Francesca’s, a boutique clothing chain, has acquired the lifestyle brand Richer Poorer as part of its strategy to appeal to millennial and Gen Z women. The acquisition aims to expand the retailer’s channel reach by taking advantage of its strong wholesale network, as well as introducing new product categories to the brand’s portfolio mix.
The recent acquisition represents a significant step forward for the retailer, which operates more than 400 stores. The company filed for Chapter 11 bankruptcy three years ago but was purchased by TerraMar Capital and Tiger Capital in 2021 and promptly emerged from bankruptcy.
In the aftermath, Francesca’s has focused on rebuilding its business by expanding its tween brand Franki and launching a loyalty program. According to a report from Modern Retail, Francesca’s Chief Marketing Officer Jann Parish has stated that the company’s loyalty program, The Fran Club, has attracted more than 350,000 members since its launch in October 2022.
See also: Can Loyalty Programs Save Struggling Retailers from Bankruptcy?
Building on its success, the boutique chain launched a resale program with thredUP to appeal to consumers who prioritize sustainable apparel options — mainly Gen Z and millennials.
At the time of the launch Parish said, “We recognize the impact that apparel has on our planet, and our collaboration with thredUP to launch Forever Francesca’s represents an important initial step in our efforts to make a difference. Our millennial and Gen Z customers are environmentally conscious and seek out unique fashion finds, and our resale program perfectly blends these two experiences.”
But now Francesca’s is looking for even more ways to rein in the attention of millennial and Gen Z women with the acquisition of Richer Poorer. The move builds upon its recent direct-to-consumer (D2C) efforts to expand its in-store presence and reach a wider audience, especially as brick-and-mortar stores have been noted to be the primary revenue source for many retailers. In fact, over 85% of all retail sales in the U.S. still occur in physical stores rather than online.
Other D2C players to make similar efforts include athleisure wear brand Beyond Yoga, prescription glasses company Warby Parker and multi-specialty telehealth platform Hims & Hers Health.
See also: How Consumers and D2C Brands Like Warby Parker Are Embracing in-Store Shopping
In a statement, Andrew Clarke, CEO of Francesca’s, said, “We anticipate improved operational efficiencies, the advancement of our omnichannel capabilities, and the creation of new revenue streams.”
Richer Poorer benefits from having a parent company with a relatively strong financial position, especially at a time when D2C brands and startups are facing challenges. According to reports, the brand, which was launched in 2010 and was briefly owned by Shoes.com, started out selling socks through wholesale channels before transitioning to a DTC business model a few years ago. Its product line includes a range of wardrobe essentials including sweats, tops, tees and intimates.
Ryan Davis, executive managing director at Tiger Capital, who assisted with the transaction, said, “The changing direct-to-consumer environment has forced promising startup brands such as Richer Poorer to seek new avenues for funding and expansion. The teams at Francesca’s and TerraMar have a track record of successfully building brands, making them well-equipped to take Richer Poorer to the next level.”
“Completing this acquisition is a meaningful step in the value creation plan for Francesca’s,” said Joshua Phillips, managing partner of TerraMar Capital.
The transaction was completed in partnership with Tiger Capital and financed by Bank of America.
Gen Z does not possess the largest purchasing power, in contrast to other cohorts such as Generation X, which is a smaller group but has the highest purchasing power of $15 trillion. But Gen Z is viewed as a long-term investment, as it provides an opportunity to cultivate lasting relationships and loyalty.
If Francesca’s turnaround and traction during its launch of The Fran Club in October 2022 is any indication of the retailer’s potential success, then its bid to continue to align with Gen Z and millennial women through brand acquisitions has promise.
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