What is next for merch?

0:02Is Millionaire's PD a luxury bag or merch? What about MaxiPack? We've heard that merch is a status symbol, a subgenre, a style statement, identity marker. We also heard that merch has reached its peak and went past it. All those statements may be true, but they miss the reality that merch has become a big business. What used to live at the edges of culture has firmly moved to the center of economy. The side show has become the main act. In this episode, we unpack what happens when consumers learn to buy everything as merch. Welcome to the season two of Hitmakers, the show that tracks how culture moves margins, multiples and market cap.

0:59Morning. Hey, Anna. How are you doing? Oh, well, it's a lovely day here in New York. I want to hear how you got into Wild Cherry. Oh, well, this is a story for another time. Actually, it's not. Did you just walk up to the door, look the door open, straight in the eye and say, I am Anna? Do you know who I am? And then she stepped to the side and like waved his arm, letting you pass by. You know what? I came in. I said, I'm Anna. And they said, happy birthday, Brian. just ignored the woman and went straight for the man they said welcome anna you almost made me spit out my coffee all over my keyboard well okay so while cherry the food is excellent and so it's the atmosphere that's thanks to the one and only sue chen of house of chen she arranged for myself and my husband Brian to go there for his birthday.

2:01And Shu Chen, she does all events for A24. So you know what? You have to have friends at high places. Oh, that's nice. So what was it like? I haven't been, so what was it like on the inside? Well. Or did you have to sign an NDA to tell just to keep the mystique? Come on. It's a night in that sense. It's a central bar and they have boots on the side and they're really nice and friendly. And it's, you know what makes it nice? It was not super crowded. Music was excellent. That's what I remember. Music was excellent. And very rarely in a restaurant you ever remember music unless it's so loud that you can't talk.

2:49And this was none of that. And I was like, oh, my God, this is like the soundtrack is so good. So actually, that's a really good point. And there are two things that I always pay attention to when I go to these like kind of social venues, whether it's a bar or a restaurant and things like that. One is the flow of people. Like, is it laid out in a way that allows you to circulate around it without like having to climb over people and like you're a linebacker dodging tackles to move through the space? I think that's a really underestimated point of these spaces. And then the second one is music.

3:30And I completely agree with you because it can pull you out or it can be completely ignorable and just become Muzak in the background. But it's like this Goldilocks zone where it actually becomes something you notice and you enjoy. And you're like, that is a really good song. What is that? And so my friend is the creative director for the Crane Club. and actually it was fascinating listening to him talk through how he selected music for the space because it was so intentional he spent so much time curating that and you don't really hear people talk about that you know particularly with restaurants so for me it was just really fascinating to to learn about i think that's such a great point and also especially because they say that it's lighting and I agree like it's really important to lighting creates atmosphere in restaurants it there is nothing worse than having like this harsh lighting or wrong lighting so lighting was very right here it was very intimate and so on but good music you don't need to talk you can enjoy in like companionable silence or you can just like enjoy music which is great.

4:46Speaking of friends in high places. Go on. Do tell more. This is like the name-dropping segment of the show. This is the name-dropping segment. Who is this? Who that? Oh, there you go. That barista. The barista. The barista. You have to say it rolling your R's. The mythical Starbucks barista. It's a she, actually. So show some respect. You with your Did I say he? Did I misgender the bear? You did. It's a she and she's a beauty. She's absolute beauty and even better in person. So when I came back after three weeks over the holidays, she was waiting for me. And I mean, it was like heartwarming. Speaking of, let's go to market moves, you.

5:36Okay. All right. Because you don't have any friends in high places, but I don't want to put you on a spot. And I don't have a barista. Crane Club is actually, like, everyone who has them being guys go. Even, do they let non-members? Did they just ruin? So, wait, just real quick on Crane's Club. So, they have the restaurant, which is at street level, which is fantastic. I've eaten there a bunch. Love eating there. And then they have the members lounge, which is in the basement below it, which is also fantastic. And, yeah, you have to be a member there and stuff. But, obviously, non-members can be brought in by members and stuff.

6:10Think of getting the lighting, the music, the atmosphere. Highly recommend it. Oh, yeah. Yeah. They did an amazing, amazing job with that. OK. All right. So let's dive into our segment where we track how companies are building cultural capital to move markets. So the first market move that we're going to talk about today is Saks Global filing for Chapter 11 bankruptcy on January 13th. Just over a year ago, Saks Global bought Neiman Marcus Group for$2.7 billion. This past Christmas, however, the retailer sold Neiman Marcus's marble-covered Beverly Hills store. After that, it missed$126 million interest payment.

