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France Fights Back: Fast-Fashion Retailers Get Nimble and Quick

Steamrolled in recent years by cheap-chic behemoths H&M and Zara, French stores are adopting the tactics of their bigger and more efficient foes.

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PARIS — Just when many had left them for dead, France’s fast-fashion firms are resurrecting themselves.

Steamrolled in recent years by Europe’s cheap-chic juggernauts — Hennes & Mauritz and Zara — homegrown companies from Etam and Morgan to Kookai and Naf Naf have found new verve by adopting the aggressive tactics of their bigger and more efficient competitors. And their methods provide valuable lessons for retailers worldwide as H&M and Zara roll out throughout Europe and the U.S.

The new efforts of the French chains appear to be paying off. Groupe Vivarte, which runs Kookai, last year doubled profits. Groupe Etam, which counts Etam, Tammy and 1-2-3 among its diverse fast-fashion brands, turned a profit this year after languishing two years in the red. In turn, it reversed a moratorium on investment and plans to spend $60 million this year opening units.

Naf Naf’s net income increased 64 percent last year and the group, which also owns the men’s brand Chevignon, plans to open 50 shops in France over the next two years.

The rapid turnaround comes as a surprise. Only two years ago, France’s leading chains were edging closer to obsolescence. Their stores had turned dusty, their advertising was a yawn and their twice-a-year collections lagged behind H&M and Zara, which brought in new merchandise every few weeks.

“We were in serious trouble,” said Naf Naf president and cofounder Gerard Pariente. “We had become very uncool. The situation became urgent: either do something now — get younger and cool — or sink.”

Before H&M and Zara blitzkrieged France in the late Nineties, most French chains moved to the rhythm of the runway seasons, bringing new collections into their stores every six months.

Suddenly Zara and H&M, with their sophisticated design and production chains, were bringing new hot trends into their stores on a four- to six-week cycle. By the time the same trends trickled into French chains, the trend had already run flat.

The question became how to deal with the pressure. Etam decided to open larger flagships and pump up the fashion quotient. The most recent example of this is the group’s partnership with the Hyeres young designer fashion contest. Its 1-2-3 chain will produce exclusive collections for three Hyeres designers for fall.

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Never mind if the edgy clothes are a tough sell. The chain hopes to generate buzz among easily bored consumers. Meanwhile, the company has opened Levi’s first stand-alone in-store corner dedicated exclusively to its women’s apparel. It, too, is designed to give new vitality to the merchandise mix.

Kookai has adopted similar tactics. A capsule collection called Kookai Creative Lab, designed by budding designers at Paris’s Studio Bercot and London’s Saint Martins fashion academies, will hit its stores this fall.

“The name of the game is to be at the forefront of fashion,” said Elizabeth Sandager, Kookai president. “We need fashionable products in the store. We need to find new ways to excite young girls, to rejuvenate our products.”

Meanwhile, Sandager, who arrived this year after holding various management positions at Bang & Olufsen, L’Oréal and Revlon, has also tapped young designer Hans de Foer, who has worked at Jean Paul Gaultier, to head the firm’s creative studio. Sandager said she has also tapped another top designer, who wishes to remain anonymous, to create last-minute “refresher” collections.

“The idea isn’t to copy the runway trends — everybody does that,” she said. “Rather, the mini collections will be based on a theme and interpret the trends in an original way.”

Kookai has moved to boost its product offering with the introduction of a collection of cashmere sweaters and limited-edition embroidered jeans. The latter mirrors strategies that many luxury brands, from Gucci to Louis Vuitton, have pursued recently.

But that is exactly the idea — to appropriate luxury tactics and blur the line between fast-fashion and runway style. H&M has done this for years by using the same models and high-fashion photographers employed by top designer houses.

The French competition has decided to follow suit. For its most recent campaign, Kookai brought in Peter Lindbergh and models including Naomi Campbell and Helena Christensen. Morgan, for its part, hired Alexi Hay and Matthias Vriens, the former senior art director at Gucci Group.

