Hill & Friends
Invest in a high value sector, backing an industry leading team in a business achieving growth year on year.
Hill and Friends is a contemporary luxury fashion brand founded in 2015 by Emma Hill CBE and Georgia Fendley. Previously, Emma and Georgia were respectively the Creative and Brand Directors at Mulberry. Together they transformed performance, presiding over a period of extraordinary creativity and growth. During their tenure, 2008 - 2012, revenues increased from £51m to £169m and operating profit grew from £5.2m to £36m.
On leaving Mulberry the pair identified a gap in the market for a new generation, contemporary luxury accessories brand. The brand was to be ethically produced, digitally focused, direct to consumer, Gen Y and Gen Z targeted, and accessible with uncompromising quality. Their instinct proved inspired with many of these trends reflected in changes since seen in the market.
Hill and Friends is on a mission to make the handbags women want to carry with the values they hold dear. Hill and Friends design and produce beautiful, practical and coveted womens fashion accessories. The handbags are all manufactured in Western Europe from the highest quality materials, Hill and Friends leathers are all a by-product of the food industry and the brands ethical sourcing and exceptional quality stand apart in the market. Handbags are priced from £295, making them great value when compared with the equivalent contemporary luxury brands products.
Launched in 2015 with an exclusive partnership with Net-a-Porter, Hill and Friends were one of the first brands to offer ‘see now, buy now’ collections, focussed on Direct to Consumer sales. Hill and Friends primary sales channel is the brands own website. Hill and Friends also have a retail and wholesale business. Since launch Hill and Friends stockists have included Barneys, Harvey Nichols, Selfridges, Fortnum and Mason, John Lewis and Fenwick.
Hill and Friends was created to challenge the market and take advantage of substantial shifts in customer behaviour.
Hill and Friends fills a gap in the market for accessible luxury handbags with exceptional quality, capitalising on recent changes in the market which saw brands in the luxury sector increase prices out of reach of many consumers. Hill and Friends provides luxury contemporary accessories direct to consumer, focusing on sales through the brands own website, thereby reflecting the shift in how consumers want to purchase luxury accessories.
Hill and Friends ‘Fashion just got Friendlier’, approach to communication and customer service is focussed on building a supportive community of brand enthusiasts with particular emphasis placed on Gen Y and Gen Z consumers. In two years, the brand has gained more than 20,000 Instagram followers and has built a valuable community.
Challenging the market, Hill and Friends continues to innovate and pass on the benefit of market innovation to the brands loyal shoppers. This Autumn Hill and Friends is launching a series of initiatives:
Hill and Friends are launching Loveworn, an initiative to capture their own secondary market, providing greater security for shoppers with authentication and refurbishment services and passing on incentives to shop the brand again. To encourage re-sale within a circular market, Hill and Friends will be creating a dedicated re-sale platform within their website where consumers can re-sell authenticated, refurbished product and receive an incentive to purchase a new product.
Wear and Repair
A Hill and Friends concept that will extend wear by offering customers a full (chargeable) repair, refurbishment and care service thereby demonstrating the quality and lasting value of Hill and Friends products and capturing a market leading level of customer loyalty to the brand.
Hill and Friends are committed to challenge and reduce the unnecessary waste within the luxury consumer market. The brand is making packaging optional and is focussed on reducing waste throughout the product lifecycle. The benefit is then passed on to the consumer who will receive an incentive to purchase a new product when choosing reduced packaging.
Substantial accomplishments to date
Hill and Friends have built a successful web business with over 38% of last year’s revenue generated via this channel.
Hill and Friends is stocked by a number of the world’s leading luxury department stores including Mitsukoshi in Japan, Harvey Nichols, Fortnum and Mason, and multiple Fenwick locations across the UK.
Hill and Friends have a team of 7 exceptionally talented individuals with extensive sector experience (Mulberry, Jimmy Choo, Aspinal of London). This year the Founders have been joined by Melissa Moore, Finance and Operations Director who benefits from over 10 years’ experience at Jimmy Choo and has been appointed to a leadership position to manage finance and operations as the business grows.
Hill and Friends have invested in their IP with all key iconic branded components registered in relevant classes and territories.
For the Spring Summer 19 Pre-season the collection has expanded to 65 handbag skus, with 66% being continuity, and 34% being seasonal. Over the last year, the top 15 products have represented over 30% of total sales.
This year Hill and Friends aims to achieve significant growth in revenue. Results for year ended March 31st 2018, show product sales are up 97% versus prior year. Sales are up 114% in the first Quarter of this year compared with Q1 last year.
The brand has captured the imagination of the Fashion Industry with substantial press exposure achieved since launch. Hosting Anna Wintour and the world’s most powerful fashion influencers at the brands two large scale London Fashion Week events and being awarded WGSN best start-up brand of 2016.