6:52Its boss Mark Metrick resigned and S &P labeled it in default. Saks Fifth Avenue shops now remain open thanks to$175 billion lifeline from investors. Many of Saks' troubles are not unique. The global department store sales fell by 4 % to 6 % in 2025, and high-end brands now prefer to sell directly to consumers or through online aggregators. One bright spot for Saks is that it owns property worth$4.4 billion, including its Fifth Avenue flagship. And liquidation seems unlikely, at least for now. Since co-founders also recently won back control of their company. after a dramatic four-month battle with creditors.

7:37The founders were selected as the winning bidders in a court-supervised sale process, partnering with a Canadian multifamily office to secure a definitive purchase agreement. The transaction is expected to close on February 13th, pending court and regulatory approvals. The victory caps a high-stakes fight that began in September of last year when Sens filed for creditor protection after owing$200 million to banks and brand partners. Next up, American Eagle Outfitters had a positive fourth quarter so far in comparable sales with single-digit growth through January 3rd of this year. The company noted their namesake, American Eagle Brand, delivered only low single-digit comparable sales growth, showing that the holiday outperformance was not led by the flagship banner.

8:23Instead, Aerie and its active offshoot offline were the primary engines of growth, with Aerie posting comparable sales gains in the low 20s and offline named as a standout performer. A broader category mixed shift towards higher growth, higher engagement brands coupled with disciplined margin execution gave American Eagle Outfitters room to raise its fourth quarter operating income outlook to$167 to$170 million, up from prior guidance of$155 to$160 million on anticipated consolidated comparable sales growth of 8 to 9%. And in news of a brand you never thought would be on this podcast, Chick-fil-A recently kicked off a year-long nostalgia campaign, joining a wave of major brands turning their archives into strategic brand assets.

9:11The fast food chain is releasing retro-inspired packaging and merchandising based on vintage design signaling a shift in how consumer brands monetize heritage. Chick-fil-A's play follows moves by Prada, Banana Republic, and Gucci, all reframing archival assets as platforms for cultural storytelling and commerce. For example, Prada is considering public access to its 53 ,000-piece archive. Banana Republic, Anna's old stomping ground, went further, acquiring a fan-run vintage archive and turning it into an official resale platform. Oh, it's worth saying that we did that in 2021 in June. That was the first thing that I did because that's the way to go.

9:59Go back to go forward. Sorry to interrupt. Go on. And Gucci turned its Florence archive into the literal stage for its Cruise 2026 collection at the end of last year. Across sectors, legacy brands are reclassifying archives as engines of brand equity, fueling limited drops, experiential spaces and new revenue streams. In a market obsessed with novelty, history is becoming a high margin differentiator where the public can engage with history through interactive and digital experiences and cultural products. Fashion retailer Aritzia reported a Q3 2026 net revenue of$1 billion, which is a 43 % increase year over year, with comparable sales surging 34%.

10:43The company beat earnings expectations with adjusted net income per diluted share, climbing 55 % to$1.10, driven by exceptional U.S. market performance, where revenue jumped 54 % to$621.1 million and now represents 60 % of total sales. CEO Jennifer Wong attributed this quarter's success to the launch of Aritzia's mobile app, new boutique offerings, and a strategic marketing investment that fueled up, quote-unquote, unparalleled demand for the brand's everyday luxury offering. Looking ahead, Aritzia projects a net revenue of$3.6 billion, which is a 33 % increase from fiscal 2025 and supported by 13 new boutique openings, 12 in the U.S.

11:28alone, and four repositions. The BBC reported that the USK beauty market has hit$2 billion, overtaking China as the number one market for Korean beauty brands. Viral TikTok ingredients like snail mucin, I have no idea what that is, heartleaf and rice water, move from niche into mainstream, triggering a turf war between Sephora, Ulta, Target and Costco as they race to lock in exclusive. Snail mucin, that means that thing that snail leaves behind. Korean beauty store chain, Olive Young, is preparing for its 2026 store debut. And the next phase of Korean beauty brands growth will be less about single product virality and more about discovery led retail.

12:12Category expansion into color and hair and consolidation of Korean beauty conglomerates. In board news, Ralph Lauren is adding NBC Universal News Group chairman Cesar Conde to its board. This falls in line with a broader shift in luxury where boards are being reshaped around brand perception, cultural relevance, and direct-to-consumer storytelling, with new power seats going to chief brand, culture, digital, and media operators. In other words, control of the narrative is becoming as valuable as control of the supply chain, especially as brands behave more like entertainment franchises. Players like Gucci and Masika have added or re-added chief brand officers whose remit spans PR, celebrity partnerships, social events, and visual merchandising, effectively centralizing narrative control as a C-suite power seat rather than mid-level marketing function.

