Rags To Riches

Hip-hop moguls use groundbreaking designs and star powerto challenge major clothing labels and become a forcein the $164 billion fashion industry

Russell Simmons have become dominant players in the so-called urban apparel niche. They’re not alone: Other performers — Master P, Snoop Dogg, Fat Joe, Busta Rhymes, Outkast, and Jennifer Lopez — have either developed apparel outfits or lent their names to marketing and licensing efforts of new and existing lines. And that doesn’t include scores of companies run by businesspeople who never picked up a mic.

RAGS TO RICHES
These entrepreneurs are selling large. The urban apparel segment of the industry alone grosses a whopping $58 billion in annual sales, according to Marshal Cohen, co-president of NPD Fashion World, a consulting firm that tracks the nation’s apparel and footwear industry. By 2007, urban apparel sales are expected to increase by another 48.28% to about $86 billion.

Such phenomenal growth explains why apparel manufacturing and licensing have become one of the fastest-growing sectors of the Hip-Hop Economy. Consider: Simmons’ Rush Communications Inc. (No. 16 on the BE INDUSTRIAL/SERVICE 100 list) racked up $192 million in sales last year, 85% of which are derived from his men’s, women’s, and children’s apparel lines.

Karl Kani, CEO of Karl Kani Infinity Inc. (No. 41 on the BE INDUSTRIAL/SERVICE 100 list with gross sales of $76.9 million) and the self-proclaimed Godfather of Hip-Hop Fashion, says the urban clothing market is not even in spitting distance of its peak. He’s confident that urban fashion companies, already generating hundreds of millions of dollars in annual sales, will “easily become multibillion-dollar businesses within five years if they can sustain their current growth rate.”

In this fourth — and final — installment on the Hip-Hop Economy, we reveal a new breed of hip-hop magnate, who is creating thriving businesses through sartorial innovation, marketing savvy, and star power. The leaders of these empires have taken the fashion industry by storm and, in some cases, have emerged as the next generation of BE 100S CEOs.

DOMINATING THE INDUSTRY
Through their connections to the entertainment and the latest youth trends, hip-hop artists know precisely what consumers — particularly those between the ages of 14 and 30 — want. As a result, they have mined the urban community for the latest fashions and trends and showcased them to the rest of the world. Through videos on MTV and BET, suburban America caught on, and the hip-hop community struck gold. “We’ve been just thrilled with the sales and partnerships that these companies have brought to the table for us,” says Kevin Harter, men’s fashion director at New York City-based Bloomingdale’s, with 25 stores nationally in cities such as Los Angeles and Chicago. “It’s a very important business for us, and one of our fastest growing in what we call our ‘urban sportswear market.’”

In fact, the $15.7 billion (as of January 2002) department store powerhouse Federated Department Stores Inc., which owns Bloomingdale’s and Macy’s, is giving hip-hop brands premium shelf space at its stores. Bloomingdale’s, the nation’s first department store to sell Sean John items and to flaunt leading urban labels such as Akademiks, Enyce, and Triple Five Soul began carrying Rocawear’s line this spring. And Macy’s

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