SECONDARY COLLECTIONS CAN’T SEEM TO MAKE A FRENCH CONNECTION
Byline: Katherine Weisman
PARIS — This week, French designers are knocking themselves out to sell a sophisticated image and beautiful clothes to buyers, press and television audiences worldwide.
But once the runway lights dim, very few of those watching from their living rooms will be able to buy into the brands. While making money in fashion in France is practically gauche, it’s still puzzling to many volume-loving Americans why French designer brands are scarcely present in the often lucrative bridge and diffusion segments.
To the French, even the terminology is a bit confusing: Bridge is essentially perceived as a commercial invention of American department stores, designed for big volume. Bridge is seen as a cut below diffusion in price and point of view, with diffusion having a closer stylistic link to a designer’s top collection.
While most Europeans opt for the diffusion definition, the nomenclature is almost beside the point: The Americans and some Italians have produced hundreds of millions of dollars worth of volume by going the secondary route.
Donna Karan’s DKNY total women’s, for example, racks up more than $300 million in sales internationally, and Calvin Klein’s CK apparel — independent of accessories and freestanding stores — produces in excess of $175 million in wholesale volume. And many of the Italians, armed with a powerful industrial base, have put significant numbers on the board. Giorgio Armani has built his North American Le Collezione business through GFT to about $80 million in women’s alone, sources estimated. Valentino is projecting his new women’s and men’s V Zone diffusion line at $90 million in three years, and the D&G line is building volume at Dolce & Gabbana, with a global projection of $280 million by the year 2000.
“Of course, if a company is looking to make money, they should come in at a price point that has a wide audience,” observes Joan Kaner, senior vice president and fashion director for Neiman Marcus.
Not everyone in France, however, wants to play the volume game. And Kaner notes that, at least as far as her customer is concerned, the French might have the right idea: The Neiman’s designer client prefers the real McCoy, not some watered-down version.
“Once the price gets lower, you get larger distribution,” explains Francois Baufume, president of Christian Dior Couture. “But once distribution gets big, it’s no longer Dior. And volume is another profession.” Dior’s strategy is to focus apparel on haute couture and luxury ready-to-wear only and has actually brought many of its licenses in-house to keep the image more elite and coherent.
But the size of the secondary market is pretty tempting. Industry estimates put the retail volume of the U.S. bridge market at $4.7 billion, or about 12 percent of the U.S. retail market for women’s jackets, dresses, tops and bottoms. Diffusion represents another $1.1 billion.
While labels like Emanuel Ungaro’s Emanuel or Yves Saint Laurent’s Encore are strong retail performers, they are the exception among Paris houses.
Price has been a major stumbling block for French firms seeking to penetrate these lower levels in the U.S. High French manufacturing costs, fluctuating exchange rates, transportation and customs all make French goods expensive on arrival in U.S. stores, sometimes priced 30 percent or more higher than in France.
Executives say price is just one element of a much more complicated equation. “Bridge is a special product at a special price,” notes Ralph Toledano, president of Guy Laroche, a house that is relaunching a diffusion line for next spring under the eye of designer Alber Elbaz.
“It’s not just any vague collection that happens to be cheaper than the first line,” Toledano says.
Aside from cost, French companies are challenged in developing lower-priced collections for a myriad of reasons ranging from a fashion culture entrenched in haute couture luxury to logistical constraints, namely, a paucity of manufacturers who can produce quality goods economically.
Compared with Italy, France has far fewer industrial companies capable of making high-quality apparel quickly, observes Robert Bensoussan-Torres, president of Christian Lacroix. Bensoussan is proud of the fact that Lacroix’s secondary line, Bazar, is made in France by Paciflor, the ready-to- wear division of its LVMH sister company, Kenzo.
He recognizes, however, that the colorful and highly embellished styling of the Bazar line and its relatively high price has made it difficult for U.S. retailers to merchandise. The more aggressive the secondary fashion, the more it can be confusing for the big retailers, concedes Bensoussan-Torres, who notes that bridge departments are often populated with less-risky merchandise.
Bazar sits on the border of diffusion and bridge, and it is marketed as diffusion in Europe and upper bridge in the U.S., Bensoussan-Torres explains. While not a huge business, it managed to hit its three-year target of $25 million in wholesale volume last year.
Adapting to U.S. distribution is another difficulty for French firms. In France and much of Europe, distribution is skewed by the importance of department stores in Paris and national capitals, while the provinces are serviced by small, independent multibrand stores. Catering to the demanding American market where retailers — unlike their European counterparts — demand markdown money, multiple deliveries per season and heavy duty advertising can be a real obstacle course for French houses, executives say.
“In Europe, they buy, they sell and they pay us,” remarks Simon Burstein, vice president of Sonia Rykiel.
“The French houses have the styling and the creativity to do bridge lines. But do they have the organization, finances and the designer to do them?” asks Joseph Boitano, executive vice president and general merchandise manager of Bergdorf Goodman.
