Deal Snapshot: Pink Lily

Pink Lily is a high-growth, direct-to-consumer (D2C) women’s lifestyle brand. Harris Williams recently advised Pink Lily on its investment from an affiliate of Cortec Group.

Here, professionals from the Harris Williams Consumer Group share what made Pink Lily an appealing investment opportunity, as well as their advice for investors interested in D2C brands.

What does the private equity community find appealing about the direct-to-consumer (D2C) space?

Budlong: Perhaps the most significant factor is the close connectivity many D2C brands can build with their customers. While most traditional brands go through intermediary retailers to the consumer, D2C brands have a direct link, giving them the opportunity to create strong and lasting customer relationships.

Pierce: In addition, the D2C model can deliver deep, real-time insights into what customers want and how they’re spending their money. Because D2C brands have better insights into customer behavior, they can use that information for demand and inventory management, tailored marketing, real-time input on new products, and lower-risk product launches since they don’t have to do a full rollout via a major third-party retailer. These structural benefits provide a host of competitive advantages for the D2C model.

Benjamin: While D2C has been growing for years, the past 2-3 years highlight additional benefits: ease and convenience. Many consumers were initially forced to adopt online shopping for several categories during the pandemic and, having seen the benefits, they are unlikely to fully return to traditional retail.

What made Pink Lily particularly appealing to buyers?

Benjamin: It’s a leader in the space with a broad and loyal customer base, it’s made significant infrastructural investments, and has a highly engaged social community. Pink Lily has an evergreen portfolio, with new products based on consumer insights and trends in the marketplace.pink_lily_tombstone.png

Pierce: It also has achieved impressive scale, which is attractive for investors. While there are a lot of digitally native brands, most have had difficulty scaling to the size of Pink Lily. It has separated itself from the pack via highly effective new customer acquisition and retention, and by making investments in a platform that could support that growth.

Budlong: Pink Lily also has a genuine “community” that’s truly engaged with the brand through social media channels. Customers are looking to the brand to address many of their lifestyle needs, not just to make occasional transactions. The company deliberately uses a social media strategy to gain valuable customer feedback, and uses that feedback to build quality engagement. In essence, Pink Lily opened a two-way dialogue with customers versus the traditional one-way sales pitch.

What advice do you have for other investors interested in the space?

Benjamin: Today’s consumers are gravitating toward brands they can get to know and relate to, versus just buying a product. Customers love Pink Lily because they know the brand is not just following trends. It is providing styles that, based on the company’s deep knowledge of its customers, will resonate with its core consumers. Importantly, the company communicates with its consumer base in a very organic way, which adds credibility to the brand identity and messaging, deepening customer relationships.

Budlong: A large addressable market is key. A lot of D2C businesses are targeting a very specific consumer who, at some point, is going to age out of the brand or lose interest in its offerings. More appealing businesses like Pink Lily serve a large demographic and serve them throughout the year. In the case of Pink Lily, virtually any middle-income female aged 20 to 50 is part of their addressable market.

To learn more about this deal, please contact our senior bankers.

The Harris Williams Consumer Group has completed transactions across a variety of verticals, including branded consumer products; consumer services; food, beverage and agribusiness; and restaurant and retail. For more information on the Harris Williams Consumer Group and recent transactions, visit the Consumer Group’s section of the Harris Williams website.

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