In the late 1980s, Mossimo was hot. Some touted the boutique sportswear brand as the next Armani. But in the 1990s, it was overshadowed by Tommy Hilfiger and Gap. By 2000, the company faced distribution problems and bankruptcy. What it needed was a new strategy. "When you hit a funny place in the road, you'd better find another road or you're dead. So that's what I did," says Mossimo Giannulli, founder, chairman and creative director of Mossimo Inc.
That new road is a three-year exclusive licensing agreement with Target estimated to be worth about $1 billion. Mossimo licenses its name and designs, and Target handles all manufacturing, distribution and marketing. Giving up boutique chic for the profits of wider distribution has been a shot in the arm for the Santa Monica, California, company. While Giannulli, 39, won't divulge company sales figures, they "are exceeding our internal plans; that's for sure," he says. "We're extremely pleased."
Appealing to a wider audience isn't without risk, however. "Sometimes when companies try to create more of a mass market, a lot of the early adopters feel the brand is being bastardized," says Carla DeLuca, principal of Luca LLC, a marketing consulting firm in San Francisco.
Giannulli admits worrying that mass distribution through a discount-oriented retailer would diminish the brand's cachet. "I was a little concerned. I was hoping it wouldn't screw with the integrity of the brand," he says. But he was bowled over by Target's ability to market designers like Phillippe Starck and Michael Graves.
Mossimo's alliance with Target has turned out to be a stroke of business luck in an economy where fashion-conscious people are looking for hip goods at reasonable prices. The whole concept of mass market is changing anyway, as large retailers gravitate toward previously elite designer brands that help them establish a unique niche in the marketplace, says Maureen Smullen, president and creative director of Smullen Design, a marketing firm in Pasadena, California, that has worked with large retailers including Target. These days, "there's nothing wrong with being mass-marketed," she contends, adding that large retailers avoid the phrase now. "'Mass' is not a word they use anymore. They don't like it because of what it used to imply-cheap, uninteresting and not well-made-and that's not necessarily the case anymore."
Giannulli thinks that creating fun fashion at a fair price has made Mossimo a cooler brand. "We're able to do so much more product and get to so many more kids who can afford it now," he says. "I think that's really cool."
The biggest challenge in making a decision like this is to decide what you want as an entrepreneur. "Do you want your business to be a million dollars a year?" asks Giannulli. "Then that's really cool. If you want a billion-dollar brand, then there's another way to get cool. It's all in the eyes of the leader of the company."