Boitano points out that the competition in bridge from local American brands is formidable. “I think the national brands have a tremendous hold on the market and have an important role in a variety of stores. These labels are able to achieve this on price, with the support they give the store in terms of selling and advertising, and the profitability perspective. Often, when the French companies try to enter bridge, they compete without understanding all of the parameters.” And without having the same financial might as the American designer firms.
As Boitano and others note, advertising is crucial to support any line in the crowded bridge market. French design houses, with the exception of Chanel, don’t have the kinds of deep pockets that U.S. designer giants like Ralph Lauren or Calvin Klein have.
Chanel, with only haute couture and luxury ready-to-wear for apparel, is a breed apart. While the house doesn’t disclose financial figures, it’s clear from the back cover of women’s magazines around the world that Chanel spends millions of dollars on advertising. The fact that Chanel advertises all of its goods, from fragrances to shoes, also means that the house is spreading the gospel of its image.
Of course, without ad money, French executives know that keeping up the brand image while going down-market is, at best, a challenge.
“With a secondary collection, unless you have the image of the brand very carefully defined, you can dilute the strength of the label,” says Sonia Rykiel’s Burstein. “Everything has to be very fine-tuned.”
He added that the second or third lines of a designer should relate to the signature collection, but must not cannibalize its sales.
Rykiel, which has a relatively strong image for a midsized company, with roughly $75 million in sales, has had a tough time with the Inscription secondary line. The company launched the line in the U.S. in 1989 and had good sell-in, but bad sell-through. “We were not well known enough at the time, the prices were not right and the product mix was off. We got clobbered,” Burstein explains. “Luckily, this didn’t affect our top line.”
Kenzo has made several stabs at the U.S. market for a secondary line, but this spring, the house nixed its latest licensing agreement for the Kenzo Studio bridge sportswear line with Cygne Designs. A spokeswoman explained that the house may have “overanticipated the label’s recognition when the deal was signed.”
Now the house wants to build the position of the top line, Kenzo Paris, through freestanding stores and key wholesale accounts before developing the Jungle bridge and jeans collections, according to Kenzo president Herve Martin.
Even with solid name recognition, a consistent image can be a challenge when a new designer enters the picture. Alexander McQueen, for example, did his first ready-to-wear collection for Givenchy only last March, and already the house is thinking diffusion. For spring ’98, Givenchy will launch a secondary line called Vision Givenchy, which will replace the “too French” Boutiques Givenchy, which wasn’t even marketed in the U.S., said Givenchy president Georges Spitzer.
McQueen will have some time to build a new identity for Givenchy; as reported, LVMH chief Bernard Arnault plans to extend his contract for at least three years. While an in-house team will actually design the diffusion line, McQueen’s collections will provide the general trends, to keep the house’s image consistent.
Givenchy, knowing the risks, is taking the cautious route. “While we have targeted this line to the international active woman and have included more mix-and-match separates, we plan to be very humble at the beginning,” Spitzer explains. “We will test the line with key partners, and we will be ready to be flexible to make necessary changes.”
And then there’s Ungaro’s Emanuel.
The success of the line flies in the face of the notion that Paris designers can’t do diffusion or bridge, or that strong consumer recognition is prerequisite to big volume. While Ungaro has a solid American following, the name is far from a megabrand. Despite this, the six-year-old label is expected to generate an estimated $180 million in wholesale volume for Ungaro’s licensed partner, Gruppo GFT, and sweet royalties for the house of Ungaro.
In fact, no French firm has been able to capitalize on the bridge market as Emanuel has, and retailers attribute this to GFT and Ungaro’s decision to set up a top-to-bottom American company with an American designer and American management to develop the line with the attitude of “When in Rome, do as the Romans do.”
Critics say, though, that the line bears little resemblance to the spirit of the designer or his top two lines, Paralelle and Collection. Ungaro’s managing director Carlo Valerio is quick to respond, noting that Emanuel is the right combination of European style and quality, and American sensibility. “For us, Emanuel is expanding our brand recognition, while our haute couture has been able to transmit our styling down to bridge,” Valerio explains.
He adds that the popularity of the Emanuel line has even trickled up to Collection, the diffusion line, and Parallele, the top line, which posted sales growth of 15 and 21 percent, respectively, this fall over fall 1996. Emanuel’s sales are up 44 percent for the period.
In addition to its All-American philosophy, Emanuel works well because of its pricing. Working in partnership with a manufacturing giant like GFT, the two companies combined provided a critical mass, which made outsourcing possible.
In France, though, outsourcing for designer labels is a dirty word. Some companies, like Christian Dior, striving for the upper crust of luxury, couldn’t conceive of making Dior apparel outside of France. Plus, for Dior Couture president Francois Baufume, bridge is a market plagued by sameness.
“To do bridge would mean putting the name of Dior on something that is already in the market. That is not our product,” he states firmly. “Of course, everyone would love to buy a cheap Rolls-Royce for $10,000, but that car cannot be made.”