PARIS ’96:
THE NEW BREED HITS THE U.S. CIRCUIT
Byline: Katherine Weisman
PARIS — It’s as if designer Olivier Guillemin is starting all over again this fall, even though he’s been in business for eight years.
In a push to develop his brand, his operating company, Aelita, entered into a partnership with six apparel makers from the Saint Quentin region who were looking to back a young designer. They formed a company called “N” Couture, whereby Guillemin’s Paris team handles the design, communications and selling, while the manufacturers — whose specialties range from knitwear to separates — are responsible for the construction and delivery of the goods. It is, in effect, a manufacturing licensing agreement, since Guillemin receives royalties on the sales.
But such solutions are hard to find. The plight of young or small fashion houses is no secret here. It’s hard enough for them to stay in business at home and make a profit, let alone try to export to or tackle the American market.
These firms are handicapped by several factors. For one, the industrial base that once supported designers here has shrunk significantly. And those factories left are often not willing to take the risk to produce an unknown label.
Getting financing from banks is difficult, as it is in many markets. Some companies are backed by private investors who have nothing to do with fashion. This ranges from the high-profile joint venture between Herve Leger and Seagram’s to the majority stake in Mariot Chanet, owned by Altarea, a French real estate company.
In France, the little financial aid available comes in the form of grants, subsidies or low-interest loans from government, semigovernment or private organizations. For example, the Couture Federation and the Minister of Industry recently gave grants totalling nearly $1 million to nine young designers, including Frederic Molenac, GR 816, Jerome L’Huillier and Jean Colonna. This assistance might help companies get short-term bank loans that are 50 percent guaranteed by Sofaris, a French government company.
Many small firms also lack good business managers. Sometimes, the designers feel they can handle the design, production, selling and merchandising of the collection all on their own. Trade shows are shaping up as a solution for some. Up until now, Guillemin tried to sell in the U.S. market directly from Paris, said Jayne Este Cure, sales manager. But small companies have few effective choices for developing their businesses, she said, and can become too dependent on the tastes of the many Paris-based buying offices that service big American and international department stores.
Guillemin, with sales of about $300,000, is one of 16 designers, mainly French, who are showing at Atmosphere’s second independent session in New York. The small group, which includes Michel Klein, Irena Gregori and Lilith, is showing at the Hotel Pierre from Feb. 24-27.
“It’s really good to be able to do a trade show if you can. That’s why we are participating in Atmosphere,” said Cure, adding that the company has signed with a U.S. agent starting with the fall season. “It’s a French grouping. We already participate in Paris.”
The benefits of going to the U.S. are the same as for other countries a company would like to export to, said Muriel Guyot, the owner of the Atmosphere name and organizer of the Paris-based trade show. “Buyers like to see who is actually behind the clothes. Also, showing at Atmosphere in New York enables the company to touch buyers who don’t come to France every three months, or at all.” She was referring in particular to small, specialty retailers.
One company, GR 816, had to pull out of AtmosphAre at the last minute. Its collection was not ready in time to make the New York trip. But producing a collection in time for the early deliveries demanded especially by larger stores is a typical problem faced by small companies.
Other French companies are showing at the Fashion Coterie in Manhattan from February 25-27, either through an American agent or on their own. Exhibitors include Indies/Batiste and Myrene de Premonville.
Companies making the trip can get financial assistance from different government and semiprivate organizations. Through a miniscule tax on all apparel invoicing, DEFI — a government agency that works for the development and promotion of French textile and apparel companies — creates a fund that contributes to the booth price of French companies participating in trade shows outside of France. Another agency, COFAS, provides low-interest-rate loans to help cover other travel costs. These financial programs are often organized through associations such as the French women’s or men’s ready-to-wear associations.
But in order to export effectively to the U.S., trade show or no, industry observers stress that the designer’s goods must be different from what already exists in the U.S. market, and must provide added value.
“Companies must examine the [U.S.] market. The local competition is important, and the chances for success are much slimmer [with all the new American designers] than it was 10 to 15 years ago,” said Berman. “It’s one thing to want to go export to a country. It’s another to see if there is actually potential.”
