Growth through foreign partnership as clothing distributors try out new approach

Instead of expanding their own chains, clothing distribution firms this year are opting for growth through partnerships with foreign houses, leading to the creation of independent store networks, and, therefore, to a reduction of the risks from the continuing recession. By adopting this policy, clothing distribution firms will target a larger share of the consumer public with products that complement each other’s line rather than being directly competitive, while also boosting their market position by ensuring their presence in a number of retail chains. As a result, almost all investment this year is going to the brand name stores which the firms represent, rather than to their own outlets. This strategy has been especially developed in Greece by Spanish multinational Zara, which is also giving a growth push to its subsidiary chain Pull & Bear. Another road to growth for Greek clothing chains is now through franchising, after a number of years in which they based expansion on their name rather than on the brand names they distribute. Vardas and Prince Oliver are reported to have already made their first deals as master franchisers. The Zara Group seems to have the largest investment program this year, intending to promote two of its chains, Massimo Dutti in men’s and women’s wear, and the Oysho line in undergarments. The group is expecting a substantial increase in sales. Regarding the group’s other subsidiaries in Greece, its Bershka line, with two stores, registered an estimated turnover of 1.5 billion drachmas and Pull & Bear with six outlets, 2.5 billion drachmas. The group as a whole sold 47-billion-drachmas worth of clothing. Massimo Dutti is launching two stores in Thessaloniki, Pull & Bear is targeting a total of 15-20 stores, Bershka 20-30, and Oysho at least 15 outlets of smaller size. Vardas is opting for the parallel development of other chains with products to complement its own, such as McGregor casual wear of Britain and BCBG Max Azria from the USA. The two franchise deals aim at the development of independent chains and outlets in shopping centers. The McGregor chain was launched with a shop in the Lambropoulos department store in December and will also grow into a wholesale network. BCBG Max Azria, one of the biggest US clothing design firms, will be initially developed with a chain of four stores in Kolonaki, Glyfada, Kifissia and Thessaloniki. Vardas’s expansion is continuing at a somewhat slower rate, as the initial target of 23 stores by June 2002 will be close to being realized with the the forthcoming opening of further five. Prince Oliver is about to launch two lines, Karen Millen of Britain and Twin Set of Italy. The target for the former is 10 stores within three years, with the first planned for March in the Athens suburb of Psychico. An agreement has also been reached with the British firm, targeting 30-40 retail outlets in Italy. The Twin Set network for the younger generation, which is being launched in Psychico and Cyprus, is planned to be larger. Prince Oliver now operates 36 stores with a range of different lines in classic, modern and casual clothes. The gradual promotion of all the brand names it represents in Greece is expected to boost revenues for the Zoumboulidis Group, which plans to put weight on development through franchises with the Mexx and French Connection chains, the former in Glyfada and Pangrati and the latter in the Lambropoulos and Hondos department stores. Fashion Box Hellas-Replay is giving priority to the promotion of the Coca Cola Ware label through a wholesale network and shops in shopping centers.The first outlet opening is scheduled to be this summer. The project originates in the Italian parent company, Fashion Box, and there are plans for expansion into the Balkans after the first half of 2002, when listing on the Athens bourse is also foreseen. For the Glou chain, growth in 2001 and 2002 comes primarily through the Puma label, as the growth of its own brand name clothing is beginning to slow down. Management projects an increase of 8 to 10 percent in retail sales in 2002 and an 80 to 90-percent increase in wholesale turnover in the labels Puma and Quick Silver, as orders are almost double those of this time last year. The company, which has concentrated on tapping its real estate assets in the last two years, expects to report profits of 1 billion drachmas for 2001, largely from the sale of a property on Stadiou Street in central Athens.

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