Read and analyse the case study on Gymshark, a UK-based sportswear retailer. Then write a well-formulated essay in response to the following questions: Which of the four drivers of globalisation has been the most influential in the expansion of Gymshark and to what extent do you think it is a globalised business?
Article 1 Clothing brand Gymshark becomes UK’s newest £1bn start-up. Company founded by Ben Francis as a student nine years ago wins £200m investment Ben Francis, the 28 year old founder of clothing brand Gymshark, has become one of the wealthiest British entrepreneurs after finalising a fundraising that makes his nine year old business the UK’s newest £1bn-valued “unicorn”. Mr Francis founded the gym wear company as a 19 year-old student in Birmingham out of his parents’ garage. Its headquarters remain nearby in Solihull. The brand has become a hit with younger gym goers. It does not use the traditional combination of advertising and high street shops for promotion, relying instead on support from a network of athletes and social media “influencers” on Instagram and Facebook. On Friday, Gymshark raised its first ever external funds, with about £200m invested by US fund manager General Atlantic. This values the company at more than £1bn, and will make Mr Francis, who owns a 70 per cent stake, one of the wealthiest business owners in the UK. General Atlantic will own just over 20 per cent, with the remainder held by Mr Francis’ partners and senior management. Gymshark employs about 500 people. Gymshark said it was only the second British company since 2001 to have achieved unicorn status without any prior investment. Mr Francis told the FT that the funds would be used to help expand the business in North America, where Gymshark already makes a large part of its sales, and in Asia. The company has already opened an office in Denver. “We are nothing without our community,” said Mr Francis, “so we will use this new investment partnership to get even closer to them on a truly global scale. I firmly believe Gymshark has the potential to be to the UK what Nike is to the US and Adidas is to Germany.” Mr Francis said the company would not change its approach to sales and marketing after the fundraising and that he had always been against the “old school” approach of rivals that focused on putting as many products as possible in as many stores on the high street. He said these “slow clunky” brands had not proved as agile as Gymshark, which has recorded strong growth in sales during the pandemic. At the start of 2020, Gymshark reported its strongest ever quarter for revenue growth while in the 12 months to July 2019, revenues grew from £103m to £176m, according to the company’s latest accounts. Pre-tax profits increased from £17.5m to £18.4m. According to the company, full-year revenues to July 2020 were £258m. Mr Francis said Gymshark had benefited from the popularity of running, cycling and exercise at home during the lockdown. It set up a fund that allowed personal trainers to use its platforms to run paid virtual classes during the pandemic and launched a “NHS Sweaty Selfie” to raise money for the NHS in Birmingham. Mr Francis said he had higher offers from other private equity firms, but General Atlantic appeared the best fit. Melis Kahya Akar, head of consumer for Emea at General Atlantic, will take a seat on Gymshark’s board. Gabriel Caillaux, head of General Atlantic’s business in Emea, described Gymshark as “authentic, disruptive and differentiated” as a brand. He added: “Against a backdrop of rising social media usage, rapid growth of ecommerce and increasing focus on health and wellness, Gymshark is positioned to seize the opportunity of further growth.” (Source: Thomas, 2020) Article 2 Ben Francis: flexing the £1bn Gymshark brand Stateside An investment by US private equity firm General Atlantic has catapulted young Birmingham-based fitness brand Gymshark to £1bn-plus “unicorn” status. Ben Francis, co-founder and chief brand officer of Gymshark, was due to board a one-way flight to Colorado before the coronavirus pandemic derailed his travel plans. Francis, an alumnus of Drapers 30 Under 30 of the fashion industry’s rising stars, was heading Stateside to extend the fitness sensation’s growing grip on the North American market. Based in Birmingham, where he started the brand in 2012 as a student, Gymshark’s ambitions are now increasingly global. Francis’s relocation might be on pause, but the business is still gunning for international growth. Last week, Gymshark announced it had secured investment from private equity firm General Atlantic in a deal that valued the label at more than £1bn. General Atlantic has taken a 21% stake in Gymshark for an undisclosed sum, which makes the brand one of just a handful of British businesses to have achieved “unicorn” status – when a privately owned start-up company is valued at more than £1bn. The investment, which is the first time Gymshark has received external funding, will be used to expand the brand in the US and in Asia. North America already accounts for half of Gymshark’s overall business, but an ambitious Francis sees plenty more opportunity in the market. “Half of our business comes from the US and Canada but when you think about the size of the market, we’re still under indexed,” he tells Drapers. “We’ve made a good start in the US market and we’re moving in the right direction, but there’s still plenty more we can achieve there. “Asia-Pacific is another area of focus for us because there’s huge opportunity there, but we weren’t sure we understood the market and how best to approach it. General Atlantic works with a lot of businesses based out there, so they are the perfect partner to explore the market with.” Garage brand Billion-pound valuations and cracking the US are all a long way from Gymshark’s humble beginnings. Francis started the brand from his parents’ garage. Naturally entrepreneurial, he built his own websites and apps as a teenager. Gymshark began life as a fitness supplement website before Francis started making his own clothing after struggling to find the kind of stretchy, fitted gymwear he wanted to wear. The business grew rapidly, thanks to its on-trend product and close relationship with fitness influencers who act as ambassadors for the brand. Gymshark has regularly won spots on research company Fast Track’s list of the 100 private companies with the fastest-growing profits. However, the time had come to seek external investment. “We’ve been growing really quickly and we’re continuing to grow, but to realise our true global potential, the best thing was to bring in a partner to support expansion in North America and Asia,” says Francis. “We’ve been working on the deal for over a year now. We did a lot of thinking and it has been a long process. “We met a lot of potential partners but knew fairly quickly when we met General Atlantic that they were the right one. They were a great cultural fit and they understand our ambitions. They are prepared to have a good amount of input in the business – to be there when we need them and not completely silent partners.” General Atlantic, he adds, also understands that social media is integral to Gymshark. Francis talks openly about building the business via his social channels and has a large personal following – 245,000 Instagram followers and 168,000 subscribers. A video of Francis signing the deal with General Atlantic has been watched more than 243,000 times since it was uploaded earlier this week. “I’d hazard a guess that many private equity firms wouldn’t have wanted me to post that video, because it is very transparent,” Francis adds. “But transparency and connection is part of our culture and that’s something General Atlantic share.” He admits that the pandemic has forced Gymshark to change some of its international plans. The opening of a head office in Denver, chosen because of the city’s love of fitness and easy access to the rest of the US, has been pushed back until later this year. “Covid-19 hasn’t derailed our internal expansion plans, but it has meant we’ve had to pivot, adjust and be very agile. Most of the problems have been logistical, like opening the office and getting people out to the US – we’re still seeing great consumer demand in the market.” Agile, focused on its consumer and now with private equity backing behind it, Gymshark looks set to succeed on its international expansion mission.