YOUNG, FRENCH AND U.S. — BOUND
Byline: Katherine Weisman
PARIS — Just because you’ve got a French label, don’t think it’s easy doing business with American retailers.
If you’re one of France’s many junior and contemporary sportswear firms, it can be enormously difficult. Although some companies have managed to crack the U.S. market and achieve varying degrees of success — see below for some of the outstanding examples — most others have had to deal with problems ranging from pricing to culture shock.
Despite the potential pitfalls, French apparel makers are eager to gain a presence in the U.S.
“You have to be there,” said Philippe Adec, president of the company and designer of the line that bears his name. “It is the center of the world for fashion.”
But, he added, it is a “dangerous” market.
“The system and mentality is so different there than here. Stores decide at the last minute to not accept delivery of a preordered shipment,” Adec noted, adding that this happens typically when buyers change — which they often do. “The new manager says to cancel all orders. Sure, you can sue, but that’s a long and costly process.”
Getting paid can also become an issue, company executives said.
“There is just bad faith in the U.S.,” observed Stephane Dessaint, creative director of junior contemporary brand Kookai, who also holds the distribution license for Kookai in the U.S., starting with fall/winter 1997-98. “The brand had three bad distributors in a row, and the last one simply didn’t pay Kookai what it was due.”
Whenever merchandise is to be exported directly from France to the U.S., competitive pricing becomes a serious issue, according to executives. Transportation costs, duties and markups can lead to retail prices roughly 30 percent higher than those in France.
Many French brands — Naf Naf is perhaps the best known — had a go at the American market in the Eighties when the exchange rate ranged between 8 and 10 francs to the dollar. But once the dollar weakened against the franc, many retailers stopped ordering, and business came to a halt.
Another difficulty for French companies is adjusting to the U.S. market, which is dominated by nationwide department store chains. In France, brands like Kookai or Morgan from Paris’s garment district, or Sentier, have large networks of wholly owned and franchised stores.
Meeting the demands of big American stores with dozens of branches is a new concept for many labels. In France, Galeries Lafayette or Printemps carry those labels in their Paris flagships and perhaps a handful of stores in major French cities only.
Many U.S. retailers say they are eager to carry French brands or work with Sentier companies for private label — as long as they can work out the price, the quality and the logistics.
“We have always carried French junior and contemporary brands, but not necessarily from the same vendor from season to season,” said Kal Ruttenstein, senior vice president of fashion direction at Bloomingdale’s.
Ruttenstein said he’s keen on these kinds of French makes — either for private label or selling the actual brand — because they work so close to the season and have the technical ability to jump on a trend and deliver new merchandise quickly.
“Every time we buy from there, it adds cachet to our offer,” Ruttenstein said. He noted that often a micro trend will appear in Paris, and due to a few strong partnerships Bloomingdale’s has with several Sentier firms, the store can order merchandise and get it delivered at roughly the same time the trend hits New York or other major U.S. fashion cities.
The only negative point Ruttenstein cited for working with Sentier firms is that the collections don’t have continuity from season to season. Quality can also be inconsistent, and retail prices end up being higher in the U.S. than what a consumer would find for the same merchandise in Paris. But Ruttenstein said his customer is going for the fashion and will sacrifice price and quality for the instant look.
While many French sportswear firms are actively pursuing new business in the U.S., junior brands Morgan, Kookai and Free, plus the more sophisticated sportswear labels Philippe Adec and Capucine Puerari, have each employed different strategies for developing American sales.
Following is a look at each of their tactics.
Since the company’s founding in 1983, it has exported “very small quantities” to the U.S., said president Laurent de Blegiers, whose wife, Capucine Puerari, designs the daywear, eveningwear, swimwear and lingerie collections for the brand.
“Our approach is one of extreme caution,” de Blegiers said. “The U.S. is very far away, and it is hard for a small company like ours to make the investment necessary to establish a solid American business.”
Historically, this small company — with revenues of about $10 million (50 million francs) at current exchange rates — worked with Paris buying offices servicing American stores to get the product sold stateside. But that, coupled with taking part in Paris trade shows, hasn’t been enough to support the brand among American buyers, de Blegiers noted.
Several seasons ago, the company decided to hire a U.S. importer to distribute the brand stateside, but de Blegiers discontinued that because the margins taken by the importer, on top of shipping and customs costs that bring prices up roughly 30 percent just for crossing the Atlantic, were making the Capucine Puerari goods too expensive. In France, average retail prices for skirts, pants and jackets for this spring range from $140 to $280 (700 francs to 1,400 francs).
For fall/winter 1997-98, de Blegiers decided to work with an agent — he is currently deciding between two — and the company has applied to be admitted to New York’s Fashion Coterie. With an agent, de Blegiers is hoping that the items will cost roughly 20 to 30 percent more in the U.S.
“In fact, you have to treat the U.S. market as if it is another European country — we need to be close to our clients in the States, just as we are in Europe,” de Blegiers said. “We cannot wait for American buyers to come to us. With the consolidation of so many department stores, a lot of buyers are no longer coming to Paris.”
De Blegiers also considers it essential to choose the right stores to sell to. Rather than struggle with that issue from Paris, he feels an agent would have knowledge of the local market in order to select the appropriate stores.
De Blegiers does not feel the current low rate of the dollar against the French franc is a major obstacle to U.S. sales.
“Even when the dollar was high, American buyers have always been very demanding about price,” he said. “But it’s definitely better to sell in landed dollars. We will keep our prices in line as best we can, but we hope not to impinge on our margins.”
Philippe Adec has been present in the U.S. for roughly a decade, noted Philippe Adec, president and designer.