Hill and Friends have signed wholesale sales agents in Tokyo and Milan plus a new innovative global digital showroom
Building on the brands '& Friends’ philosophy of collaboration, Hill and Friends have signed a Collaboration contract for Spring Summer 19 which will see the Hill and Friends brand reach a wider audience.
Hill and Friends has four current revenue streams; Direct to consumer web sales, wholesale, retail and collaboration.
Direct to consumer web sales is the fastest growing channel and the priority for the business representing optimum return on investment, product margin and the values of returning consumers.
Digital marketing tests have so far proven to provide a significant return on investment via social channels. The brand has also seen a significant return on investment via social channels with revenue driven through social channels increased 141%.
Hill and Friends intends to grow the web channel significantly this year. In addition to traditional web revenue, Hill and Friends is adding the Loveworn concept to capture a new secondary market. Hill and Friends is also launching a chargeable repair, refurbishment and care service which allows for upsell of specialist services and products to the brands loyal customers.
Wholesale sales will continue to be important for the business for both revenue and building brand awareness. Wholesale sales provide a degree of revenue certainty within the business, with product purchasing planned in response to committed wholesale sales. The right wholesale partners also provide a significant boost to brand awareness by sharing the Hill and Friends brand with their audiences and endorsing Hill and Friends quality and appeal.
In addition to full-price wholesale sales, Hill and Friends have established relationships with off-price wholesale channels, allowing for efficient end of season stock disposal, ensuring optimised stock and cash management.
In-line with Hill and Friends commitment to providing consumers with an immersive brand experience, physical retail opportunities have been exploited including a 12-month pop up shop on South Molton Street in London and a pop-up in Mitsukoshi Ginza in Tokyo. The South Molton Street store coincided with an increase in online sales and Hill and Friends will continue to identify brand building commercial pop-up opportunities with more planned in the UK for the pre-Christmas period, including a personalisation pop-up planned for November and December. The Hill and Friends retail concept is flexible with modular fixtures designed to quickly and easily deliver a unique pop-up retail experience.
In addition to the regular revenue streams listed above Hill and Friends collaborate with a number of non-competitive, more established businesses, providing consultancy and product capsules generating an additional revenue source and in many cases, a strategic alliance with accelerated marketing impact.
Use of proceeds
Hill and Friends is raising additional investment for three key initiatives:
1. Changing production process.
Investment in scalable, agile manufacturing with less advance commitment and expenditure.
Volume of manufactured product now meets the minimum order quantities required to move to fully factored, agile manufacturing. This will have a substantial impact on the business allowing for optimised sell through, with the possibility to re-order best-selling products on short lead times throughout the season. In addition, this change could have a significant positive impact on working capital requirements.
2. Systems and re-platforming
Moving from Magento to Shopify and launching shopping on Instagram.
Shopify has emerged as the leading platform for commercial integration. Hill and Friends have committed to moving from the brands existing Magento platform to Shopify. This change will allow for optimised consumer experience, quick and easy integration with affiliate sites and will allow the brand to activate shopping from Instagram where Hill and Friends currently have more than 20,000 Instagram followers.
3. Digital Marketing
Investing in digital marketing for optimised ROI to accelerate brand awareness and accelerate growth of direct to consumer web sales.
Following test activity this year, Hill and Friends have identified priority digital marketing activities. Hill and Friends plan to invest in sustained brand and web support through an increased social ad spend and monthly campaign style shoots with an influencer. This will create rich and diverse content to distribute over all channels, tapping into new audiences by demonstrating product worn in different ways by a diverse group of people.
- the company has received investment from the Founders in the form of long term irredeemable loans of £999,180. These loans have no interest and are only repayable to the Founders on exit, pari passu with the A ordinary shareholders. Investors in this round will subscribe into A Ordinary shares, which will participate in a first return of capital mechanism on any exit event.
- the company has issued options to an investor representing 3% of the company’s issued shares and options. These have been taken into account in the pre-money and are reflected in the share price. If the campaign exceeds its target and reaches up to £905,695 then a small amount of further options will be issued, after which they will be capped. These options have anti-dilution protection on a down-round, which could have a dilutionary effect on investors in the future.
*Please note that any discounts, rewards and/or offers listed by a company in its campaign are subject to the terms and conditions applied by that company and listed above. It is the company’s responsibility to honour such discounts, rewards and/or offers and Seedrs does not take any responsibility for them.
The Hill and Friends brand has broad appeal amongst its female demographic. Data sourced from Google analytics demonstrates the brands customers are female and diverse in age with a high % of customers aged between 25 and 44 years old, with highest volume of transactions in the 25-35 age group and highest transactional spend coming from the 45-54 age group. 80% of the brands customers are UK based with the next largest market being the USA.
Characteristics of target market
The Global market - Macro trends.
The Global Luxury Fashion Accessories market is growing with handbags and accessories outperforming all other sub categories. Luxury handbags and accessories online sales continue to grow with brands focussed on direct to consumer channels tipped to dominate the market in the next few years.
