“We’ve lost touch with our audience”: Esprit announces major changes

Source: https://fashionunited.uk

Esprit wants to be an iconic brand again. While still the third favorite fashion retailer in its home country, Germany, where it registers an impressive 87 percent brand awareness, things don’t look so bright elsewhere and the company has been continuously reporting revenue decline. In a presentation for investors held in Hong Kong this Monday, Esprit recognized that a lot needs to change: “Our brand identity is inconsistent, we don’t know what we stand for”, “we’ve lost touch with our audience due to lack of consumer focus” and “Esprit is not fast fashion” are just some of the harsh realizations the retailer has come to.

But those inconvenient truths are being seen as stepping stones to rebuild the business model and distinguish the brand from fast fashion and discount retailers. “Our time is now. We are committed to change, to put us back where we belong”, said the label in its presentation. But how does it intend to do that? By becoming the next Benetton — at least when it comes to brand image. Esprit is set to reposition itself as a politically engaged brand whose mission is to bring more joy into the world. With the motto “radical positivity”, the company aims to be recognized for offering “products and experiences that lift the spirit”. Causes like sustainability, tolerance and inclusivity will be at the core of its brand DNA, with an advertising campaign in partnership with UN Women’s National Committee in Germany already in the works for the next International Women’s Day.

Customers can expect changes in the look and feel of both Esprit’s e-commerce and brick and mortar stores, with a new store concept set to be unveiled in August 2019. The company has also announced the intention to step up its game on social media, with the goal of surpassing 1 million followers in the next 18 months. To get there, Esprit will increase its social media spending, working with micro influencers and engaging with consumers via real-time tools such as Instagram Live. These moves were inspired by a survey with over 10,000 consumers in Germany, China, France and Sweden, four of Esprit’s key markets.

Esprit to offer less items and more black from June 2019

It’s not all about brand message, though. Esprit’s product offering is set to go through changes too. To start, the company realized it carries way too many options, which means higher development costs and complex stock management, not to mention the dilution of its brand and collection message. Therefore, it intends to reduce the number of items by 20 to 30 percent from June 2019. The brand wants to be known for its pants, T-shirts and sweaters, categories which already make up more than 50 percent of its assortment. The goal, from now on, is to “create excellent products customers can trust over time” and, to achieve that goal, Esprit will invest in improving the quality of its products and using data analysis to track the success of each collection.

In addition to focusing on pants, T-shirts and sweaters, the retailer aims to make the assortment more commercial by ditching vibrant colors and focusing on neutral shades such as black, white, grey and beige instead. This decision was inspired by a market research which showed 30 to 40 percent of items sold by Esprit’s competitors are black, while the color only appears in 15 percent of Esprit’s pieces at the moment.

Denim is a significant category in Esprit’s catalog, having seen a 40 percent growth compared to last year, results which the company attributes to the wide range of fits and clear explanation of styles. Moving forward, Esprit will focus on sustainable denim, made from organic cotton and recycled fibers. Currently, about 30 percent of Esprit’s denim offering is sustainable, but the brand aims for its entire mainline to come from sustainable sources, with the exception of tencel, by Spring 2019. Speaking of sustainability, 90 percent of Esprit’s e-commerce orders in the European Union will be shipped by carbon-neutral or reduced emission programs by the end of the year.

Esprit to cut 40 percent of non-store jobs

To make sure all these plans are implemented seamlessly, Esprit is planning a major organization restructuring, with overlapping functions bound to be eliminated and hierarchies to become more horizontal to accelerate the decision making process. The executive team has already been reduced from 13 to 6, and the company intends to cut approximately 40 percent of its non-store positions by June 2019. As a result, office spaces will be reduced in both Germany and Hong Kong, with five offices merging into one in the company’s Hong Kong headquarters.

Even though no job cuts in stores have been announced for now, Esprit is set to make a store by store assessment to decide on its retail footprint. “We are taking bold steps to review our current store portfolio”, said the company in its presentation. 18 stores in Asia have already closed its doors since FY 17/18, and the fate of 28 European shops has been sealed too, with closures, rent reductions and resizing underway.

It’s not all doom and gloom, though, as the company has its eyes on Asia for further expansion: a total of 223 store openings are planned in China by 2023, with an additional 78 stores across Asia to be opened within the next five years.

“We will be the best in class in wholesale”, promises Esprit

“Wholesale used to be one of our strengths, and it will be again”, said Esprit in its presentation for investors. The company has identified the limited consideration of wholesale in product development as an issue to be addressed going forward, and recognizes “complicated and slow processes” as a hindrance to its relationship with wholesalers. As a result, sales have been declining, although wholesale still turns a profit.

Esprit is looking to solve these problems by involving key partners in the design process and creating in-season capsules to generate more sales opportunities for partners. Furthermore, all wholesale orders will go digital thanks to a new tool which has already been implemented in Asia and is set to roll out in Europe this month. Last but not least, the company promised a new shop-in-shop concept to debut in the second half of 2019.



Categories: Asia, Brands, Business, China, E-commerce, Europe, France, Germany, Retail

Tags: , , , , , , , ,

%d bloggers like this: