Interview: Hugo Adams, new CEO of sustainable childrenswear brand Frugi

2018 was a very busy year for Cornish childrenswear brand Frugi. In July founders Lucy and Kurt Jewson sold a majority stake to private equity firm True, which was followed by the appointment of Hugo Adams, former executive board director at Superdry, as new CEO in August and Julia Reynolds, previous CEO of Antler luggage, as chair in October. These steps are set to take the sustainable kidswear brand to its next level and scale its growth across multiple channels. Since its launch in 2004, Frugi has grown into one of the leading childrenswear labels in the UK thanks to its 100 percent organic cotton garments and strong ethical credentials, which play a significant part in its appeal. The brand currently operates in 28 countries with an annual turnover of 10 million Pounds, and 2019 is set to be another eventful year. FashionUnited spoke to Hugo Adams about his first few months at the helm of Frugi and finds out which key developments are top of his agenda.

Your background is in senior management positions for major brands such as Superdry, M&S and Dyson. What attracted you to Frugi and the childrenswear sector?

To be honest, it was the strength of the business that attracted me. I was aware of it already and had seen the brand grow, with Lucy and Kurt having built this small but flourishing business based on their strong ethical and environmental values, combined with an incredibly uniquely designed product. It was since True’s acquisition that I became more involved with it and started to look at it in more detail. I just thought that it was an exciting brand in an interesting sector. Childrenswear as a sector is relatively robust in comparison to womenswear and menswear and growing faster than those two categories. Frugi is a product and a business that is really well positioned within that, and it’s got lots of opportunities for growth. I’ve worked with three big founder-run companies and brands, with Anita [Roddick] at The Body Shop, with James [Dyson] at Dyson and with Julian [Dunkerton] and James [Holder] at Superdry, and this felt like it’s in the early stages of its growth potential, whereas all the other businesses - while they were still very entrepreneurial - were already quite mature by the time I got there. With Frugi the attraction is that it’s a great business, in a good position, in an interesting sector and with great possibilities for growth, so that’s the exciting thing about it.

What is top of your agenda? What key developments / goals are you tackling first?

From an operational point of view and a business point of view, Frugi is in really good shape, but not enough people know about the brand, so there is an awareness job to be done, and there’s also an expansion job to be done in terms of our wholesale presence, e-commerce presence and our international presence. I want to make sure that everybody knows our brand - because not enough people currently do. But I will also be focusing on aspects such as how do we drive e-commerce, how do we drive our wholesale business, and how are we expanding into new international markets? There are lots of markets that we are not in, and even the ones that we are in still have lots of opportunities for expansion. So top of my agenda for now is brand awareness, driving our digital business and expanding our wholesale operation.

Last year private equity firm True acquired a majority stake in Frugi. What does this mean for the development of the business and what will this enable you to do in terms of your growth plans?

True has got a very strong background in e-commerce - Alex and Alexa was one of their original investments. They’re really helpful, because they have this great combination of retail and consumer sector expertise. They’ve got a variety of businesses that they are involved in running, and then they also have a division which focuses on next generation companies across emerging technologies, marketing solutions, new products – essentially start-up businesses whom they are helping to shape and to grow and to cultivate. In addition, they have existing relationships with leading industry retail partners, for example M&S, Waitrose, TK Maxx, who have signed up to their scheme. So they combine the knowledge that sits within the companies that they own, the companies that they partner with and then the emerging and start-up business that they are also working with. It’s a triangle of three different things. And the benefit to us is that we get access to an understanding of the new technologies and new start-up businesses, as well as being able to tap into the relationship with some of the larger retail businesses. It’s a great way of using their consumer sector expertise. It’s a really nice combination and is quite unique.

How is Frugi’s distribution structured? Which channels are the most important ones?

It’s roughly 50 / 50 between our e-commerce, direct-to-consumer side and the wholesale side. Both are growing really strongly. We currently have around 500 stockists across 28 countries; about 220 of those wholesale accounts are in the UK and 180 in Germany which is our second largest market. The majority of our stockists are independent retailers. In terms of our larger accounts, John Lewis is our biggest in the UK, and outside of the UK, Zalando would be our biggest European stockist. We’ve got a good presence in lots of places. And those small independent stores are really important to us, that’s how the company was built up, and it will continue to be an important part of our business. They are the experts, they run very successful shops, almost all of them are very personal, family businesses which generally fit very well within the ethics of our company. There is also an opportunity to work with bigger retailers, especially internationally. So there’s room for more of the John Lewis-type partnerships outside of the UK, in addition to expansion of our own e-commerce channel.

There’s obviously lots of scope for international expansion, but with 220 stockists in the UK, do you also see potential for further growth across your domestic market? And if so, do you have a target?

There’s still more potential in the UK, for sure. We’re still exploring and signing up new people and are very interested in anyone else who wants to partner with us. We’ve done an extensive market analysis and looked at the right geographies where we feel our strengths are, but also where we are weakest and who potential partners and stores could be. So we have a prospect list, but not a target list as such.

Would you consider opening own retail stores in addition to e-commerce and wholesale?

We don’t currently have our own shops and it’s not something I am looking to roll out any time soon. It’s not the best time to do that, and there’s enough opportunity for us within e-commerce and wholesale. That said, we did do a pop-up store at Leeds Trinity, which was a tactical opportunity for us, and I think we may do more of those pop-ups in good strategic locations or county shows now and again.

