Monday, October 4, 2010

Neda by Bebe: Changing business model to fill the “affordable luxury” niche

Neda by Bebe: Changing business model to fill the “affordable luxury” niche
The clothing giant Bebe, best known for its logo t-shirts, is changing its business model to better appeal to its target audience, fashionable women in their 20s and 30s with disposable income. According to Bebe’s chief executive officer, the company wants to fill the “affordable luxury” niche. Bebe took the first step in fulfilling this goal by opening Neda by Bebe, an accessories and footwear boutique, in San Francisco. The items sold at Neda by Bebe range between $250-$500. Although they are more high end that the accessories currently sold at Bebe stores, they are more affordable than Dolce and Gabbana and Prada.

Bebe was started 30 years ago by Iranian born Manny Mashouf in San Francisco. Mashouf, a college student at the time, saw an empty storefront and made the sudden decision to start a clothing store. The store was initially called the Caspian Corner and according to Mashouf, catered to women “who want to look vivacious, sexy, but not junior and cheap.” The store name was changed to Bebe shortly after, which means queen in Farsi. Mashouf met his future wife Neda because she was a frequent shopper at the original Bebe store. Her first purchase was a pair of Marilyn Jeans, which were so tight that “you had to lie down to zip them up.”

Mashouf owns 73 percent of Bebe’s stock and was estimated to be worth $1.5 billion by Forbes Magazines in 2006. Mashouf does not put much emphasis on his success. He states that his monetary success hasn’t changed him: “I don’t think money will ever change me, no matter how much it is. I’m still the same person I was…when I was in college.”

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