Corporate Partner Eric Perlmutter-Gumbiner shared his insights on trends within the branded consumer products industry for LA Times Studios' Beauty, Fashion, & Consumer Goods Roundtable.

Below are Eric's excerpts from the feature:

Q: What are the biggest business opportunities for Southern California’s beauty, fashion, and consumer goods companies over the next three to five years?

The biggest opportunity is turning strong brands into durable businesses. Southern California has always been unusually good at creating brands, communities and cultural relevance. The next step is building the infrastructure around those strengths: disciplined omnichannel distribution, thoughtful international expansion, strategic partnerships and access to the right growth capital. I also expect continued convergence between consumer products, media and the creator economy. The companies that win will not simply have great products. They will understand how to turn customer affinity into multiple revenue streams while maintaining the authenticity that made consumers care about the brand in the first place.

Q: How is artificial intelligence changing everything from product development and trend forecasting to marketing, customer service and supply chain management?

AI is quickly becoming less of a discrete initiative and more of a basic operating tool. The near-term opportunity is not replacing the judgment that makes great consumer companies successful. It is giving teams better information and allowing them to move faster. That can mean identifying demand signals earlier, producing and testing creative more efficiently, improving customer service or making inventory decisions with better data. From a business and legal perspective, the companies using AI most effectively are also being deliberate about governance, intellectual property, consumer data and vendor risk. Moving quickly and building the right guardrails are not mutually exclusive.

Q: How are brands balancing premium positioning with growing consumer price sensitivity and economic uncertainty?

Premium positioning has to be earned. Consumers may be more price-conscious, but they will still pay for products they believe are differentiated, high quality and meaningful to them. The mistake is assuming a premium brand can simply pass through every cost increase without affecting demand. The strongest companies are protecting the elements that make the brand special while becoming much more rigorous about product mix, margins, promotions and distribution. There is also a strategic component: where you sell, how often you discount and which partnerships you pursue can affect brand value just as much as the price on the product.

Q: What role are influencers and content creators playing today compared to five years ago? Has the influencer marketing model fundamentally changed?

Absolutely. Five years ago, creators were often treated primarily as a marketing channel. Today, the most sophisticated brands increasingly view them as business partners, distribution partners, and, in some cases, entrepreneurs capable of building meaningful companies themselves. The economics are also becoming more sophisticated. Brands are thinking beyond one-time sponsored posts and looking at longer-term relationships, performance economics, licensing, equity and co-created products. At the same time, creators have become much more selective about the brands they associate with. The best partnerships work because the economic incentives and the audience relationship are genuinely aligned.

Q: How are brands navigating California’s increasingly complex regulatory environment while remaining innovative and competitive?

The best companies treat legal and regulatory issues as part of the business strategy, not something addressed after a decision has already been made. That is particularly important in California, where consumer protection, privacy, employment and marketing rules can intersect with virtually every part of a growing consumer business. My advice is usually to identify the areas of real risk early, build sensible guardrails and then let the business operate within them. Good legal advice should help a management team make better decisions and move faster. It should not become a substitute for business judgment or an unnecessary obstacle to growth.

Q: What do investors look for in a health, beauty or consumer goods company these days?

Investors have become much more focused on the quality of growth. A compelling brand and strong topline growth still matter, but sophisticated investors are also asking how efficiently that growth is being generated, whether customers return, whether margins improve with scale and whether the company has multiple credible paths to distribution. They also pay close attention to management teams. The best founders understand their customer intuitively but are equally willing to build the financial and operational discipline required for the next stage of the business. Great consumer companies combine brand magic with very unglamorous execution.

Q: If you were advising the CEO of an emerging Southern California beauty, fashion or consumer goods company today, what one strategic investment or business decision would you prioritize over the next 12 months?

I would invest in building the company for the business you expect to have three years from now, not just the business you have today. That does not mean adding unnecessary overhead. It means making sure the management team, financial reporting, intellectual property, contracts, capitalization and governance can support the next stage of growth. I see companies create enormous value very quickly and then lose time or leverage because the infrastructure did not keep pace. A little discipline early makes financing, strategic partnerships and ultimately M&A significantly easier, while allowing the founders to remain focused on building the business.

*This roundtable was originally published in LA Times Studios and can be accessed here.

Environment

Chambers USA 2017 Ranks Greenberg Glusker’s Entertainment Litigation and Environmental Practices

Resources

Contact

Connect