13:04Even Gap, Inc. recently hired a chief entertainment officer. For decades, we've celebrated the rise of the smart home, knobless, switchless, effortless, and entirely orchestrated via apps. But as the Wall Street Journal recently reported, evidence suggests that screen-free, quote-unquote, dumb spaces are making a comeback. Many smart home features are losing their luster as they raise concerns about surveillance, and frankly, they just don't work. Google searches for, quote-unquote, how to reduce screen time reached an all-time high in 2025. And in the past four years on TikTok, videos tagged with, quote unquote, analog life hashtags, which catalog users embrace of old technology, physical media and low tech lifestyles received over 76 million views.

13:51And last month, Architectural Digest reported on nostalgia for old school tech. Landline in hand, cord twirled around fingers type of stuff. People are waking up to the idea that screens are getting in the way of real-life interactions and are taking steps through design choices to create an alternative place where people can be fully present. In sad news, Valentino Garavani passed away peacefully in his home in Rome at the age of 93. Born in 1932, Valentino founded his house in 1960 and became the architect of Valentino Red, a shade so specific and powerful it became a global brand asset. He was the go-to designer for the jet set, famously dressing Jackie Kennedy for her wedding to Aristotle Onassis and creating red carpet history for stars like Julia Roberts and Elizabeth Taylor.

14:42J.Crew has launched its first collection with the U.S. Ski Team and U.S. Snowboard Team, debuting a three-year partnership that names the brand the official lifestyle apparel partner for U.S. Ski and Snowboard as athletes head towards the Milan Cortina 2026 Winter Games. The 26-piece lineup spans refined knitwear, elevated loungewear, and essential cold-weather accessories for women, men, and kids anchored by vintage-inspired patches and alpine graphics pulled from J.Crew's archives. to capture a retro ski spirit with modern fit and color. Positioned at the intersection of style, sport, and community, the collection is designed for both sloped-side leisure and off-mountain wear and launches with a campaign featuring athletes including Colby Stevenson, Haley Langland, Rel Harwood, River Radimus, Tess Johnson, and Zach Miller with community-focused activations planned at U.S.

15:36ski and snowboard events throughout the winter season. And finally, the most brutal market move of the past two weeks is the widening gap between, quote-unquote, value and vogue. Mid-tier giants like Target and Caring, as we know as owner of Gucci, have struggled in the first two weeks of 2026. Target is losing value customers to Walmart, and Caring is losing prestige customers to Hermes. Retail analysts are calling this the great separation. Brands like Bershka and H &M have already responded by systematically reducing the number of items in their lower price tiers by 15 to 25 percent to move up market and avoid competing with ultra low cost entities like Xi 'an.

16:17And which, by the way, I think that is one of the biggest changes happening that not enough people are talking about. Like I see, you know, articles here and there talking about it. But with everybody talking about AI as the big kind of like structural tech driving change happening. I actually think this whole kind of K-shaped shift of the economy and its impact on literally everything, everything is such a huge story. And I just don't feel like enough people are talking about this. I agree with it. And I think that it started really not now. I think it started in 2019. And but because of pandemic, it sort of got interrupted.

17:02And then because of the influx of money in the economy afterwards, it got sort of masked. And now you see it again. But it did start back then when you had sort of two luxuries, super high and then super low and nothing in between. But I do agree that there has never been people who were ultra rich and ultra not. It's like Gilded Era levels of wealth concentration. I've seen a stat that is even worse because Robert Barron's controlled. I've seen I've seen it and I'm going to misspeak, but so don't like zero zero point four percent. And now today's Robert Barron's of the economy control like 11 percent.

17:57So even more. Oh, wow. I hadn't seen I hadn't seen that one. But yeah. Yeah. I have to see. I think it was in Financial Times or somewhere that I saw that they control a bigger percentage of economy than Robert Barron's. And that was an insanely unequal time. And even then, Robert Barron's gave back to society. Obviously, I'm not defending them, but they were building Cardinkey Hall, Met Museum. And those guys today, they're like building bunkers to hide from us. We pick up our pitchforks. islands and building things in New Zealand and Hawaii where only them and like their 10 people can like hide while the world class.

