SUCCESS IN THE KEY OF AGNES B.
Byline: Katherine Weisman
PARIS — She doesn’t do glitzy ad campaigns, skips the fashion show circuit and has never done a blockbuster fragrance launch.
But Agnes Bourgois has managed to build a family-owned business that earned $12.5 million (66 million francs) on sales of $149.6 million (793 million francs) last year. And sales this year are expected to rise 5 percent to $156.9 million (831.5 million francs).
Agnès B., president and designer, and her son and managing director, Etienne Bourgois, have built the business by combining price-sensitive design ingenuity and modern market strategies, still often rare with French fashion companies.
Keys to the company’s success include
Biannual collections with styles added regularly throughout the season.
Highly selective and limited distribution, restricted mainly to 62 boutiques, either wholly owned or owned through partnerships, with the exception of two franchised stores, which generate 96 percent of total sales. In addition, there are a handful of shop-in-shops in a few top department and specialty stores.
Frequent deliveries to boutiques: three times weekly in Paris; weekly in stores elsewhere in France, Europe and the U.S.
Sophisticated computerized management of production, inventory and delivery.
Last, but certainly not least, is Agnès B.’s fashion, which has developed a near-cult following among customers, which include women, men and teenage girls.
Speaking about her fashion design, Agnès B. talks more about its purpose rather than its style.
“You have to give a piece of clothing a raison d’être. I need to reflect about the life of my customers,” she explains from her showroom on Paris’s Rue de Rivoli. “Sometimes I think about myself, and I often try on the clothes I am designing. That way I can bring more improvements.”
She almost sounds like Donna Karan, but Agnès B. got into the business a good 12 years before Karan. The company’s history seems even more unlikely, given the fact that Agnès B. originally planned to be a museum curator after finishing her studies in fine arts in the early Sixties. But after being a stylist for labels like Dorothée-Bis and Pierre D’Alby, she registered the name Agnès B. in 1973 and started her company two years later. Her passion for art, however, continues in her Galerie du Jour, an art gallery in Paris’ first arrondissement.
“Agnès’s thing at the outset, and still today, is taking a basic good and adding some styling,” explains Etienne Bourgois. “The theory being that basics just need a new touch.”
The result is a company that produces fashionably classic, somewhat forward clothes for women, men, teens and children under the Agnès B. Femme, Agnès B. Homme, Agnès B. Enfant and Lolita collections.
The collections sold in Europe and the U.S. are made in France. In Japan, where Agnès B. operates under a joint-venture with the Sazaby Group, 40 percent of the goods are French-made, while the remainder is made locally. The women’s collection, which accounts for 70 percent of sales, comprises 150 to 200 pieces per season.
“We don’t do structured collections,” says Etienne Bourgois. “If Agnès wants to add 20 more jackets [mid-season], she does them.”
But the company is careful not to bring out new items too often. “American companies have gone too far with this, introducing whole new collections every month,” Bourgoissaid . “You can’t destabilize the client like this. Customers want to see some constant pieces.”
This is a business decision as well as a fashion one. Agnès B. often keeps items in a collection for many seasons. “We’ve had these pants for four years,” she says, pointing to the pair she’s wearing.
Other examples include the now-classic snap cardigan sweatshirts and sailor-striped T-shirts. Even with her free-spirit approach, Agnès B. takes price into consideration when designing. “These days, people want to go for a week’s vacation rather than spend 5,000 francs ($950) on a jacket,” she says. “Past fashion habits are no longer.”
Average retail prices for the women’s line run about $396 (2,100 francs) for a suit, $113 (600 francs) for pants, $105 (560 francs) for a skirt and $90 (480 francs) for a blouse.
Unlike rtw labels that depend on wholesaling, Agnès B. is practically a proprietary label retailer, since only 4 percent of sales are in non-Agnès B. stores. Bourgois said Agnès B. was adamant about having her own distribution from the start, when she opened her first boutique in 1975 near Les Halles, complete with live birds.
“With [our own] boutiques, we can do what we want,” he explains. The stores tell the company who their client is and what they really want. While Agnès B. opened a 300-square-foot permanent space at New York’s Bergdorf Goodman last spring, shop-in-shops at Galeries Lafayette’s Paris flagship and Montparnasse stores, and sells to Geneva’s Bon Genie specialty store, the firm shies away from department and specialty store distribution, especially in the U.S.
When Agnès B. first approached the U.S. market in the late Seventies, the line was picked up by stores like Macy’s, Barneys and Bloomingdale’s. The company, however, was displeased with the results.
“The problem with American stores is that they want the French brands for image, but then they don’t merchandise [them]. As soon as an item doesn’t sell, it’s put on sale after six weeks,” Bourgois notes.
Stores owned in partnership include 35 shops in Japan held through a 1984 joint-venture with the Sazaby Group called Agnès B. Sunrise. The venture plans to expand into Southeast Asian markets, starting with two stores in Hong Kong next year. More stores are planned for Hong Kong, Singapore and Malaysia. China is a long-term target.
The Japanese venture has been an huge success, with retail volume nearly tripling over five years to $203 million (20 billion yen). Interestingly, in Japan, the label appeals to a broader age group, women 15 to 40 years old, than in France, where the customer is 20 to 36 years old.
But Agnès B. has its share of headaches, and the company acknowledges in particular that there are some export wrinkles that need to be ironed out.
Outside of Europe, Southeast Asia is the only market where Agnès B. can export from France and make a decent margin. In markets like the U.S. and Asia, retail prices can be 15-30 percent higher than those in France, due mainly to customs duties. This has severely limited Agnès B.’s American presence, where the company has four stores: one each in Boston and Los Angeles, and two in New York City.
“We should be doing more in the U.S., but we have a price problem,” Bourgois said. “Our basic T-shirt is 30 percent more expensive in the U.S. than in France. We cannot compete with the likes of Gap.” To expand in the U.S., Bourgois says the company would have to move at least some of its production outside of France, as it does in Japan.
“In the U.S., store rent is high, and it is not easy to make a profit,” Bourgois continues. “Delocalizing is key.”
Bergdorf Goodman executive vice president Joseph Boitano doesn’t agree that Agnès B.’s prices are too high: “The great thing about the line is that it provides fashionable, but not trendy rtw at a very good price.” He said skirts and jackets sell for $300 to $400 in the store. “We find the prices fine for our customers.”
Last year, the firm changed its American management, and since June 1993, Yves Seban has been vice president of Agnes B.’s New York-based subsidiary.
Currently, Agnes B. is examining the possibility of opening more stores in the U.S., including San Francisco and Washington D.C., and is considering going further with wholesaling.
The company will either continue to expand on its own, or ultimately pursue a partnership, but foreign licenses are out of the question.
Company management knows it could grow sales quickly through licensing accessories and possibly home accessories. But such agreements are limited to a 1987 fragrance and cosmetics deal signed with mail-order group Club des Createurs de Beaute, which is 50 percent-owned by L’Oreal. Créateurs markets three fragrances: the first women’s fragrance “le b” launched in 1987; “le petit bb” baby’s scent launched in 1991; and the newest women’s scent, “Courant d’air,” which bowed in 1992. Fashion accessories, which now include sunglasses and shoes, are manufactured under contract and sold mainly through Agnes B. stores.