French clothing retailer Iger's performance slides behind: Soul figures leave

The performance of the Iger Group, a French clothing retailer with nearly 100 years of history, has continued to decline in China.

Once, China’s performance contributed to the entire group. However, with the large-scale changes in personnel and the emergence of brand aging and other issues, Iger's performance in China has now become a "dragging."

The reform has already begun, but the result is still too early.

Performance delays

Agglomeration’s performance announcement released in July showed that China’s sales in the second quarter of this year were EUR 69 million, a decrease of 5.6%, which was more than the 2.2% decline in the same period of last year.

In stark contrast to the data in China, the Group’s sales in the second quarter were EUR 271.7 million, which was higher than the EUR 263.2 million in the same period of last year, which recorded an increase of 3.2%. Among them, the European market continued to grow to 2.024 billion euros, an increase of 6.7%.

"More than 60 million sales are really terrible," Wang Jun (a pseudonym) told the new financial reporter. He is one of the former executives of Iger China.

Although he has left for many years, he often pays attention to Iger. His work experience there has played an important role in my career. According to his memories, during the most prosperous period of Iger's (1999-2007) Performance was double-digit growth. At the time, France’s profitability was not very strong. The development of the Chinese market made up for the performance of Europe. But now the situation is just the opposite.” Wang Jun felt regret about this.

All along, the Chinese market has played an important role in the entire AIG Group. In 1994, Iger Group of France established a wholly-owned subsidiary in Shanghai, Shanghai Ying Model Clothing Co., Ltd. (Iger China), and French Chinese Liu Yipo opened its first store in Shanghai in 1995. As of June 30, 2014, AIG Group had 4,246 stores worldwide, including 3,083 in China.

Looking at the financial data of Iger Group over the years can also be seen that the turnover in the China region accounts for about one-third of the group's total turnover. In the AIG headquarters website, financial data and business presentations are also listed in the Chinese region for analysis.

In March 2009, Pierre Pilchior, the 73-year-old founder of the Eige Group, publicly told the media in Shanghai: “The demand for the Chinese apparel market is still very strong, and we will increase more investment.” In his mind, “the Chinese market is very large” .

However, three years later, the business in China began to decline continuously, and the Group also decided to close some of its stores in China to reduce losses.

The soul character left

For Iger China, the soul of his illegal Chinese-born Liu Yupo is none other than his own. From 1995, he opened his first store in Shanghai, China, and left in 2008. From Wang Jun’s point of view, Liu Yaopo’s contribution to Iger’s former glory in China was undeniable.

According to Wang Jun, because of the origins of the brand and Iger, Liu Lanpo took this brand to China in 1995. Although at that time the French headquarters sent a lot of experts to guide, involving products, retail management, logistics and other aspects, but Liu Yanpo still belongs to the soul.

Wang Jun joined Iger in his most prosperous period, serving nearly four years, giving him the greatest feeling is "it is a real retail company, a lot of things will not be affected by the outside world." He thinks this and Liu Yupo's development of Iger. Directional control is related to tactical adherence.

At the time, some of Iger's strategies were not fully recognized in the industry, such as discounts. Although the situation in the entire market was good at that time, the products in different regions would be limited in terms of test sales. "We will follow our attention on the products that have been on the line for a few weeks and observe its dynamic inventory turnover days. If it does not meet expectations, it will be quickly discounted."

Wang Jun admits that this way of quick discount will hurt the brand, but "Iger has controlled every aspect of the whole supply chain very well, so at the end of the season it will be very active." So, "those In terms of actual business performance, Iger's business performance is still relatively healthy regardless of earnings or quarter-end inventory."

In addition to Liu Yaopo’s strategic vision, Wang Jun appreciated Liu’s highly-executive team that he gradually developed in Iger. According to his recollection, this team is basically Chinese. “Whether it is the follow-up products, logistics requirements, or marketing and retail terminals that are on the market, this team is playing a role.” Wang Jun believes that Liu Yupo cultivates this. The team’s development of the Iger brand in China is crucial and has also been “de-French”.

After four or five years of exploration and adjustment, "After 1999, Iger's performance in the Chinese market began to grow. By 2003 it had reached a certain scale. The development after 2003 was also relatively smooth." Wang Jun said.

The change originated from a change in 2007. Wang Jun called it an "unusual personnel change." So far, the media has not found any reports of this incident because it was "public relations."

Wang Jun is not convenient to disclose the specific details of the matter. He only stated that “involving the changes in equity and management rights, the management has some disputes, there are public angers, and some other companies are involved. It is very complicated.” In short, “For the company’s great influence."

To this day, Wang Jun still insists that if this matter was "not to start from a personal point of view, then Iger's development in China would not be so passive." He said that he regretted this.

The most direct result of that incident was the departure of Liu Shupo. Wang Jun said that at the time of the handover, he had organized an internal conference for suppliers and malls. He clearly remembered that "the venue was on the Bund No. 18. The chairman of the headquarters also expressed his thanks to Liu Shupo."

Liu Shupo officially left in 2008, after which the Chinese CEO was Fu Xin.

Wang Jun took the initiative to resign during the personnel changes. At the same time, most of the teams trained by Liu Yaopo chose to leave from 1995 to 1999. “The people in the product department are relatively stable, but after Liu Xipo walks away, the whole mentality of doing things is different.”

He was grateful for his years of working experience at Iger. Although he felt regretted when he left, he did not regret it. “Staying will not have good results because you cannot change the status quo.”

After Zhang Xin took over in 2007, Iger China's performance still has a momentum of upward development. However, last year, Iger China "advised" that suppliers paid discounts to affect Iger's brand. "Some suppliers left." .