18:38I mean, I think the point that you make about the robber baron era and how, you know, explicitly the idea was, is like, how do you make as much money as possible so that you can do as much good in society as possible? I mean, if you read... PR tactic, they didn't want to do good, but in order not to be like, held. They had to, you know. Well, and there was probably some... There was a different social consciousness display. Yeah. And I mean, that's the main point that I'm kind of saying. Different aspiration, yes, of display of that wealth. Here's the interesting thing. If you look at the history of Rockefeller, because he was in oil and railways and everything, his entire belief system as a Christian was that it was his God-given responsibility to do anything he could to make as much money as possible so that he could then donate it and spend it to help as many people as possible.

19:33Like that is truly how he thought. And you can debate and argue with that and say that that's a perversion of Christianity and whatever. But the point here is that it's very different than what's happening now. And it's just, I don't know. I mean, we're sort of diverging. We should get back to like a whole conversation about merch right now. So it's sort of like how hard. Back to merch. I think that's absolutely relevant as we slide into conversation about merch. Because when you think about merch, it was something that existed completely outside of this. Completely outside of commodities system.

20:14And because it was tied to first music, it was made by fans and amateurs. It was not part of any retail company or brand. You went to a concert, you got a T-shirt, you were playing a video game. So it started in music and then it went to streetwear, to sport, to video games, to films and so on. But that was a signifier of your allegiance, of your fandom. And in that sense, it was not just a T-shirt. It was a symbol. Yeah. And why I think this is, and I know you agree, this is such like an important topic to talk about is because merch just isn't this like side game anymore. Exactly. Like you said, it's massive, massive business.

20:59It's the only genre that exists today, really. Wait, say more about that. Because you don't have any more menswear, womenswear, tailoring, sports. Like everything is one genre. You have urban sport. You have genre-less. You have like presenting one collection. You have what do you wear? Evening wear is now also sportswear. Before you had, I don't know, prep is now combined with grunge, is combined with streetwear, and streetwear is combined with luxury. You know, everything is sort of like, and also people don't search, oh, I need tailoring. They search for like, oh, I just like I want Balenciaga or I want X, Y, Z, you know.

21:44So in that sense, when you say you kind of like distinguish what merch is from the rest. Yeah. We don't need to kind of stick to that. But I do think that it is it has become a category of its own. It was not that thing, oh, you get something at the concert or you get something at the bar when your favorite band is playing. Not only to support the band, but more importantly, to signal that your taste, basically. In the simplest form to signal your taste, to signal where do you exist in that entire taste environment. And in that sense, it's not just a T-shirt. It's the opposite of a T-shirt because otherwise it's just cotton and whatnot.

22:32Yeah. And actually what makes this really relevant is, you know, if you look at what Disney did, Disney hired Bobby Kim as its global creative director of merch. And so, like, Disney's merch business is massive. It's$62 billion in sales. It sells products across 180 countries, across 100 categories, activates at all levels of the market. And so like Bobby's trying to like push all of this and do all these different collaborations with all these different fashion houses, trying to make it work at Walmart, trying to make it work on the Paris fashion runways. Like this is a huge pillar of Disney's business.

23:12And I think it's just it's emblematic of exactly what you said, that merch is its own genre. Merch is a business within itself now. Yes. And this is also where, so the first thing is merch was a signifier of a subculture of taste of fandom, allegiance, amateurs and specific niche, taste, niche, taste community. And now with Bobby, nothing against Bobby, it's the evolution, Disney calls that division consumer goods, which is unbelievably telling because merch went for something that's like a signifier into consumer goods, thanks to places like Hot Topic or Paxson and thanks to streetwear, which took merch from subculture to mainstream.

24:05When you think about what Supreme did over decades, which is having Thursday drops of merch in limited edition scarcity, which is by very definition, merch has to have scarcity because band shows in a town only for a day or a couple of days and so on, is they took dynamics of merch and commodified it. So Disney doesn't call it merch, it calls it consumer goods. So now if merch is a consumer good, it just took a signifier, separated it from that subculture and is selling a subculture as aesthetic. And I do think that is that friction removed. So there is no logic of a subculture. There is just aesthetic of subculture.

24:52And that is what makes this conversation now that we are having relevant, because is that really merch or is that a consumer good? that it still has its special place because aesthetically it represents certain subculture. So there is no meaning, there is no logic, but there is aesthetic of, say, collaboration with the streetwear. Or let's take Miss Chief's ultimate participation trophy that they did a few years ago with Tiffany, which is really the joke. Oh, I was just going to compliment you for subtly integrating some Hegelian philosophy into your description. Anytime. Anytime. Well done. I see you and I appreciate it.

