JULIA CAMWELL
RESEARCH METHODS & SOURCES • French Connection Wesbite • French Connection Annual Report 2012 Preliminary Results year to 31 Jan 2012 • Articles on FCUK and macro environment: Reuters, Drapers, Retail Week, Marketing Week, Forbes, BBC, Bloomberg, etc. • Brainstorming of ideas • Books: Fashion Marketing Contemporary Issues (Hines&Bruce), Fashion Marketing (Easey), Mastering Fashion Marketing (Jackson&Shaw) • E-journals: “Building brand identity in competitive markets: a conceptual model” (Ghodeswar, 2008) • Lecture Notes and Hand-outs
INTERNATIONAL EXPANSION PROPOSAL
INTERNATIONAL EXPANSION FOCUS AND REDUCING UK RETAIL STORE PORTFOLIO The recent French Connection Preliminary and Annual reports identified that last year the UK/ Europe retail divisions alone made a loss of £8.2 million. “The most significant divisional contributor to the decline (in group gross margin) was the UK/Europe retail business.” (FCUK Company Report, 2012) This is due to a number of factors: • Poor economy • Rising input costs and supply chain costs • Less accessible premium price architecture • Saturated market • Lack of regular purchasing consumers “While the improvement in sales is welcome, the relentless squeeze on disposable incomes will put pressure on people's ability to spend in the next few quarters.” (BBC, 2011)
“Fashion continues to develop as tastes, trends and reach become increasingly global, creating further opportunities for our business to expand its inspiration and marketplace.
There are many geographic opportunities available to us for expansion and within existing markets we look to diversify our channels our distribution to cover retail, wholesale, licensing and e-commerce.� (French Connection Annual Report, 2012)
PROPOSED GROWTH OF RETAIL OPERATIONS IN HONG KONG & CHINA “Joint ventures in Hong Kong & China have continued to perform well with both businesses achieving strong growth in like-for-like revenue.” (FCUK Annual Report 2012)
From this brand has gained: “not only a share of profits generated by the joint venture but also from gross profits generated from supplying product to the businesses and the receipt of brand royalties.”
Working with “local partners in those territories” has also allowed French Connection to gain prior knowledge into the micro environment which will also be essential when expanding. The next step would therefore be to increase the portfolio of French Connection retail divisions within Hong Kong and China. Positive factors include: • Capitalising on growing global economies • Gaining more control and do not need to share profits • Makes logistical sense • Brand identity can be further instilled “Within a generation, the middle class in China will be roughly four times the size of the American Middle Class population, according to the UN Population Division & Goldman Sachs.” (Forbes, 2011)
As well this, in other territories such as Australia, India, Asia and South
Africa could be expanded in from the current wholesaling operations into retail operations, and further increase brand presence. • Oil stain approach • Flagship style retail divisions in major cities • Creation of platforms to expand from • Joint-venturing can be utilised
Another consideration for the brand moving forward is stronger online presence and e-commerce development.
“E-commerce is now a significant and successful channel within our retail business, accounting for 17% of retail revenues. We continue to invest in this channel to ensure we have excellent online functionality and competitive delivery services.”
Future: French Connection could consider expanding e-commerce into the Far East to allow further accessibility for countries which the brand is currently expanding into.
“If retailers can harness multi-channel activity they will increase their understanding of their customers and will improve conversion rates and profitability.” (Experian, 2011)
Ending point:
expansion of the brands e-commerce channel and international growth, it is also essential that both the new retail divisions and the brands website is also cohesive with When considering the
the brand's values with clear
clear brand identity consistent over all platforms.
positioning, conveying
which should be
“Companies that present a cohesive, distinctive, and relevant brand identity can create a preference in the marketplace, add value to their products and services, and may command a price premium.” (Schmitt and Simonson, 1997). “When brand faces aggressive competition in marketplace, brand personality and reputation of the brand help it distinguish from competing offerings. This can result in gaining customer loyalty and achieve growth... successful brands are built through creative repetition of themes in various types of media.” (Ghodeswar, 2008)