Luxury goods FY2015 Luxury goods saw sales growth of 13.4% with Bags and Accessories outperforming apparel, footwear, cosmetics and fragrance and jewellery and watches.
Global personal luxury goods market returns to healthy growth, reaching a fresh high of €262bn in 2017. Europe grew 6% reaching €87 billion of retail sales to regain its place as the top region for luxury sales by value. 85% of luxury growth in 2017 was fuelled by Gen Y and Gen Z (Bain & Company 2017).
The UK market - Hill and Friends primary market. 31% of Brits have bought a handbag or manbag in the past 12 months. 59% of women aged 16-24 have bought a bag in the last 12 months, 33% of which preferring to buy a designer bag (Mintel 2016).
At Hill and Friends we approach marketing as a strategic exercise with small budgets and a carefully structured strategy which tracks ROI on a weekly basis.
We focus on:
1. Building grass roots support for the brand among consumers
We do this by providing benefits for our database of customers including product and season previews, regular communications, a focus on problem solving customer care and a communications transparency to tell our customers more about the brand and our business practices. We also provide this audience with early access to sales and promotions.
2. Building awareness via influencers, VIPs and Celebrities
Primarily via Instagram and our other social platforms we identify and partner micro-influencers with a genuine interest in the brand and an audience closely matching our demographic (or a sub-set of our demographic). We work directly with the influencer or celebrity stylist and build a trusted relationship, sharing product, providing super efficient service and engaging with their community.
In addition once a month we create a product shoot with a micro-influencer to demonstrate the versatility of our product and provide every day inspiration and rich content for our website and communications.
3. Building awareness via our high profile wholesale stockists
We work in partnership with our wholesale partners to reach their audiences and tell the Hill and Friends brand story in an engaging way to ensure cut through. Examples include our Hill and Friends Bellboys joining the Harrods door men for the launch of Hill and Friends at Harrods. The Branded take over of Selfridge’s luxury accessories hall complete with giant Hill and Friends concierge desk, launch event and bellboys. A Fashion show and launch event co-hosted with Vogue Russia at Au Pont Rouge in St Petersburg and branded pop ups in Japan, most recently with Mitsoukoshi.
Our wholesale partners are attracted to Hill and Friends brand theatre and we actively invite collaboration, offering shop, window and marketing support to ensure their audiences know our brand.
4. Digital Marketing
We invest in focussed campaigns, predominantly focussing on Facebook and Instagram and re-targeting, measuring impact and adjusting strategy in-tune with the season, customer response and sales results.
During 2018 we have been testing investment at a low level to fine tune best the ROI and would now like to consistently invest in digital marketing to help grow the brands own direct to consumer website and build brand awareness.
From our launch in 2015 we have achieved exceptional brand awareness for a new business, leveraging interest in the founders, their backgrounds, the brand positioning, product and a home grown British success story to generate extensive press coverage and ensure the press and industry are included in the brands story and journey, becoming advocates for Hill and Friends as a female founded challenger brand changing the way the fashion businesses is perceived.
We take advantage of every opportunity to build a closer relationship with our consumers, from pop-up shops, to London Fashion Week events and intimate trunk shows at the Founders home. We believe one of the advantages of being a small business is the ability to provide a more personal brand experience with the customer at the heart of communications and events.
7. Branded collaborations
We have signed a contract with a British favourite to create a capsule of Hill and Friends for products they will sell on their web platform reaching millions of consumers. Through on-brand product collaborations we plan to reach a bigger audience in-line with our demographic.
Hill and Friends is unusual in that it competes with both established premium luxury brands like Mulberry and Burberry as well as less established and more accessible contemporary luxury brands.
This is in part due to the brands heritage, launched by a team with an exceptional premium luxury industry reputation, comparisons to Mulberry are inevitable. Many disaffected Mulberry customers have moved to support Hill and Friends, with some establishing discussion forum threads and Facebook groups dedicated to their ‘discovery’ of Emma Hills’ new brand.
This has created some challenges in positioning with Hill and Friends adjacencies ranging from premium luxury to contemporary luxury. Over the past 18 months Hill and Friends has asserted its position as a contemporary luxury accessories brand, a positioning which reflects the brands challenger status, competitive pricing and broader demographic appeal with significant proportion of customers under 35.
In this positioning Hill and Friends quality and confidence make the brand standard apart, less trend driven, higher quality, more ethical and with a brand focussed product strategy. Competitors in the contemporary accessible luxury segment include both established brands like Michael Kors, new relatively unknown brands like Yusefi and Wandler and diffusion brands like Marc by Marc Jacobs.
Hill and Friends are uniquely placed to offer ethically sourced, UK and European made luxury goods with handbags priced from an accessible £295.00. Consumers recognise the honest price/value relationship and the long lasting appeal of the brand and it’s broad appeal to both ex-Mulberry consumers and new Gen Y and Gen Z shoppers.