ETAM’S EXPANSION PLANS
Byline: Robert Murphy
PARIS — French lingerie firm Etam is bulking up.
As part of an aggressive expansion plan, the publicly traded company plans to open 15 megastores in France over the next year, including a 45,000-square-foot flagship on Paris’s Rue de Rivoli. Within five years, Etam is aiming to roll out another 100 European units, adding to its chain of more than 1,000 stores in Europe.
Meanwhile, the firm controlled by French businessman Pierre Milchoir, is also expanding overseas. It opened its first unit in Tokyo this summer. Over the next year, Etam will introduce another 10 to 15 stores in Japan. In five years, Etam expects to operate more than 50 Japanese units. The company already operates 100 units in China.
The new megastore strategy marks a departure for the Paris-based firm, which has traditionally concentrated on small neighborhood units. Etam managing director Jacques Levy said the firm has shifted its focus to opening larger stores similar in size to those operated by trendy mid-tier retailers like Zara and H&M, which have aggressively expanded in Europe over the last few years.
Etam currently holds a 12 percent share of the French lingerie market, according to Levy. Lingerie accounts for 65 percent of sales, with ready-to-wear representing the rest.
“Zara and H&M have changed the face of European retail,” said Levy. “Women have become accustomed to their sprawling format. They like the space and vast product choice. Consequently, they don’t like smaller stores, especially when shopping for mid-priced products.”
In the past, Etam stores ranged in size from 2,000-to-3,000 square feet. Separate stores concentrated on lingerie and ready-to-wear.
The new stores, including a unit near the Champs Elysees slated to have opened this month, will range from 8,000 to 10,000 square feet and regroup all of the firm’s segments’ under one roof.
“We were a little worried with the transition into larger units,” Levy said. “Our past expertise was in smaller units. But putting all of our activities into one larger store was a perfect solution.”
Additionally, Etam’s new stores will stock its junior Tammy line, launched in continental Europe this summer. Previously, Tammy was sold in the U.K. But it’s expected to account for 10 percent of the company’s business in Europe this year.
Apart from enlarging selection, Etam wants to give the stores a modern perspective. For example, there will be video screens projecting recent collections, and the decor will will be sleek and contemporary, using wood fixtures, cement floors and white walls.
“The idea is to modernize our look while keeping a very feminine flavor,” said Levy.
Although Etam executives are upbeat about expansion, investors have recently soured on Etam stock, saying the firm was expanding too fast. This year, the stock tumbled more than 50 percent from a high of about $26.
Adding fuel to the fire of investor discontent were Etam’s poor first-half results, down 2.7 percent to $424 million. Levy attributes the decrease to new investment, noting, “If we want to grow in the future, we have to spend now. A company needs to invest in the future.”
Still, Levy concedes Etam has its work cut out for itself if it is going to make the format profitable. For instance, he said the firm is still struggling to define its new marketing strategy.
“We are still exploring the question but it’s not clear for the moment,” said Levy.
He did suggest that the company would focus on refining its image and giving it a modern fashion spin.
Etam, founded 80 years ago, started to reorganize two years ago when the firm’s French arm acquired its sister operation in the U.K., which had had been separately owned.