Branded Consumer Products Co-Chair, Andrew Apfelberg, Featured in Beauty, Fashion & Consumer Goods RoundtableSeptember 19, 2022 – Article
Andrew Apfelberg, Corporate Partner and Co-Chair of the Branded Consumer Products Group, shared his expertise on latest developments and trends in the business of beauty, fashion, and consumer goods with Los Angeles Times in their Beauty & Consumer Goods Roundtable.
Q: In what ways has the pandemic changed the beauty, fashion, and consumer goods sectors going forward?
Apfelberg: We need to be realistic that our world has changed. We work from home, we don’t eat out as much and it takes a special set of circumstances for us to go out to crowded environments. This means that what we want is different. We more highly value comfort, health and something that looks good on Zoom. We want products that work with our less formal dress/look. It also means that how we want to get it is different. Going to a mall or brick-and-mortar store is less desirable than e-commerce. However, we still want to see how the product looks on us in particular and be able to inspect and interact with it as if it were truly in our hands. While we want it “now,” we are used to hearing about delays due to supply chain and staffing challenges. The beauty, fashion and consumer goods sectors have started adapting to this but will need to do so even more in the future.
Q: What are some key tips you have shared with your clients in terms of safeguarding from future pandemic scenarios?
Apfelberg: I have been working with clients on identifying all of the different “stakeholders” in their company, figuring out their key concerns and revising the company’s business model to address them. By “stakeholders,” I mean a wider group than just owners; it includes employees, suppliers, vendors, distributors and customers. Having deliberate conversations with each such group is the best way to find out their concerns, likes, dislikes and priorities. It also is the best way to discover how that altered during COVID and might change in a future pandemic scenario, inflation or climate change. Without this data, it is impossible to design a business model that will survive (and hopefully even thrive) in future challenging times.
Q: What are the pros and cons of being based in Los Angeles or California in 2022?
Apfelberg: The pros of being based in Los Angeles in 2022 outweigh the cons by a significant margin. We have the most diverse set of creative influences in the world and a strong spirit of entrepreneurship. We work hard and produce quality products. If purchased by locals, you can feel confident that your products will be embraced elsewhere. The entertainment industry and celebrities located in Los Angeles are unparalleled in their ability to get the word out and create strong and loyal followings for the products. The cons of traffic, expense and laws that are not as company friendly as in other locations, pale in comparison.
Q: How big and long-lasting a factor is influencer and social media marketing for the fashion and beauty worlds today?
Apfelberg: Influencer and social media marketing will be the leading edge of product promotion for the next handful of years. Consumers want a curated experience; especially from someone that they feel they can trust and admire. Whether or not it is in reality, this feels more “authentic” than historical advertising. It also feels more “personal” in that the customer will only follow an influencer that resonates with them. The social media posts are powerful in that they can always be located (even ones from the past) with just a few clicks of a button and are attractive visually (and sometimes auditorily, too). Combining this multi-sensory consumption of content with the “expertise” of the influencer creates an impactful and memorable impression on the consumer that can be (and often is) shared with friends and family, thereby creating a second endorsement for the product.
Q: What advice would you offer to an early-stage beauty, fashion or consumer foods company seeking growth capital in 2022?
Apfelberg: The best advice I can give is to think about where you want to end up and work backwards from there. If your endgame is to sell one day, consider what potential purchasers want/don’t want and design your company accordingly. For instance, if they highly value ownership of IP, then it probably makes sense to pay more along the way and document things more formally to achieve this. If your valuation will be based on EBITDA (earnings before interest, taxes, depreciation and amortization), then you may want to run your business to maximize that instead of just growing revenue. If your endgame is to hand the company down to your kids or employees one day, give some thought to what those folks will need to know in order to carry on your legacy. Start training them now and include them in decision-making. Let them know your vision for the future and that you believe in them as the ones to implement it. Then, and only then, decide how much and what type of growth capital you want and the non-financial characteristics your investor should bring to the table. Make sure that the capital will enhance your chances of ending up in your desired place and negotiate the terms accordingly.
*This roundtable was originally published in the Los Angeles Times and can be accessed here.