands to license them and distribute products across bricks and mortar and e-commerce channels, while REV seeks to revive brands into viable e-commerce businesses.
Charlotte Van Dyke, an English forensic neuroscience graduate, former fashion model, and founder of the Om & Ah London clothing line, joined Dressbarn as a consultant in 2020 and became its CEO later that year. She recently acquired a manufacturing and production operation in Bali, to launch her second clothing brand, Aura.
Here, Mehr and Van Dyke discuss the REV business model and how Dressbarn, which generated over $40 million in volume last year, was recast with a new website.
WWD: Are you continuing to actively scour the market for brands to buy?
Alex Mehr: We are as aggressive if not more so than 15 months ago when we started the business. But now we know what to expect. We were kind of the only guys doing this. We didn’t have other case studies to look at — now we have more knowledge. We are more aggressively pursuing brands.
WWD: What kind of brands are you most interested in buying?
A.M.: The categories that we like to go into are home goods, clothing, electronics. Every category we go into is big, though there are actually a lot of small categories, niche websites, we are interested in. We are going to do more in apparel. We are also interested in food, grocery stores, home office equipment and home improvement.
WWD: What’s the exit strategy for the brands purchased?
A.M.: I just don’t like selling. We are putting our hearts and souls into these businesses. We are believers in long-term holding strategies. The idea here is to run these companies for a long time. Having said that, if the right situation came up, we would consider selling.
WWD: Why did you buy Dressbarn, a retailer that was floundering for a long time?
A.M.: The brand has been around for many decades. There’s huge brand awareness. If you take a brand that is very strong and updated its business model to a modern e-commerce operation, you see it come back to life.
WWD: Are you always going to be strictly e-commerce?
A.M.: No. We are not hand-tied to that. We believe in e-commerce first. That is our strategy. There are lots of things in terms of a combination of e-commerce and brick-and-mortar we are also interested in. But the key is online. We’re e-commerce first, not e-commerce only.
WWD: What is REV’s criteria for buying a brand?
A.M.: It’s brand awareness and brand affinity: Is it very well known? Brand affinity: how likable the brand is. What people feel about the brand. Do they have positive or negative emotions. There are brands that [maintain] high awareness and customers think of it in a positive way, but might have fumbled for a few years, perhaps with the product or with business issues. Those things can be fixed.
WWD: Is it necessary when buying a distressed brand to get at it quickly, before it fades from the scene for too long?
A.M.: We love to get the brand before it stops operations or goes dormant, but with Franklin Mint it wasn’t active for quite a few years before we got it. Linens ‘n Things also had not been operating for a long time.
WWD: It would seem challenging to recast Dressbarn as e-commerce only considering the audience was primarily mature and prone to purchasing in stores rather than online.
Charlotte Van Dyke: The customer was very used to being in-store, so for them when you [become] 100 percent digital and you can’t touch and feel product in stores, there’s no room for error. Everything has to be seamless, from our product pages, to descriptions, to videos on the page, to the checkout, which has to be very quick.…We have done a lot in terms of live calls, showcasing the bestselling products, staging two-hour live fashion shows, really livestreaming on Instagram and Facebook, and enabling shoppers to interact with models and stylists, and ask about the fit and the style. One cool feature we have been rolling out is a little pop-up on the corner of the website indicating that we’re running a live show right now. The shows are called “Simply Styled.”
WWD: Did you bring in much staff that was with Dressbarn before the acquisition?
C.V.D.: Roslyn Jaffe founded Dressbarn in the ’60s with a mission to provide women with clothing to wear in the workplace. With the guidance and support of a phenomenal team of female buyers, designers and executives, we’re committed to keeping this spirit of female empowerment alive at Dressbarn. We made sure we hired legacy Dressbarn buyers. We have four buyers, all of whom were with Dressbarn for over 20 years. We had the contacts. We knew what the customers want. And with our digital marketing, really our forte as part of REV, we knew we could launch strong and keep Dressbarn really alive.
WWD: Who is the Dressbarn customer?
C.V.D.: Typically, the Dressbarn customer is 50 to 65. But we have shoppers 90 years old checking out our website. To expand that demographic out, we have done a lot of new campaigns, for swimwear, bohemian dresses. Our live shows create engagement. We send out lots of beautiful emails. We have a 10-step styling course on video. We’ve managed to hit a demographic around 30 to 50. We are doubling our demographics from age 30 to 70. It’s really significantly expanded.
WWD: Has the merchandise evolved much?
C.V.D.: When COVID-19 hit, we started pushing into loungewear and tie-dye sweatshirt sets. Beautiful dresses play a big part in what we like to merchandise. We expanded into bohemian, cool, relaxed looks for around the house and dresses you could throw on with slippers. We also expanded into home goods: candles, blankets, pillows, throws, general goods for around the home.
WWD: How is Dressbarn performing?
C.V.D.: We’ve experienced superstrong growth, month over month. Even though we are pushing a large amount of volume, our customers are very happy. Our customer feedback score has never been higher. It’s really about getting those core foundations in place. If you do that, there is nothing to stop you from getting profitable and growing very quickly. Our cost of delivery is built in. We figure out that ahead of time. It’s not the case where we are going to be stung. None of these costs are surprises. They are calculated.
WWD: How about the supplier base. Is it the same or changed?
C.V.D.: We have a lot of the legacy ones. We have also expanded into a lot of other categories and vendors. We have multiple merchandising strategies. We create product in-house. We wholesale. We are doing drop ship. It’s a pretty even split. Drop-ship enables us to test different categories.
WWD: What about the pricing?
C.V.D.: We have begun offering more expensive items, but the core price is very similar to what it was. Jeans and sweaters are between $25 and $50, for example. We don’t think pricing has changed much. Dressbarn was always perceived as bargain stores, but we have collaborated with designers, Ora and Uma, testing dresses priced $110 to $120 versus $30 to $40 dresses, which we have a lot of. We will stick with the higher items, for sure. The more people we cater to, the better.
WWD: Could higher prices have a halo effect on the overall pricing perception?
C.V.D.: You have to be careful, so if you go to the Dressbarn homepage, you see the core pieces. We show them first. A mistake would be if we listed straight off the bat our bestsellers, [which could be higher priced]. We are not stripping Dressbarn from what it was.
WWD: Would Dressbarn ever return to operating physical stores?
C.V.D.: I would never say never. It seems running a physical store is a lot more expensive than a digital store. In digital, it’s very low overhead and low risk, provided the margins are correct, the marketing is correct, and the cost of customer acquisition is good. One thing that is exciting is the idea of a pop-up store. We are looking at that quite seriously. There is a real opportunity with pop up stores, which could also be for in-person events with influencers.