“It’s a total departure for us,” said Sandager, referring to Kookai’s past, more playful campaigns. “We want to position the brand image on the same level as the luxury houses.”

“We are about fashion now,” added Jocelyne Bismuth, president and founder of Morgan. “We have to be about fashion to compete. We have to be young. Our image has to be as strong as a top fashion house. Competition comes from all price levels now.”

Morgan, with some 100 stores in France, had sales of $195 million last year, up 12 percent. Kookai, with 125 units, had sales of nearly $167 million.

H&M and Zara have profoundly affected retailing worldwide, from department stores to independent multibrand retailers. As in the U.S., both channels have come under pressure in Europe, with the latter losing 9 percent of their total market share across the Continent, according to a recent study by France’s Institute Francaise de la Mode, or IFM.

These merchants have also helped push fashion into the forefront. For example, fashion items have become retailers’ bread and butter, while sales of basics have drastically declined. Even the major department stores in France have trumpeted fashion in a way they hadn’t before.

For this reason, the French players were forced to overhaul their design methods and speed up the production cycle. And the way they did it can provide lessons to other retailers globally.

“They forced us to revisit our entire infrastructure,” said Naf Naf’s Pariente. “Before, our business was in basics. But H&M and Zara put the accent on fashion. Every month they had new stuff in the store. Now we’re equipped to keep up the pace and we have new collections in the store every six weeks, too. The shelf life of a garment is four weeks now. Before it was six months.”

Naf Naf is one of the few French fast-fashion players to have successfully accelerated the design and production cycle, putting it on par with H&M and Zara.

But not everyone has the manufacturing muscle or the capital to do this. For Kookai, which sources its production at factories in Portugal and Italy, it can only feed stores every three months. One of its main priorities is to modify this.

“Becoming quicker and more reactive is the key to success in the business today,” said Sandager. “Customers don’t have patience anymore. When they shop, they want to see something new all the time.”

Executives said that the accelerated fashion cycle reflects changes in the shopping psyche, too. Women now freely shop across price channels, pairing a top from H&M with, say, a pair of trousers from Chanel.

“Today, it’s all about zapping,” said Sandager. “No one is devoted to a single brand. They go where they can find the best fashion at the best price. Prices are going down. This is even happening in luxury with top houses introducing less-expensive items.”

With 43 stores in France, H&M generated $357.7 million in sales here last year, up 11 percent. France is H&M’s third-largest market after Germany and Spain. Zara doesn’t break down sales by country, but with 73 stores in France, the country represents its second-largest market after Spain, where there are 202 Zara stores.

Both companies have singled out France as one of the markets with the highest growth potential in Europe. Zara is also expected to aggressively expand its new concept, Bershka, geared to juniors. Meanwhile, both chains continue to eye the U.S. as a prime market for future expansion.

But the French chains are concocting their own ways to keep pace with these expansion projects. Unlike H&M, Kookai, Morgan and Naf Naf operate corners in department stores. And for lack of immediate investment capital, a handful of chains are exploring what they call “affiliation” as a means to expansion.

Naf Naf, which operates 166 shops in France, last year opened nine test affiliation boutiques in Russia and plans to open 130 such shops across Europe within the next few years.

The concept is a simple one, and similar to franchising. The main difference is that the supplier decides what the partner store will carry. Pariente said this model would help free up capital it would have spent otherwise expanding in Europe. This year, $20 million has been allocated to opening new wholly owned shops in France as well refreshing old ones.

“It’s a very attractive way of doing business,” said Sandager, adding that Kookai hoped to open affiliate stores soon. “The merchandise offer remains homogenous across stores and that’s good for the brand’s general image.”

Meanwhile, fast-fashion firms here hold other hopes that they can successfully duke it out in the continuing fight for shoppers’ euros. The recent IFM study also pointed to a nascent trend for smaller brands.

“I think that the new trend is for more individuality,” said Sandager. “I see it among young girls that are tired of all wearing the same thing. They want clothes that are different, that set them apart. Whether we succeed in the battle really depends on our ability to deliver.”

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