José Luis Duran: "We want Lacoste to become a desirable brand"
In December 2012 Swiss group Maus Frères took 100% control of Lacoste SA, the family-owned brand in which it already held a 34% stake. After buying the company from the Lacoste family, the group underwent a serious transformation. CEO José Luis Duran speaks to FashionMag.com about the company’s objectives.
FashionMag.com:What has happened since Maus took over Lacoste in 2012
José Luis Duran: Beaucoup de choses ! Nous avons commencé par mettre en place une nouvelle organisation. En détenant 34 % des partMany things. We started by implementing a new structure in the company. Maus already had a 34% stake in the company via our Devanlay subsidiary, so we were, in some ways, the natural choice for a takeover. We were faced with two very different structures, both with different cultures. On one side we had a team managing licenses and on the other, an operational group. From these two branches we needed to find one sole structure that everyone could identify with but which was also efficient.
At the end of 2012, there were 16 managers on the team. By March 2013, we had cut that down to a team of 8, one manager for each division, with people that I had previously worked with and external recruitments. We created a marketing and branding position, headed by Berta de Pablos Barbier, who arrived in September 2012 after stints at Mars and Boucheron. Laurent Israel came in from Dior and Ralph Lauren to look after our product and everyone else had previously worked with me at Devanlay.
FM: What was your second point of call?
JLD: We tasked ourselves with creating a united image for the brand. Marketing and our PR agency worked meticulously on the project, exploring various options. We questioned our licensees - Pentland for shoes, Procter & Gamble for fragrance – and even held focus groups with clients in the United States, China and France. That all took place between February and September. But the most important thing was to determine, black and white, what exactly Lacoste is.
FM: Did you already have an idea of the answer?
JLD: We had three main ideas. The first was to reinforce the brand’s heritage, with its sporting spirit, innovation and French savoir-faire. Next was to hone in on our three values, joie de vivre, authenticity and elegance. Finally, we wanted to focus on positioning Lacoste as a premium brand. We are constantly looking to increase added value. Product offering is an important factor, but you also have to consider customer service and digital presence, for example.
FM: It sounds like there is still a lot to achieve…
JLD: Evidently, there is work to be done but we are not starting from scratch. Until last year, Lacoste had experience growth of 14% on average for the past three years. We had gained visibility, expanded geographically and had improved our womenswear collection as well as accessories, so we had a solid starting base.
FM: So why the need to make such large changes?
JLD: We wanted to work on desirability. Lacoste is known for its quality but it is not necessarily looked at as a desirable brand. Quality remains an important factor for us if we still want to be a global brand in 80 years’ time. And that is the objective. Though I recognize the importance of volume, it is not an obsession for me.
FM: What steps are you taking to ensure that you will meet this goal?
JLD: We have recently decided to redo our windows in 16 stores, including those in London and Paris. It is very important because our windows are often our first point of contact with the customer. By the end of 2014, we will have implanted our new window concept in 100 of our 1200 stores worldwide. It may not sound like a big task, but our new windows cost three or four times more than our previously ones.
FM: What else is changing?
JLD: We have decided to close several points of sale – a decision which we did not take lightly. By the end of 2014, we expect to have closed 40 branches (editor’s note: out of 500) across various countries, including 4 or 5 in the United States, 2 or 3 in France and some in China and Japan. We are closing them because they do not correspond to the new, unified image of the brand. Closing franchises is not an easy decision to make. In the United States, we have told Macy’s that we will be closing 25 of our 300 concessions, even though some of them are big earners for us.
FM: What are the criteria when deciding to close a point of sale?
JLD: It could be the location or it could be the size. Or even the two. In 2009, Lacoste stores measured on average 80m². Today that is closer to 115m². When you want to position yourself as premium, you cannot make much of an impression with 50m² of space. However, that does not mean that we will close all stores smaller than that. We always take into consideration the stores profitability and catchment area. For example, in the Beaugrenelle shopping centre in Paris, we opened a store of 65m² - dedicated entirely to men – because we believe that the flow of customers and the location lend themselves to that market segment. There will be a few women that will be disappointed that we don’t sell womenswear in the store, but that is choice we have made.
FM: Will you be reworking Lacoste’s product offering?
JLD: We do not want to spread ourselves too thinly. We are looking to reduce the size of our collections by 15-20% in order to make stores less overwhelming. All that while rendering everything a bit more higher-end. Despite an increase in revenue, the average amount that a customer spends in store has not changed in five years. That is where are looking to see growth. Today, shirts that cost more than €100 euros account for 10% of our revenue – we want to push that up to 20%.
FM:Will you continue to push your women’s and Live! collections?
JLD:: These segments do not need to be touched. Womenswear accounts for 20% of sales and childrenswear, 5%. Since menswear represents 75% of sales, we are going to focus on this segment. Of recent years, we have let ourselves go a bit - we should be able to sell jackets for 300 euros. Because of our enthusiasm for women’s and children’s, menswear became somewhat overlooked. That needs to change.
FM: What is your strategy regarding licenses?
JLD: Good question. Previously, relations were pretty flexible with our eight licensees. Clothing and leather goods came under an agreement with Devanlay so everything is fine concerning that [laughs]. Shoes were looked after by Pentland, fragrance Procter & Gamble and we have other licensing agreements for watches, glasses, home linen and jewellery. We have since ended our jewellery license because we realized we didn’t carry any weight in this segment. However, we have signed a licensing agreement for a line of men’s underwear which is due to launch in spring 2015. We are not looking to replace our licensees, but rather work with them to ensure we are heading in the same direction. Licensed products are important at Lacoste and saw double figure growth in 2012.
FM: Are you looking to up your marketing?
JLD: It may seem strange in a time of crisis, but we are actually raising our marketing budget for 2014. But it will be used in a very different way. Over the past few years we have focused on runway shows, menswear, Live! and polos. We are leaving that behind to create a more institutional campaign, representative of the brand itself. The campaign will launch in January and will feature a film and a big internet campaign.
FM: Will Lacoste continue to sponsor big sporting events?
JLD: Of course, but we will predominantly focus on big events like Roland Garros and will stop sponsoring smaller events.
FM: What about your digital presence?
JLD: It is clear that it is an important point of contact with the client. We need to build a good rapport with the client via this medium. Today, online sales account for 3% of our revenue. Online is almost like a global store front. We currently have a sports site, a site for Live! and an online store. In April 2014, we will launch our flagship site where customers will be able to find everything Lacoste. And, of course, we will continue to work on our social media presence.
FM: What is turnover like at Lacoste?
JLD: In 2012, we did 1.8 billion euros in wholesale and 4.6 billion in retail. Growth in 2013 will reflect the global trend. In terms of the spread of our business, the United States accounts for 22% of sales, France 10%, Asia 21% and Latin America 11%. The rest comes from Europe (except France) and the Middle East.
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