Frugi appears to be going from strength to strength and seems unaffected by a difficult trading climate. What would you attribute this to?

I think childrenswear is more resilient than other industry sectors. People will compromise on what they buy for themselves, but not on what they buy for their children. But also, I don’t think it’s a total disaster out there. The strong brands are getting stronger and the weak brands are getting weaker. There’s just no space for mediocrity. Whereas 10, 15 years ago you could survive by simply being in the middle ground, you just can’t do that anymore. You’ve got to have a strong proposition, you’ve got to have a strong product, and it’s increasingly important to back that up with really strong ethics. And that’s why we continue to grow. We will grow at about 30 percent this year, and have grown at this rate for the past few years as well. And the reason is the combination of having a great product with very distinctive designs and great attention to detail, backed up with really strong ethics and things like our charitable donations. We give 1 percent of our turnover to charity every year, and these are things that people are increasingly looking for. Of course the ethical aspect will never be the most important thing for consumers – you’re not going to buy an unpleasant product because the company is ethical – but I think it’s an important facet of a business that has got great products. For me, the product is the most important thing. We will definitely have the best product on the planet, supported by a really strong ethical background, and that combination is increasingly interesting to consumers.

How are you looking to develop your product range? Are there any wider trends within childrenswear that you are responding to?

In terms of general trends, the ethical and organic trend will definitely continue, so we’ll stay on top of that and we’ll always be about that. And then the three main trends that we are mostly focusing on are 1. Unisex - designing without any gender stereotypes in mind, and blending more across the ranges. 2. Designing with the children in mind, which has always been the main ethos of the company anyway. So it’s about building an emotional connection with the kids. We’re not trying to create a look like a grown-up mini-me. We are trying to create products that a child wants to wear and that are fun and engaging for them, which is why we have very bright colours and lots of different characters and all of that. It’s that combination of the emotional connection with the kids, as well as the product being comfortable, practical and functional. And then the third one, is again, the environmental side and the question: how can you extend a product’s life and its use, or increase its purpose? We are and never will be in disposable fashion, and of course, the general trend is slowly moving away form that anyway, but certainly for us the focus is longevity and sustainability. As consumers are looking less for throwaway fashion and more for a longer life product, we will continue to design products so that they can get as much life out of them as possible. And of course the make-up of the product and the organic cotton it’s produced in means that the durability is already significant anyway. It sounds counter intuitive, if you’re trying to sell less, but I would rather sell less but to more people. In other words, I would rather have a product that has longevity, because I believe that more people will be interested in that product.

Where do you see yourself in the market in terms of brand adjacencies and positioning?

We don’t spend a lot of time looking at other brands and competitors. I know that’s an easy thing to say and sounds slightly flippant. But because we are in a strong niche – it’s not even a niche, it’s a growing part of the market – we are not that concerned about what other people do. We don’t do much, if any, competitor analysis. We know what we’re good at, and there is a growing market for it, so we’re continuing to innovate within our product range and our designs. It sounds a little inward looking, but for all the right reasons.

Alongside yourself, Julia Reynolds has recently joined the business as chair, and Lucy Jewson also remains on the board. How closely do you work with Julia and Lucy on shaping Frugi’s future? What does each of you - with such strong, combined industry experience - bring to the business?

It’s a really good combination. You’ve got me, you’ve got True, you’ve got Lucy and Julia. Lucy is of course the founder of the business and she has grown it incredibly successfully. I meet up with Lucy every week and we talk about ideas and about what’s going on with the business, and I can tap into all of her entrepreneurial passion and background. She’s still fully involved in the design and development of the product as well, and again, to have her creativity still in the business is fantastic, and obviously she sits on the board as well. Julia is almost the other end of the scale, she has the big corporate background, she’s been the CEO of a number of large businesses. She has a huge amount of experience and knowledge, so she is the sounding board from a commercial environment. And then there’s obviously my own, varied background. So it’s actually a really good mix of skills. And that combined with True’s capability and their majority ownership of the business, it’s a great place to be and makes for great board dynamics.

As a British company with an international presence, are you worried about the implications of Brexit? What is your business outlook post March 2019?

It’s generally a bit of a mess, but there’s a limit to what you can do to influence any of it from a single business point of view. We’re doing everything that is within our power, so we’re bringing in s/s 19 product as early as we can to make sure that we’ve got it in before anything in the short-term happens that might disrupt it. We’re looking at contingency options for distribution in Europe, because at the moment we do everything from our warehouse here in Cornwall, but a European distribution option might be a prudent plan. And then obvious things like hedging currencies and looking at what resource requirements we might need if the administrative burden goes up. Basically, we are trying to manage what we can manage as opposed to worrying about what we can’t influence.

What are your short-term and long-term goals for Frugi?

The ultimate goal is to be the most fun, desirable and trusted brand on the planet. They are the key pillars in terms of strategy. Longer-term, there are lots of opportunities we can explore, especially in terms of international expansion. There are untapped markets for us such as America, Canada, China, Japan and Korea, which would all be interesting for us. But we’re do everything one step at a time.

Photo credit: Frugi