Camaïeu, Pimkie, Burton… The endless curtain falls on ready-to-wear brands
13 Apr 2023
Eight Advisory Paris
13 Apr 2023
Eight Advisory Paris
Bankruptcies and shop closures will continue. In a market that has been shrinking steadily for fifteen years and that is being disrupted by e-commerce and new entrants, the weakest players are threatened.
RECITAL – Bankruptcies and shop closures will continue.
In a market that has steadily shrunk over the last fifteen years and has been turned upside down by e-commerce and new entrants, the weakest players are threatened. How far will the break-up of the ready-to-wear industry go?
After the purge that swept away the weakest brands during the Covid phase (those unable to get a EMP ), the survivors hoped to get back on their feet. Unfortunately, the opposite is the case: after the resounding liquidation of Camaïeu in September, the number of exits has been increasing since January. There are many applications for receivership (André, Kookaï, Gap France, Kaporal, Go Sport…) and liquidations are becoming more frequent (San Marina, Cop.Copine…).
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Even the biggest pessimists did not see the storm coming. Brands that have been part of the French retail landscape for decades are being wiped out. Not a single buyer with a strong backbone has emerged. Not a single investor is pulling out his wallet. Since 2008, the clothing sector has been in structural decline. It may have recovered in 2021 and 2022 after the pandemic-related slump, but it has declined by 15% in fifteen years. At the same time, e-commerce has taken market share from shops and new players have emerged. All the conditions are in place for retailers who are unable to make the digital turn and reinvent their business model to fall by the wayside.
READ ALSO – San Marina, André, Kookaï… Why the carnage in the ready-to-wear sector is accelerating
“The crisis in the middle ready-to-wear industry has just begun,” warns Bernard Bouquet, a lawyer specialising in restructuring.
“Everyone would like to say that things are getting better, explains Xavier Bailly, partner at Eight Advisory.
Unfortunately, we have to expect new failures. The companies that are doing well are getting better and better and widening the gap by investing more and more (like Inditex). On the other hand, the bad companies are suffering a setback.”
In a few days, the fate of San Marina, founded in Marseille in 1981, was sealed. On 25 February, the shoe manufacturer’s 163 shops closed for good. The Noz warehouse bought up the stock to sell it at low prices. The San Marina name has found some takers, but there is no guarantee that it will survive. In addition to the sudden disappearance of entire networks of shops, hundreds of independent shops are also closing. Both in the cities and in the shopping centres, shops are closing, leaving an army of vendors out in the cold.
“The situation is very tense, says Pierre Talamon, president of the National Garment Association, which represents 30,000 independent fashion boutiques. In 2022, we recorded a net balance of 2,500 outlet closures. This is the worst record since 1947. In January we were already at 850 net closures.”
Even the most optimistic experts now recognise that there is no room for brands that are out of step with their customers. The economic context is accelerating the necessary restructuring of the sector.
“There are still too many players in the middle segment,” admits Gilles Minvielle, director of the Economic Observatory of the French Fashion Institute (IFM).
“ 80 % of the players are doing badly or even very badly,” says Laurence-Anne Parent, retail and consumer protection associate at Advancy, a strategy consulting firm.
According to this expert, the strongest will cannibalise the market, while the others risk disappearing. In leather goods, only the market leaders are doing well: the five biggest control 40 % of the market. The five biggest control 40% of the market, compared to 25% in 2017.
Same causes, same effects. Many retailers have too many shops, some of which are no longer profitable because rents are too high. They are not only are they suffering from rising operating costs and falling consumer spending due to inflation, but they have been slow to adapt to the internet.
“Finally, they have a Covid debt that is only exacerbated by the repayment of PGEs,” adds Bernard Bouquet. We need to have the courage to close shops and find the funds to invest. All is not lost. Well-known brands are not bankrupt. But they need to restructure.”
Covid has raised false hopes. Companies that are doing badly have been given these famous government-guaranteed loans that have kept them artificially alive. This is a rude awakening. In addition to the repayment of EMPs, there is the triple penalty of inflation: it burdens their costs (raw materials, energy, transport, salaries, etc.). It also forces them to raise their prices and drives consumers away.
In January and February, sales of textiles fell by about 10% compared to 2019, according to the French Fashion Institute.
In 2023, the Advancy firm expects the market to shrink by 20% in value and by about 30% in volume compared to 2019.
The French are forced to cut back on their spending, and on their holidays and leisure activities. Not the ready-to-wear. The need to consume has changed. The awareness of the ecological impact of the sector makes buyers moderate and prefer second-hand clothes. Inflation forces them to reduce the number of items they buy.
