LE BON MARCHE'S TRANSFORMATION

Byline: Katherine Weisman

PARIS--The American term "specialty store" is hardly applicable in France, where department stores selling just about everything are the norm.
But by 1998, Le Bon Marche, Paris's Left Bank department store, will be able to adopt the phrase, thanks to an ambitious and so-far successful reorganization that's been under way since 1988.
Now, what once was a store that sold nuns' habits--and whose main floor boasted a shoe-shine and locksmith stand, as well as a spice merchant next to women's lingerie-- has increasingly become an elegant place for Parisians to shop.
When financier Bernard Arnault took over Le Bon Marche--along with luxury houses such as Christian Dior--as part of his acquisition of the bankrupt Boussac textile firm in the mid-Eighties, the store needed a major face-lift.
The store's metamorphosis was initiated by Philippe Vindry, who in 1993 left to head the Printemps department store chain. Vindry's managing director, Philippe de Beauvoir, 44, now president of the Au Bon Marche holding, assumed the daily management of the store in 1991 and is continuing to see the transformation through. "We understand that [Le Bon Marche] is only one store, without branches," explained de Beauvoir, discussing the store's limitations.
"The Left Bank is great, but where we are [West of Saint Germain des Pres] doesn't have the kind of traffic that Galeries Lafayette or Printemps have on Boulevard Haussmann. Plus, we are the smallest of the true department stores."
Le Bon Marche has 30,000 square meters of selling area, which includes the Grande Epicerie food shop, technically a separate operating company, compared with the Galeries Lafayette flagship, which boasts 50,000 square meters.
Given these constraints, de Beauvoir said that he and Vindry realized that Le Bon Marche could not be all things to all people.
"Instead, we decided to specialize in 10 to 12 departments where we will try to be the store of reference," de Beauvoir said, adding that the goal is to make the store "the most selective" in Paris. To achieve this, one of the strategies has been to close profitable but low-margin departments in the face of competition from specialty chains and discounters. For example, in 1990, Le Bon Marche stopped selling major electrical appliances. Next year, it will discontinue audio and video merchandise.
For women's fashion, the plan has been "less is more." Over the past few years, the quantity of women's brands has shrunk at the high and low ends. Clothes for more traditional women once represented about 50 percent of turnover and now represent 25 percent. At the same time, the floor space devoted to women's fashion has increased by 32.8 percent. Now, Le Bon Marche offers bridge and better sportswear, said Christine Samain, the store's women's fashion director. "Most of our women's suits sell for less than 5,000 francs [$926]," Samain said. "Someone who wants to spend 10,000 [$1,852] can go to a designer or multibrand boutique."
Some brands have been discontinued to boost the store's image, said Samain. These include Marcelle Griffon, a French dress brand that was a strong performer at the store but had an old-fashioned image, and Sym, a separates firm, but with a "cheap" side.
Another brand, Gerard Darel is finishing up its tenure. "We are taking a risk getting rid of a big brand like that, but it is just too expensive for what it is," observes Samain. "Moreover, Darel has a great press collection, but what is sold in the stores is completely different."
Samain considers it would be ridiculous to offer the vast selection, from starting prices to couture rtw, that Printemps and Galeries boast. "We wouldn't have a raison d'etre," she said.
Women's labels include Ralph Lauren (in a new corner), Max Mara, Georges Rech, Michel Klein's Klin d'Oeil, Capucine Puerari and Paule Ka. Sportswear brands include Esprit, Oilily, Kenzo Jeans and Ventilo. There is also private label under the Le Bon Marche and Edition Privee labels. Starting this spring there will be a new private label line of fashionable classics called St. Germain des Pres.
As for men, they have a swank new department called Balthazar on the street level, with a separate entrance, which opened last spring featuring designer, branded and private label goods. The decor and merchandising is very American, with wooden shelves, display tables and cozy leather armchairs.
Brands here include Céline, Christian Dior, Ralph Lauren, Yves Saint Laurent, Kenzo and the Balthazar private label collection.
So far, the plan is working. While the men's and women's departments have been drastically changed, the sales they generate have increased. In 1994, women's fashion represented 13.9 percent of total store sales (excluding turnover from la Grande Epicerie), compared with 11.6 percent in 1987, the year before changes started taking place. At the same time, women's fashion rang up $27.7 million (150 million francs in constant francs) in 1994, compared with 108.1 million francs in 1987.
Men's wear accounted for only 7.3 percent of total sales in 1987, compared with the current 10.6 percent. Meanwhile, the value of men's wear sales has jumped nearly 69 percent in constant francs, to $21.3 million (115 million francs).
For the men's, women's and children's fashion, accessories, lingerie, and perfume and cosmetics departments combined, selling space increased only 19 percent between 1987 and 1994, but sales increased 34.4 percent to $119.8 million (646 million francs).Final results or estimates for 1994 are not available. In 1993, the store's operating profit increased 14.7 percent to $15.9 million (85.9 million francs) on flat sales of $153.7 million (830 million francs).
Another policy that sets Le Bon Marche apart is management's decision to limit sales and promotions to four times annually. The store has the traditional after-season storewide soldes, or sales, twice yearly, as well as two mid-season promotional periods for select merchandise. Le Bon Marche refuses to have other limited sales periods, or special sales on limited goods.
"We discontinued the previous price reduction operations," said de Beauvoir, who added that constant price promotions confuse the customer and make the real price of goods unclear. In the face of a growing number of discounters in France, and the strong competition from hypermarkets, other French department stores have to stop their constant sales practice, he believes.
"They have no legitimacy in offering 'the lowest' prices," observes de Beauvoir.
Another key to the store's reorganization is that divisional directors are directly involved in the store's business through a system of management and profit sharing that is highly unusual for the French market.For example, Samain is responsible for the selection of women's fashion, as well as for sales and profits on the selling floor, and for determining the salaries of the buyers and sales clerks in this department. It's as if the directors are running their own stores. "There's profit sharing for the whole team. The salespeople are compensated in a way that gives them incentive to reach the sales goal of that department," explains de Beauvoir. "In a good year, an employee can earn three months in additional salary."
He said that a similar reorganization will be implemented at Franck et Fils, Paris's only specialty store, whose majority control was acquired by Au Bon Marche last November. De Beauvoir said a marketing and merchandising study will get under way in the first half of this year to determine the current and potential positioning of this landmark, albeit outmoded, store in Paris's 16th arrondissement. Proposed changes in the store's offerings, merchandising and possibly architecture will begin most likely at the beginning of 1996.--Fairchild News Service

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