25:43Thank you. Unfortunately, I'm showing heart to those who are not watching. But you know what? We do podcasts are the thing. Lee, you and I have a bright future. Let's go on YouTube because YouTube is now for years been watched on TVs. So I think we need it. First of all, we need an agent. And then we need some glam team, clearly. Well, for all the people who want extra credit from this podcast, go read Hegel and Dorada. You'll understand some more of the kind of key concepts that Ana's heading on. Anyway, back to much. Or the sociology of business on Substack. Yeah, yeah. It's always good to go to source material, though.

26:23Oh, don't. I have hyperlinks there. I'm sorry. No, finish your thought, and then I'm going to build on it. Well, my thought was, and I actually did want to start our examples with mischiefs because it is taking something completely out of context, something that seems like a merch, a trophy. Is that a merch or is it a work of art? Because it actually subverts what it's. The Ultimate Participation Trophy is actually not merch because it plays on Tiffany's long history of creating trophies for US Open. But it combines polo and tennis and when I say combines the figure that's represented on the actual trophy, has both a racket and has both a polo stick and is also on a horse and so on.

27:16It does multiple sports at the same time. And it's released in 100 units and anyone can buy it. So in a sense, there is scarcity of merch and there is a drop nature of merch. But because there is actual meaning and social commentary, it does have that previous role of merch that it had, but not aesthetically. What is the role that it aesthetically has? So that's a question for you, Lee. So it's a great question, but I want to take a step back for just a minute because I want to structure a little bit of what you said for everyone. So I think what's been really interesting in what you said and what we can kind of see over the history of merch is that there's effectively like three waves of merch.

28:03There's merch 1.0, which, as you said, came from the cultural markets and the cultural makers who were creating, you know, T-shirts and things like that for their fans. And like, you know, this is really what bands were doing at their concerts and stuff. You actually had to go there and experience the cultural moment. And you had this artifact to show that you were there. Then you get into the 2.0 phase, which where let's let's give hot topic credit they created the 2.0 phase where they would sell the nirvana t-shirt or these band t-shirts that you could buy without ever having had gone there right and so this is the mainstream commercialization of subcultures showing your association without actually having to participate in those cultures and so that's And even hundreds.

28:56And it's really relevant to say here that there was a concept of selling out and early streetwear brands were like, no, we are not going to produce more than 100 t-shirts and so on. But then the money was too good. And then the logic of capitalism took over. So, you know. Yeah, exactly. And then they all got rich and Bobby Huntworth is now the VP of Conumerable. Great job. You can hear it. Great job. It is a very funny thought to say that Supreme is just a descendant of Hot Topic. I think it exists. It's genetically related to the business model of Hot Topic. Anyway, moving on. So then there's merch 3.0, which is what we're starting to move into, which is like, you know, as you said in our conversation, it's about niche, secret.

29:49indecipherable merch, which is really hard to understand why people are so excited about it, why it's a big deal. And it's really responding to the fact that there is no such thing as mainstream culture anymore. Everything's fragmented. It's still - Oh, but wait, we're going to get to that. And I think we first need to stay with Merch 2.0, which is that mega commercial merch. And I do want to go back to ultimate participation trophy that makes fun of it. And it makes fun of it because it combines all sports together. It has a mainstream luxury brand under quotation marks. Tiffany was never luxury.

30:24Alvin Mates is trying to make it luxury. Good luck with that because Americans don't buy luxury. They do. But they're going to put rather like, they rather have a house with a garage for three cars than, you know, buy fifth Chanel bag. But that's just my observation. Correct me if I'm wrong. and that is a commentary on merch but other like for example take nike original high chicago which jordan wore where back at the time they released only in limited number of pairs made by htm team at nike only selected boutiques had there was a drop their only fans if you know you know could have them. That was actually the real merch at the commercial level because Nike made it.

31:18But it followed the original logic of merch, which is you need to know why is that relevant. You need to know the story, basically, not just aesthetic. I think that's one of the important kind of themes in all of this is that the merch has to have a if-you-know-you-know element to it. Not anymore, because look at Balenciaga IKEA bag made in the same color as IKEA but made in leather. That's closer to what Mischief has done with Ultimate Participation Trophy, because the joke is on you if you spend$2 ,000 and buy it. But isn't that still an if-you-know-you-know? It's a little bit of like... One in third European is inconceived in IKEA bed.