Companies also shouldn’t expect buyers to just show up at their door ready to order, if they haven’t supported their collection through even small efforts like sending out targeted mailings. Catherine Malandrino debuted this spring and already landed a corner in Bloomingdale’s with an in-store event planned for Feb. 29. The collection was picked up by nine other stores in the U.S. and Europe, including Galeries Lafayette and Harrod’s. While observers might think this is beginner’s luck, co-owners and founders Bernard Aidan and designer Malandrino have the benefit of past experience and mistakes to lead them on the right course.
Aidan was the U.S. partner for the French sportswear brand Et Vous for 11 years, and Malandrino was the former design director for Et Vous, as well as having done stints at Louis Feraud and Stephane Kelian.
“I don’t assume that American retailers will buy our product with no back up. To me, you take a product that is beautiful, but if it is not shown right, explained right, or marketed right, it won’t work,” said Aidan. “We are not just showing a collection and waiting for an order. We go to the end. We will have our own salespeople on the floor at Bloomingdale’s and will share the cost with the store, and we will give support to merchandising.”
Aidan and Malandrino started the new venture with their own resources and some bank loans. Aidan says his credibility with the banks came from his experience with Et Vous. “When you respect your projections, the banks will lend,” he noted. Now, Aidan recognizes that to propel the company forward, he will need financial backing. “Based on the first season, the business is taking a proportion that I can’t manage on my own,” he said.
At Sinestil, the Brussels, Belgium-based maker of Natalie Valentiny’s collection, commercial manager Michael Silovy takes a similar approach, focusing more on developing Valentiny’s product. The company’s wholesale volume for 1995 was $4 million.
“Exporting to the U.S. is difficult for companies like ours. We sell medium-priced goods, but our name is not that well established,” noted Silovy. “Meanwhile, the typical American buyer wants either a competitive price, or a name with lots of image.”
To get to the nontypical American buyer, Silovy and Valentiny produce the best possible designs with a difference. So far, the strategy has worked, even if erratically. In its 10th season for fall, Valentiny has sold to U.S. stores, including Maxfield’s, Les Habitudes in Los Angeles and Workshop in San Francisco, in addition to seasons with Henri Bendel and some of the larger department stores.
Silovy is quick to criticize some of his French counterparts.
“The young French designers invest more in their name than in their product. As soon as they set up shop, they hire a PR, or try to do a defile. And they lose money year after year,” observed Silovy. “Sure, we’d like to be better known, do a fashion show in Paris. But we want to make a profit — even our first year we made a profit — and the cost of a show is all the profit I make in one year.”
Silovy is astonished that some designers, even with powerful backers, have not eked out a profit in 10 years. He also wonders how these small companies can pay for a fashion show and pay their staff and suppliers, when their sales are so low.
Silovy, and others, cite getting paid as another challenge in exporting to the U.S. market. While the current situation at Barneys is exceptional, Chapter 11 filings among U.S. retailers have been daunting for small foreign firms. Silovy says he stopped selling to Barneys last winter, after six seasons, because “Barneys just didn’t pay correctly.”
Whether or not U.S. retailers do indeed have poor payment practices, they have earned a bad reputation. And while retailers claim that they are actively seeking new resources, the smaller companies often steer clear, at least during their first years of business, noted Joelle Berman of Profem.
Others, including Michelle Meunier and Olivier Chatenet, the team behind Mariot Chanet, also are frustrated by American retailers who expect sales and profit results immediately.
“The problem we have had in the past is that major stores placed huge orders with us for the first two seasons and expected immediate results,” said Chatenet, whose company is almost breaking even, with wholesale sales of roughly $2 million in 1995. “This compares to a European store like Galeries Lafayette, which has worked with us for about four years. They ordered small at first, and the first few seasons were difficult. It took about eight to 10 seasons before we had reasonable results, and now it works very well.”
To gain more exposure in the U.S., the team is thinking about getting an American agent and is considering participating in showrooms or trade shows. Ironically, he notes, it was the U.S. retailers who picked up the Mariot Chanet collection before the Europeans.