“The fall in consumption has led to an accumulation of stocks, which were bought at high prices last year, says Xavier Bailly. Caught in a vice, many already weakened companies have run out of cash.”
At Kookaï, the 320 employees are holding their breath. The company, which was put into receivership on 1 February, hopes to get back on its feet. But how? In the 1990s, Kookaï was synonymous with boldness and originality. The brand lent itself to advertising campaigns with supermodels Linda Evangelista and Cindy Crawford, legendary fashion designers Karl Lagerfeld and Yves Saint Laurent…
Thirty years later, she no longer attracts the attention of French women. The future is also unclear for Pimkie. The brand was bought from the Mulliez family the trio of investors formed by Lee Cooper France, Amoniss (Kindy) and Ibisler Tekstil. They promise to “modernise the offer and image” to “confirm Pimkie’s place among the top 3 most popular brands for women aged 18-25”. The first step was the closure of 64 shops, resulting in the loss of 257 jobs. In 2010 and 2018, Pimkie had already carried out two PSEs. “What future for the employees? “ asks the CGT.
READ ALSO – Cop.Copine: the last days of a brand after 37 years of existence
Yohann Petiot, director general of the Trade Alliance, which represents 26,000 shops and 170,000 jobs in the fashion industry, is appealing for help. “At the end of February, cotton prices have increased by 28% compared to the 2019 average, he explains. Between May 2021 and March 2023, the euro lost 10% of its value against the dollar. Rents automatically increased by 10% between the beginning of 2019 and the end of 2022. This is a cataclysm. The level of costs is no longer adapted to the reality of the business.” In order to avoid further closures (partial or total), he asks for the possibility of rescheduling EWPs’ debts and limiting the automatic indexation of rents. This would be a breath of fresh air. But if they want to have a future, the companies need to rethink their strategy. For years they have been piling up bad decisions and also suffering from a weak shareholder base. The disappearance of Vivarte in 2021 (La Halle, Minelli, Caroll, San Marina, Naf Naf, Kookaï, Chevignon, Pataugas, etc.), after several years of downsizing, has left ageing brands alive. They were unable to renew themselves. The decline of the Ohayon empire (Camaïeu, Go Sport, Gap France) also testifies to strategic mistakes that have affected sales. “The Covid and inflation are just the igniters, insists Laurence-Anne Parent. In the 2000s, women bought 10 to 12 garments a year. By 2020, that number had risen to 20, on an almost constant budget. In the meantime, retailers had generalised remote sourcing, which lowered prices (for buying and selling) and increased volumes. Even the small brands had their place in the sun”.
The success of certain brands (Zara, Uniqlo, Kiabi, Shein…) should serve as your compass. Even in a struggling industry, there are recipes for success. Each of these brands, in its own way, meets the expectations of its customers. The Beaumanoir group (Cache Cache, Bonobo, Bréal, Morgan, Caroll, La Halle…) targets the provinces. Kiabi dresses the whole family at low prices. Uniqlo cultivates its quality-price ratio with basics (down jackets, turtlenecks). Chinese company Shein is a hit with teenage girls with its prices and a host of influencers on social media. Inditex (Zara, Massimo Dutti, Bershka…) pays attention to both its shop network and online sales (almost 25% of its business). The world leader plans to invest 1.6 billion this year to maintain its lead. In 2020, it has announced the closure of 1,200 shops (excluding Zara) around the world to replace its small shops with larger, more attractive ones. At the end of 2022, García Maceiras, the group’s CEO, summed up the model’s strength: “Fashionable collections, an attractive shopping experience and a team strongly committed to profitable and sustainable growth.” In a shrinking market and with increasing competition, only brands with a clear value proposition will survive. “Especially as consumers focus on a few trusted brands in an uncertain environment, 3-4 at most“, warns Laurence-Anne Parent.
READ ALSO – Kiabi sharpens its creativity while lowering its prices
“The brands that are doing badly have lost their DNA and their ability to differentiate themselves, points out Laurent Melchior, co-manager of the Etam Group (Etam, Undiz, Maison 123). The situation is more difficult because in a declining market, the only way to survive is to outperform the market.”
Investors know this. Like the banks that refuse to lend money, they are absent. Even buyers of scrapped companies are no longer interested in the sector. In February, Kaporal Jeans had to file for bankruptcy because no new investor could be found to revive the brand. San Marina hoped for the support of “a major player in the Brazilian footwear industry”. In the end, the latter preferred not to take the plunge.
Copyright Le Figaro, Mathilde Visseryas