Nor Benetton, nor Esprit, nor Forever21, nor Abercrombie&Fitch are amongst the biggest groups of the sector. Victoria’s Secret, a mass phenomenon in the early 2000 has lost its sex appeal, and the surfer fashion has been reduced to a sports market. However, new models have arrived, like Primark’s low cost, that has shaken the ranking and continues to grow while its competitors face restructurations.
The Irish company, property of the British giant AB Foods, has speed its expansion in the last decade with the opening of new stores in new markets. The company counted with 191 stores in 2009, an its revenue was around 2.8 billion pounds. Five years later, the group had doubled its sales and at the end of its fiscal year 2018, its revenue arrived at 7.4 billion pounds. Its 2009, also implied the development of the internationalization of the chain, that up until then only operated in Ireland, United Kingdom and Spain. That same year, the group arrived at Netherlands, Germany and Portugal, and today also operates in Belgium, Austria, France, Italy and United States.
As consequence the group has speed its retail network, at the end of its fiscal 2018, the group counted with 360 stores, that add a total of 1.4 million square meters. The company continue to bet for commercial malls, but also went to the streets, with the opening of flagships stores, like the one opened in 2015 in Gran Via street in Madrid. One year earlier, the company stole the throne from Zara as the fist fashion chain in Spain by number of buyers.
Primark found, in the decade`s first years, the territory ready to continue growing, with the lowering of the markets acquisition power, its “amazing fashion, amazing prices” was an immediate response to the consumers needs. But once the recovery started, the company continued growing, but some markets, like United States, still fight. At the same time, the company started to revolutionize its retail concept, going more towards fashion and introducing services like hairdressers or cafes. All this expansion process has been led by Paul Marchant, who, in 2009, took control after Arthur Ryan, the chains founder left.
But while Primark still rides the wave, other decade phenomenon like Abercrombie&Fitch started to lose gas. The American company conquer teenagers’ closets with a provocative communication studied in business schools and that broke with the traditional concept of retail. However, that sex appeal that put the company on the top, started to fade as taste and sensibilities of the consumers change. Mike Jeffries, responsible for this new “sex” image, as he described it, left the company in 2014, after eleven consecutive quarters on the low. Jeffries was chosen by L Brands to save the company from liquidation in 1988.
Other phenomenon of the decade like Abercrombie&Fitch started to lose gas
In 2009, the company’s revenue was 2.9 billion dollars, after a fall of 15.9% compared to the previous year. In 2018, under the lead of Fran Horowitz, the current CEO, Abercrombie rised 3.5 billion dollars, and rose 3% compared to 2017. Today, the groups motors are Hollister and its local market.
The company is in its second phase of transformation: the fist one between 2015 and 2017 and was concentrated in stabilizing the company and switch its strategy to put the customer back in the center. The second one that goes until 2020, forecast a light rise while the transformation moves forward and the third, from 2021, goes through speeding its growth and becoming in one of the biggest omnichannel players in retail, the groups annual report stated. Only time will tell if this restructuration of the chain will work.
Polemics and sex
Another American giant that in the same decade has go from the top to the bottom is American Apparel. With a polemic and hypersexualized advertising, an offer of basics, lame and neon t-shirts, and the made in USA stamp, the phenomenon grew quickly in the beginning of the 2000, despite owning only a hundred stores. But in 2014, everything fell apart. One year earlier the group grew 3%, up to 710.5 million dollars, and survived several sexual abuse allegations against its founder and CEO, Dov Charney. The executive then gave the board of directors a resignation letter.
The company named as new CEO, Paula Schneider, former executives of companies in the sector like Warnaco or BCBG Max Azria. From that point, the group wondered without a destination, missing its strategy, turning low results, cutting its workforce and its store portfolio to try to recover profitability. In September of 2015, America Apparel was de-listed after its closed at 16 cents per share, and one month later, the company filed Chapter 11. Today, the brand is owned by Gildan Activewear, that externalized the production to Honduras and Nicaragua and closed all its phisical stores to operate only online.
United States had, before the Primark phenomenon, its own low-cost, Forever21, that today is decreasing its numbers. Forever21 arrived in Spain in 2011 with a huge amount of expectation, a line of 600 people in the entrance and the daughter of the founder, Linda Change cutting the inauguration ribbon. The formula? Fashion at a low price. Its speed at the time of copying trends from the runway has left the brand with more than fifty lawsuits from brands like Diane von Furstenberg or Anna Sui.
United States had, before the Primark phenomenon, its own low-cost, Forever21
Prices, on the other hand, were amongst the lowest in the American fashion offer: according to a research elaborated by Brean Murray in 2010, Forever21 was, back then, the cheapest young fashion chain in the country, with an average price of 15.34 dollars per item. Same as many as its competitors the company took time to open in international markets, but not even in its local market the brand counted with an extended store network. In 2015, Forever21 counted with less than 500 stores, while Zara already overcomed the thousand stores all around the world, eight years earlier.
The company is not listed in the stock Exchange, so it’s hard to follow its evolution. The last available data, from 2017, states that its revenue was 3.4 billion dollars, 15% less than a year earlier, according to Forbes. The company closed its only Spanish store in 2013, and this year it said goodbye to its Chinese market with the closure of all its stores and its outing of platforms like Tmall and JD.com.
