Spartoo CEO Boris Saragaglia on overcoming 2022 and his ambitions for the company
A few days ago, French footwear e-tailer Spartoo presented its annual results for 2022, a tough year during which the company managed to keep its revenue stable. CEO Boris Saragaglia talked to FashionNetwork.com about a chaotic year that severely tested the flexibility of Spartoo’s strategies.
FashionNetwork: How would you describe the last fiscal year, in which war and inflation gradually disrupted consumption?
Boris Saragaglia: In H1 2022, we experienced a major Covid-19 wave in January, then in February the war in Ukraine started. Consumers found themselves caught in a situation characterised by more and more problems. We had to wait until July-August to see some improvement because, with inflation starting to rise, many consumers shopped during the sales. After a positive month in September, the issue of growing energy costs put more pressure on consumers. November was very tough for us. But December went well, thanks to a change in pricing strategy, and an in-depth market analysis. This enabled us to turn a profit in H2. In comparison, I believe that business for a player like Zalando was weak in Q4, with a strong focus on promotions and inventory clearance. Instead, we concentrated on keeping prices stable, adapting in real time. Every day, it was all hands on deck, as our staff kept looking for ways to optimise performance. This has enabled us to generate growth.
FNW: How did 2023 begin?
BS: Demand has been down between 25% and 30% since the start of the year. But data we get from the brands showed that this is also affecting our competitors, notably German ones. The situation is very tense: consumers are spending their money on food, and since this is a category where inflation is high, they then wait before buying other products, including footwear and apparel.
FNW: From your standpoint, do you think this situation will benefit entry-level brands?
BS: What’s certain is that purchasing frequency will decrease, for everyone. Then, when the average French [consumer] will be willing to spend again on apparel and footwear, which are after all primary necessities, they will turn to entry-level [brands]. And they’ll buy less, of course, and above all they’ll wait a little longer.
For more affluent consumers, little will change: ours is a made-in-France footwear brand that does well with products priced at €120-€150, especially thanks to the adjustments we made.
FNW: You are now operating 35 [physical] stores. Are you going to stop expanding in this direction, given the economic situation?
BS: In 2023, we will try to open about 10 franchised [stores]. Three by Aldo, one by Spartoo, plus a number of new concessions. Our experience as Aldo’s exclusive distributor will allow us to assess the results that this strategy can bring us, and I think it will improve the chances of [Aldo] selling well online. But [physical] stores remain part of our strategy. I think this approach helps improve willingness to buy again, as well as consumer confidence in Spartoo and our brand awareness. This is a long-term vision we developed in 2014, and we still believe in it.
FNW: Spartoo now sells pre-owned products. Is there demand for an alternative to Vinted?
BS: We're too far from Vinted's volumes to say that. Our strategy is to tap the opportunity for recycling. And if people want to sell us second-hand products in order to buy new ones from us, well, we’ll be happy to provide this service. Also, it means we can include in our range, brands that we don’t normally stock, from major retailers like Zara to luxury labels. This enables us to improve our organic indexing position, and to attract new customers. Vinted, LeBonCoin and their ilk are all fighting one another. But in the long run, we know that 100% marketplace models cannot survive because of lack of profits. As Ebay and Priceminister have demonstrated, for example. So for us, resale is just an additional business model.
FNW: When will you enter the home decoration segment?
BS: We have recently lost two people in this area, so we put this activity on stand-by for the time being. [Home decoration] remains an opportunity but, in times of weak consumption, we’d rather focus our efforts on footwear, trying to offer attractive prices without spreading ourselves too thin.
FNW: How are your footwear sales currently split up?
BS: Children’s footwear accounts for 10-15% of our revenue. Men's footwear accounts for 15%, and women's for approximately 75%. One of our goals is for children’s footwear to account for a sizeable share of our business. Another is to rejuvenate our clientèle, currently centred on 35 to 40-year-olds. If we can bring the [average] age down towards 30, it will be good for us in the long term. Unlike our competitors, we aren’t chasing after teenagers. We’re fine with people of a certain age, who have money to spend, have an active, very busy life, and buy online for practical purposes. Much better than 19-year-old TikTok users, who are much more unpredictable. They have €100 to spend, order five t-shirts and return three, and then switch to another site. This isn’t our cup of tea, nor an interesting target in the long run.
FNW: Which segments are still to be developed, and is there room for acquisitions this year?
BS: We are always looking to expand in the luxury segment. But we already have a broad portfolio of brands that cover 90% of the market. There aren’t really any holes to plug, but for example we could always grow the sports segment a little more.
On the acquisitions side, we consider every opportunity. A huge number of operators are facing difficulties, but we are only looking: as long as consumption trends don't change, we’ll remain extremely vigilant. We are heading towards the same deflationary measures of the early 2010s. When things go south, one must be careful, and keep one’s powder dry.
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