“When we started in the U.S., the dollar was at 10 francs. The new thing we brought to American stores was yarn-dyed jeans,” Adec recalled, noting that at first the company exported directly from France and then brought in U.S. agents to facilitate sales. But in 1988, once the dollar began to fall, Adec established a licensing agreement with New York-based Morelle Products to make and distribute the brand in the U.S.
“The American product is the same model, using the same fabric as the French collection,” Adec said. “The only exception is for special orders for department stores, and there may be some sizing adjustments.” Aby Saltiel, Morelle’s founder and president, added that the main size adjustments are for lengths.
Retail prices in the U.S. are roughly the same as in France, Saltiel said. Adec jackets retail from $380 to $550, pants are $160 to $250 and skirts are $110 to $200. Philippe Adec has consolidated sales of about $20 million (100 million francs). Saltiel would not disclose American volume figures.
To reinforce the French origins of the line, Adec makes appearances and does trunk shows for his U.S. clients, which include Bergdorf Goodman, Neiman Marcus and Nordstrom.
This junior brand is taking another stab at the U.S. market after three consecutively bad experiences with local distributors.
Stephane Dessaint, the company’s creative director, is the new distribution licensee for the label. He is based in New York to establish the label Stateside.
Given his problems with American department stores, Dessaint has decided to open a handful of wholly owned freestanding stores in several cities and stock them with product from Kookai in France. The first store will be in New York’s SoHo. While Dessaint readily acknowledges that it will be hard to keep prices in line with those in France, which help maintain a faithful junior clientele, Dessaint hopes to keep the U.S. prices just 20 percent higher, but did not disclose how. In France, Kookai’s average retail prices are about $53 for skirts, $60 for pants and $115 for jackets.
Once the image of the brand is established, Dessaint wants to find partners to open more freestanding stores to be held in joint ventures. Dessaint feels the brand’s concept and image must first be established on its own before wholesaling to larger retailers.
Kookai had wholesale volume of $114.8 million (574 million francs) for the fiscal year ended Aug. 31, 1995, the latest figures available.
This brand, launched in 1980, is the product of a manufacturer whose origins date to 1945. Morgan has consolidated sales of about $100 million (500 million francs). Morgan owns 40 freestanding stores in France, along with many other franchised stores. There are 260 freestanding Morgan stores worldwide owned by the brand’s international distributors, but none in the U.S.
That should change beginning next year thanks to two new distribution agreements the company signed about a year ago, according to Claude Bismuth, the director of development. Bismuth is married to Jocelyne Bismuth, the head of Morgan’s design team. A company called Punch in New York is managing the brand’s distribution on the East Coast, while Flying Solo in Los Angeles is handling Morgan on the West Coast. Thanks to these partnerships, Morgan has been exhibiting at U.S. trade shows, Bismuth said.
The initial aim is not to gain distribution in larger stores, but like Kookao, Morgan wants to establish itself through freestanding stores. Morgan’s partners plan to open about 10 stores next year in various U.S. cities.
“We want to show off our concept, everything from the clothes to the architecture and merchandising,” Bismuth said. For the time being, the company will export its French-made clothes, even if they arrive in stores at higher price points than those in France.
“At the outset, we want to have a small business with a strong concept and where sales are working well, even if prices are higher,” Bismuth explained. “Our primary goal is for the product to be well understood by the public.”
As do other Sentier firms, Morgan works quickly. Its biannual collections comprises roughly 400 models, and the company produces about 80 new pieces a month to provide stores with fresh, trendy merchandise.
Morgan’s choice for the U.S. market mirrors its strategy for other non-French markets, excluding some European countries, where the company systematically works with local distributors to market the French-made product.
The U.S. is on Morgan’s list of export markets not by choice, but by circumstance, Bismuth explained.
“You absolutely cannot go it alone in the U.S.,” he said. “We waited for several reasons. We have been developing other markets, like Asia, and we did not want to try and tackle too many markets at once, but we also had not found the right partners.”
This junior label, which features a lot of clubwear, is just three years old and has consolidated sales of about $12 million (60 million francs), according to president Michel Zberro. The brand attacked markets abroad from the outset, and exports represent roughly 50 percent of total revenues. Prior to becoming a brand, Free, like other Sentier labels including Kookai, manufactured for other brands and still has some private label activities, Zberro noted.
For the U.S. market, Free set up a licensing agreement by setting up a Paris-based company called PBI to handle the line’s French manufacture for the U.S. and manage American sales. PBI is run by Philippe Bechnainou, one of the founders of Free. Since PBI’s only function is to make and sell Free in the U.S., using the brand’s models and fabrics, it has very low overhead compared with the parent company, enabling Free to be marketed in the U.S. with the same retail prices used in France. Stateside, sales are handled by exclusive distributor Follies, a company with offices in New York and Miami.
In France, retail prices for Free average about $60 for skirts, $75 for pants and roughly $100 for jackets.
PBI’s Paris location is also helpful because the company works with short lead time, Zberro explained. For French clients like Galeries Lafayette or Printemps, Free sends new, trendy pieces to the stores three times a month to supplement the seasonal collection.
Free has gained exposure to American clients in part through trade shows in the U.S. including WWDMagic, as well as in France. While the company exhibited at Who’s Next, the street and clubwear show that took place at the same time as the Pret-a-Porter show here last September, the brand will be showing at the Pret in January. Zberro felt that Who’s Next was too unisex for Free’s feminine, sexy image.
Free has limited distribution in the U.S., where it has been carried by Patricia Field and Antique Boutique in New York, as well as Fred Segal in Los Angeles. The company is targeting specialty shops for the short term and will see how sales evolve before tackling big chains, said Bechnainou.