Another phenomenon of the decade that arrived at the United States is New Balance. Founded in 1906, the company lived a new boom after the sneaker phenomenon and the casual movement in womenswear, that turned into the push of its sales in the second half of the decade. It was the second comeback of the brand after the one in the seventies and eighties, when it renovated its logo and broke the hundred-dollar price per a pair of sneakers.
Phenomenon’s that lost their momentum
While new phenomenon’s broke into the fashion business other titans and king of the decade started losing its positions and its connection with the consumer. This was the case of Esprit, that dropped off the list of the ten biggest fashion retailers.
To the German group, listed in the Hong Kong stock exchange, the economic crisis caught him right in the middle of an internal one. After ten years with the same executive in the lead, the company had three different CEO’s as a response to the change in strategy between 2008 and 2012. The last one to arrive was the Spanish José Manuel Martínez Gutiérrez, former Inditex, that surrounded its helm with executives from the Spanish giant to make Esprit faster, more efficient and more product oriented.
In 2019, José Manuel Martínez Gutiérrez left and with him all his dream team from Inditex. The executive left the company 40% smaller and with bigger drops, but with a healthier financial position, and was relieved by Anders Kristiansen, former managing director of New Look.
Another phenomenon that started sinking is Victoria’s Secret
Another phenomenon that started sinking is Victoria’s Secret. For years, its runway show has been one of the most mediatic events of the world, and its lingerie was the epitome of sexy. But it stopped. Even if the brand continues to dominate the intimate market in the United States, its sales close two years on the low, dragging with them the main brand of L Brand, that has in Victoria’s Secret, 60% of its revenue. Motives? Brand, product, and over capability in stores.
In the first place, the hypersexualized, white, skinny Victoria’s Secret that Roy Raymond conceived in 1977 is no longer aspirational for the 2019 women, that look for brands with a more inclusive message. On the other hand, the product has lost its point in the athleisure and casual. The group arrived late to the transformation of retail: a few years ago, it only sold in United States and United Kingdom and its more than 1,500 stores around the world became a burden.
The retail strategy was also one of the reasons that made Benetton lose its colors, like the founder, Luciano Benetton stated in 2017 after retaking the lead in the company. The executive stepped forward in the company when it was in the middle of a five-year restructuration and accumulated drops of 202 million dollars.
Luciano Benetton took back the lead of the group when a five-year restructuration plan was on the go
Other giants in the global ranking are also in the middle of a transformation process. It’s the case of C&A, that despite still listing as one of the ten biggest companies in the world, it’s in the middle of a restructuration process with the goal of improving its efficiency, reduce costs and return to growth in 2021.
With this plan, the company announced in 2016 an investment of 1000 million euros to rearrange its business and has fired more than 230 employees in Spain, Germany and Belgium. Its last move is an alliance with another retailer, Bestseller, one of the few giants that still survives though multibrand to commercialize denim products. Bestseller continues in the rise and in the last decade has bet for diversification with the creation of new brands.
Another giant that continues growing is PVH, even after putting in stand by its strategy after closing in 2010 the acquisition of Tommy Hilfiger, and three years later, Warmaco, licensee of Calvin Klein. That same year, the company announced the cease of corporate operations for two years, with the goal of recovering its previous speed. However, at the end of its fiscal 2018, there is no new acquisition on the map. On the other hand, the company has let go of some of its assets like GH Bass&Co to focus its efforts in Calvin Klein and Tommy Hilfiger.
Calvin Klein is the one with the biggest change in the last decade. The company lead by Steve Shiffman since 2014, hired in 2016 Raf Simons as a new creative director, but three years later, the Belgian designer left the group without achieving a rise in sales. PVH keeps the goal of increasing Calvin Klein’s sales up to 10 billion dollars.
Relieve in the teen fashion
At the begging of the 2000, high schools where loaded with surfers without boards: long hair with highlights, seashells necklaces and the Quicksilver, and the Quiksilver, Rip Curl, Billabong o Roxy tag in their clothes. But long time ago, teens released the surfer and embraces a different aesthetic, also from a Californian origin. These brands stepped down the spotlight. Quiksilver (that owned Quiksilver, Roxy and DC Shoes) filed for bankruptcy in 2015.
In the teenager’s closet Californian fashion has taken the lead but with a more urban approach
The company started then a plan that implied a reduction in its structure and its commercial network. The group changed name to Boardriders and in 2018 bought Billabong for 260 million euros. Rip Curl on the other hand, started in 2012 a selling process that abandoned later because of the market difficult conditions, that made an impact also in the companies results. The company decided to turn its strategy and bet for more technical products in a sector that continues to operate today.
While teenager’s closet updated into a more urban Californian style, its king arrived. Brandy Melville, a social media phenomenon that was born in Italy and arrived in United States in 2009. The company’s revenue is around 70 million euros and generates 90% of its sales overseas. Its rival Subdued, also Italian, has focused its change in Europe, where it counts with more than 70 stores.
Teenager’s outfits are completed by urban brands. The leader in this section is Supreme, listed since 2017 by The Carlyle Group and that became popular after a collaboration with Louis Vuitton. The growth of urban fashion has also rescued some popular brands of the nineties like Vans, Converse, Fila or Kappa, that are reliving a golden era.