Several French brands, often emblematic of the mid-range of the 1980s and 1990s, suffered from the consequences of inflation and Covid-19. They also pay for their lack of adaptation to new consumption patterns.
The shopping streets look sad. The list of French ready-to-wear brands in bad shape or forced to close down keeps getting longer. After 42 years of activity, the shoemaker San Marina was placed in compulsory liquidation on Monday February 20, dragging down some 650 employees.
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In recent weeks, other clothing and footwear brands have made similar announcements: André, Go Sport and Kookaï have been placed in receivership since the beginning of the year. At the end of September 2022, the liquidation of Camaïeu, leading to the dismissal of more than 2,000 employees, had already hit the sector. In May, it was the Pimkie brand, which had been in difficulty for nearly a decade, which declared that it was looking for a new buyer.
“Repeated shocks”
How to explain these cascading announcements? Movement of “yellow vests”, health crisis, inflation… The clothing and footwear industry has suffered “repeated economic shocks” in recent years, observes Philippe Moati, professor of economics at the University of Paris Cité. The forced closures on Saturdays due to the demonstrations and then the payment of rents during the confinements, while the curtains were drawn down, have “deteriorated the financial situation of companies”, underlines the economist. State aid has indeed “had an infusion effect”allowing signs in difficulty to prolong their survival, notes Yohann Petiot, director general of the Alliance du commerce, but these subsidies have now disappeared.
In this context, inflation was able to deliver the final blow. “There is the increase in the cost of energy, rents and wages” but also “the repayment of state-guaranteed loans taken out during the Covid-19 crisis, which further reduces the profitability of businesses”details with AFP Emmanuel Le Roch, general delegate of Procos, federation of specialized trade. “Because of the rise in prices, households are losing purchasing power and are forced to arbitrate in their expenses”to the detriment of clothing, also notes Philippe Moati.
“Clothing is a saturated market: we already have clothes, we are rarely on first equipment. So these are purchases that can easily be postponed.”
Philippe Moati, economistat franceinfo
In 2022the sector’s turnover was thus down by more than 4%, compared to 2019, the pre-Covid reference year, according to the French Fashion Institute. A gloom destined to last: eight out of ten French people plan to reduce their spending on clothing in 2023, according to a study conducted by the consulting firm Wavestone.
A sector in difficulty for fifteen years
However, the difficulties of the sector are not new, note the experts interviewed by franceinfo. The French spent 2.8% of their budget in 2018 on clothing and footwear, compared to 3.4% ten years earlier, according to INSEE. And despite this downward trend observed since the end of the 2000s, “supply continued to grow, creating overcapacity in relation to demand”, analyzes Philippe Moati. At the dawn of the 21st century, the number of players in the clothing sector has indeed exploded, with the irruption, in France, of international mid-range giants, such as Zara, H&M or Primark, reminds franceinfo Gildas Minvielle, director of the Economic Observatory of the French Fashion Institute. Among their strengths: strategic locations, very large sales areas and a sustained collection renewal rate. At the same time, destockers, such as Action or Zeeman, have multiplied, while low-cost food brands, such as Lidl or Aldi, have also started selling clothes.
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Opposite, the French chains (Pimkie, Camaïeu…), centered on women’s fashion, had succeeded in imposing themselves in the 1990s and 2000s. “by taking market share from independent multi-brand retailers, thanks to more accessible prices”, emphasizes Gildas Minvielle. But without having “very innovative strategy”. Gold, “In a saturated market, you have to be able to sell a product, but also an image, an identity, signs, values”, says Philippe Moati. What specialists call “the immaterial” and which allows brands to stand out. “Reworking the product offer, the store concept, thinking up a strategy for social networks…” This obligation to “to recreate desirability” is expensive, according to Yohann Petiot. But the ability of traditional channels to invest is often burdened by heavy indebtedness linked to the opening of “hundreds of stores” in the 1990s and 2000s, recalls Céline Choain.
A breathless consumption model
In addition to increased competition, the sector has also had to deal with changing consumption patterns. “Before the Internet, it was your geographical location, and therefore the number of visits to your store, that built your turnover. Today, an increasingly large part of our sales are made on the web”, explains Yohann Petiot, of the Trade Alliance. In 2021, 21% of clothing sales took place online, up from just 6% in 2009, according to research published by IFM and panelist Kantar in May.
“Traditional retailers have often underestimated the e-commerce model, going too late and in a plan-plan way.”
Philippe Moatiat franceinfo
Conversely, old and new brands have succeeded in the web bet, by giving up physical stores (Zalando, Sarenza, Veepee, Asos…). Other players have developed a particular tone (Le Slip français), targeted a very specific clientele (young people for the Chinese Shein, for example) or found a strong concept (the French brand Veja and its “ecological basketball”), the experts interviewed by franceinfo.
Finally, many brands have missed the “second hand” turn. This market, maintained by inflation and the ecological awareness of part of the clientele, represented 6 billion euros in France in 2022, against only one billion in 2018, according to the French Fashion Institute. “Now, all the brands are trying to get started, but it’s too late, the place is taken by Vinted, Facebook Marketplace or Le Bon Coin”believes Philippe Moati, who underlines the existence of a premium for players who are already well established. “The more your platform works, the more attractive it is, because buyers and sellers want a place that brings people together.”
Historical channels in difficulty suffer a “effect hourglass”summarizes Céline Choain: the low-end and the high-end succeed, while in the middle, the signs have more difficulty in distinguishing themselves and in resisting. However, the ready-to-wear sector is far from having said its last word. “THE model of the mall and the shopping street with all the shops in a single file is running out of steamacknowledges Philippe Moati. But the signs that are disappearing today will give way to others and to a new mode of consumption.