In Wang Jun’s opinion, although the current market is not as large as it was a decade ago, the decision of the company’s interests should be seen by the policy makers. He believes that in recent years, Iger's brand investment and market investment in China has increased, but the effect is not obvious.

Missing fast fashion

When Aiger entered the Chinese market in 1995, the entire clothing retail industry in China had not yet formed scale and climate. According to Wang Jun’s memories, there was a brand similar to the lady house, but there was no absolute fire clothing brand. After four or five years, the number of consumers increased and the overall external environment was positive. “At that time, China’s own apparel brands did not choose too much, and several brands could develop well.” He believes that Iger has not been particularly clear in China. The positioning, through a few years of exploration is positioned as a ladies.

Wang Jun said that when he first joined Iger, he would pay more attention to the rankings of sales of Esprit, Vero Moda, Only, Ladies, and other similar brands in various shopping malls. “Sometimes they exceed us, and they may lead us.” In short, everyone was a competitor at the time and "is a virtuous circle."

In the eyes of Magang, an independent commentator in the footwear and apparel industry, Igers represented a more authentic European and American fashion concept when he entered China. “There is still scarcity in the Chinese market.” He introduced the new financial reporter. "But later foreign brands more famous than it have entered China, more and more brands can replace it, and its scarcity has disappeared."

Around 2005, ZARA, H&M and other international fast fashion brands entered the Chinese market. In fact, Liu Shupo's development of international fast fashion brands has long been expected.

"I first knew that ZARA was also his translation of Harvard's case into Chinese for all our senior executives to see, telling us how successful ZARA's international brand is doing." Wang Jun said.

In 2006, in the seventh issue of “Decisionmaking” column of Shanghai TV Station, Liu Lanpo and other three consulting companies’ experts were invited to chat with guests about ZARA’s views. At the time, Liu said on the program, "We have special people in our company, and we constantly look at French magazines, British magazines, American magazines, and see all the information online..."

As early as in 2004, "he has been keenly aware that international fast fashion brands will exert their influence on the Chinese market, what impact China will have on the retail industry, and what kind of challenges it will face in the future." The military said.

So from 2004 to 2007, Iger China has made some changes, "buying some bureaus" in response to fast fashion. Specific to "internal supply chain, product and overall rapid response mechanism."

However, the high-level changes in 2007 made “some of the preparatory work we did before was overturned, so it did not continue well.”

In 2012, when AEG China CEO Fu Xin was asked by the media how to look at the Iger brand, he said: “I think Iger is a fast fashion brand, and I understand that fast fashion can provide the fastest for consumers. The latest fashion products. We understand the needs of our customers and can provide the fastest possible choice."

In addition, he also pointed out that “we can do 12 series of new products at the same time and go online in the shortest time. Fast fashion needs the rapid operation of the entire company. We are really fast fashion because we have such an internal system to support it. To this point."

However, in the minds of consumers, Iger is still a certain distance away from the fast fashion. "Iger is not fast fashion, and the goods are not as fast as ZARA. The style is not so novel. I used to buy it when I was in college. Now I visit Uniqlo and ZARA is more." A 80-year-old consumer said to the new financial reporter. .

In Magang's view, the current Iger can not be equal to fast fashion. "We should cater to the changing habits of young people today to make changes in products and marketing."

Unknown result of reorganization

The decline in sales of Iger China started from 2013, and he pointed out in the financial report that he encountered difficulties in both product and business models. In this regard, a few months ago, Iger began the business restructuring program. On the one hand, the Group hopes to reduce the personnel costs and regionally adjust the marketing structure by accelerating the liquidation of off-season commodity inventories, so as to achieve the goal of stopping the decline in revenue in China in 2014. On the other hand, retail networks, product supply, and sales channels have also become the key points for reforms in China.

It is understood that Iger has closed 88 stores in the Chinese market in the first half of the year while opening independent stores in shopping centers. In addition, Iger's products are designed to be European and American, and the lingerie series is distributed on a larger scale.

Regarding the future adjustment direction, Iger pointed out that in the future, it needs to adapt to the diversity of consumption in the Chinese market, reduce the discount rate, and operate on a new brand platform. This platform should emphasize the foundation of the Aeger French brand and meet the taste requirements of Chinese consumers.

Although the decline in the second quarter sales of the Iger China market has increased from 2.2% in the same period of last year to 5.6%, it has slowed down compared to the 15.2% decline in sales in the first quarter. Iger Group attributed this to a series of business restructuring and reform plans.

However, in Magang's view, Iger's current measures to close stores and other related issues can solve the problem of loss caused by poor performance of individual stores, but this is not enough to support a good and healthy development in the future. "Because it is not really a pressure to give it pressure. Two stores, but the overall trend is not good and pressure from competitors."

In this regard, Wang Jun also agreed. He believes that companies are now restructuring or self-rescue by closing stores and changing product structures, but not every company that succeeds in doing so has succeeded. He admits that Iger's E&Joy brand's attempt is remarkable, but "if the entire company's decision-making direction is problematic, the local performance will not greatly help the current situation of the entire company."

He is not optimistic about the current restructuring, "because there is no core change from the management."

More importantly, “the general trend in the domestic market is not very good and the industry itself is in a period of moderate growth. Under such circumstances, no company will have much chance.” Therefore, Ma Gang also believes that if the future Iger does not If the big strategy is to change the status quo, it is not realistic to stop falling in the short term.

"If you don't get better, or if you go down and worsen, the market will eventually become polarized," he said.

The new financial reporter learned and verified the issues related to Iger’s development in China, current performance declines, and future business changes. As of press time, he had not received a reply.