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L’OCCITANE MAKES A SPLASH AFTER 20 YEARS AS A NATURAL CHAIN

Byline: Sarah Raper

PARIS — Combine the traditions of Marseilles soap making with the cheery, warm interiors typical of Provence and you get L’Occitane, the hottest fragrance and bath chain in France.
Although it’s nearly two decades old, people are talking about the company now because of its aggressive new expansion strategy. With eight store openings in France and seven abroad this year, L’Occitane has just doubled the number of its units.
Also, the chain’s image seems right for the Nineties. The boutiques measure an average 440 square feet each. They feature floors made of clay tiles fired in Provence, bright frescoes painted by a local artist of scenes from 18th-century perfumeries and details such as antique-looking display fixtures and vintage apothecary bottles.
The 700-product range includes woodsy-scented vegetable soaps colored in rich browns for $5.50 each and fragrances in simple bottles with labels showing watercolor scenes from Provence, priced at $21 for 150 ml. There are also old-fashioned-looking aluminum tubes of sun products made of shea butter at $16.25 for 150 ml.
“It’s the same concept as Body Shop, but L’Occitane is pretty,” said Olivier Ruth, L’Occitane president. Both companies were founded in 1976.
L’Occitane got its start when Olivier Baussan, an entrepreneur from Manosque, 50 miles north of Marseilles, who set up a small fragrance and soap production facility with $4,000.
Last year, the company had sales of $13.7 million (70 million francs) at current exchange rates.
Half the volume came from France, where its products are sold in 1,600 doors, including L’Occitane boutiques as well as home furnishings stores, perfumeries and pharmacies. Thirty percent consists of exports and the remaining 20 percent of sales is rung up by a division that produces products for third parties, including Pier Import and Habitat.
L’Occitane owns nine boutiques in France and has granted concessions for six others. An additional four shops are set to open before year’s end.
According to Ruth, this concession contract, which does not generate royalties, is less lucrative than a typical franchise agreement but has allowed executives to be more demanding about store locations, for example.
Abroad, there are also concessions for 14 shops in Switzerland, Belgium, Taiwan, Hong Kong, Saudi Arabia, Canada and Spain, plus a shop that’s a joint venture in Sweden.
L’Occitane is also looking for a location for a wholly owned store in Munich.
The big problem has been profitability, with L’Occitane reporting losses of more than $2 million in 1993. Earlier this year, the company was restructured and recapitalized.
A Banque Indosuez investment group called Natural holds 58 percent. Renold Geiger, a businessman of Austrian origin who also backs the L’Octée cosmetics firm, holds 34 percent. Founder Baussan still has 8 percent.
As part of the restructuring, the majority backers demanded a change. Ruth, who previously ran the French mass market soap brand Le Petit Marseillais, was brought in to manage the company while Baussan continued as a creative consultant.
Ruth has embarked on an aggressive plan to expand L’Occitane’s network of boutiques in France and to step up exports, especially to the U.S.
Currently, L’Occitane is mostly carried in gift and home furnishings shops, but the company intends to realign its distribution.
Retailers as diverse as Victoria’s Secret and Saks Fifth Avenue have made inquiries, according to Ruth. The appeal of L’Occitane lies in its philosophy of “accessible luxury” and in its politically correct approach to the business.
Like Body Shop, L’Occitane emphasizes natural products and also deals directly with Third World suppliers. For example, Baussan has traveled to Burkina Faso in Africa to negotiate shea butter purchases from village women. L’Occitane pays a higher price than usual to ensure high quality.
L’Occitane has also worked to create jobs in Manosque. But unlike Body Shop, L’Occitane draws from southern French traditions like soap making and perfumery and aims to export the flavor of the region via the frescoes and tiles. For example, L’Occitane claims its Eau des 4 Voleurs (Four Thieves’ toilet water) was inspired by a recipe for a clove and lavender balm used by robbers in Toulouse in the 17th century. The four were convicted of stealing from the houses of plague victims and were sentenced to be burned at the stake.
However, the court, intrigued by the fact that the men had never gotten sick during the plague, agreed to free them in exchange for the recipe.