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Bank on Basler

For years, the name Basler has meant money in the till for upmarket classic womenswear retailers. But a 'safe' image presents its own problems, so how can the management team move the brand forward without alienating its core customers?

Basler has historically been a reliable brand for classic, upmarket womenswear. The label is known for dressing smart women of a certain age, often those aged 50-plus, who demand a particular quality of fabric and cut in a garment.

A loyal stockist once jokingly described the brand to Drapers as "boring, boring, Basler". She was not being wholly detrimental - her implication was that the brand was ultra-reliable in financial terms - but also she always knew what she would find in the showroom at the start of the buying season. The product may have been in the new season's colours, with the odd tweak to a silhouette, but overall there were no surprises. "That doesn't mean it was bad," she said. "It was like that because it worked that way."

However, the label's venture capitalist-backed management team are aware that in today's fast-moving fashion market such reliability can quickly become a poisoned chalice, and although there are no signs that customers are turning away from the brand, it must move on to stay relevant.

Basler managing director Jens Eilhardt, who has responsibility for product, purchasing and sourcing, describes his typical customer as a woman aged 40-plus, a trend follower rather than a trendsetter, who is incredibly quality conscious. "She likes to live well, she buys for an occasion but needs to look smart even if she is shopping at the weekend," he says. "But there's a new 45-year-old customer that we are drawing into the circle."

Stockist Angela Wybrew, owner of Angela of Long Melford in Surrey, agrees. She says: "I've been stocking Basler for about 15 years. I have women that come back season after season for the brand. Recently it has become more contemporary and snappier - it really started to turn the corner three seasons ago. Since then there are more interesting pieces; some good knitwear and blouses. The T-shirts used to be boxy, but are now narrower and shorter. There are more fun pieces. It used to be a set customer with a set look, but it's moved away from that. Now, my younger ladies buy into Basler."

Bertha Barbour, owner of 101 Boutique in Thornhill, Dumfries, also runs the Basler shop in Edinburgh. "I've been stocking Basler for 25 years. It works because of the quality and fit. The brand is constantly reinventing itself - it's gone slightly trendier and younger.

"It's not a high fashion brand, but it slips a little towards high fashion while still retaining its classic image. If it moved along too far it could end up like the others, which have done the same and fallen by the wayside."

Eilhardt says that over the past three to four years the brand has accelerated the changes in its collection each season. "To give you an idea of the pace of change, there are things that we would not have done 18 months ago that we consider to be a must now," he says. "An example is jeans, where year in year out we would have done one classic five-pocket style. But with jeans being such a key trend indicator, we now tweak our styles every season to reflect what the key look is.

"Basler has always been known for a very co-ordinated look, but we have introduced a lot of soft separates as well as upping our dress offer, and it is these areas of product that are showing tremendous growth. We have seen sales in these segments double over the past year."

And it is growth that the brand's venture capitalist backers are interested in. Basler's financial progress is being watched closely in its domestic market, because it is the first German fashion business to be in secondary venture capitalist ownership, having been bought by Alpha in 2002 and then sold to Triton last year.

Armin Fichtel, another one of the business's three managing directors, points out: "We are something of a pioneer for the fashion sector in financial terms in Germany, which means that everyone is looking to see how things turn out."

The first phase of venture capitalist money helped to increase Basler's turnover and profits. Sales were up 5.3% to EUR164.9 million (£110m), changing the momentum of a business that had been recording flat sales. In the next phase of venture capitalist ownership, there is a three-plank growth strategy. The first is the familiar European theme of verticalisation via retail, which will increase the number of wholly-owned and partner/franchise-run Basler stores. The brand currently has nine wholly-owned stores, all in Germany, and 70 other partner/franchise stores across the world.

Fichtel explains: "Our priority everywhere is to operate with partners, but we will open wholly-owned stores in certain locations if we feel we cannot find the right partner for reasons such as prohibitively high rents."

The pace of the brand's store growth is accelerating. Ingo Hesse, managing director with responsibility for sales, export, retail and marketing, says that two years ago it had only three wholly-owned stores, in Dusseldorf, Berlin and Hamburg, and just three partner shops. He adds: "We really believe in the stores - they are incredibly important for the brand and its image." Basler's aim is to take retail, which at the moment accounts for 7% of sales, to about 25% to 30% over the next five years.

Basler's two stores in London are both run by veteran high-end multi-brand and single-brand retailer Robina Ziff of the Robina Group. She says: "We opened the Bond Street store three years ago and Brompton Road in August last year, and they are both performing well. From a partner's point of view they are easy to deal with. The clothes arrive on time and in a shop-ready condition - the quality control is fantastic. Having the entire product range means that I attract a much broader range of customers than a retailer that perhaps only buys two or three product groups. There are 20 groups within the collection so you can provide a lot of newness. Therefore I have some customers in their twenties who buy Basler, as well as the core group who I would say are in their mid-forties."

Late last year Basler bought out its UK agent Christian Lawaczeck's Basler agency and employed him to head a UK subsidiary, which will have a wholesale and retail arm. At the moment there are eight Basler stores in the UK and Republic of Ireland. Lawaczeck says: "There is huge potential for stores in the UK - I think we are looking at between 25 and 35. It's not going to be easy to get to those numbers, but we will look to work closely with a few very good partners. The brand has 200 active stockists in the UK and about 200 doors.

He adds: "I want to stress that our wholesale business is still super-important and that retail is meant to complement it. A bigger retail presence will boost the brand's profile - in Germany, we've found that having more partner stores has increased sales for our wholesale stockists. It's also the way to get a critical mass for the more lifestyle-based areas of our offer, such as accessories."

Basler has a presence in 40 countries and on every continent, which sounds impressive. But the brand says there is huge scope for building a bigger international business. International expansion is the second tranche of its growth strategy. In the next five years the management aims to have grown the brand's exports from 63% to 75% of the overall business.

Fichtel says: "The Middle East, Russia, Asia, southern Europe and the US still hold a lot of growth potential for us. Germany is our biggest market, accounting for 37% of sales, but the rest is all exports. Most of the newer markets - the likes of the Middle East and Asia - will primarily have a store strategy first and we will look to build a wholesale market on the back of that if it's appropriate. In some markets such as India, for example, there isn't a network of multi-branded boutiques to wholesale to, so it is going to be store-based.

"We have now been in China for two years and we opened in South Korea a year ago. We open in Istanbul this autumn, and we will be looking to open in India next year."

Despite the push on exports, the brand is still growing sales by 2% to 3% year on year and aims to continue at that level. In the UK the new subsidiary set up with its new showroom in Newman Street in central London will provide Basler with seven sales representatives, which is set to rise to nine by the end of the year. The aim is to give stockists more sales support and build closer relationships between the brand and its customers. Lawaczeck says that he expects his staff will spend three to four days a week on the road talking to customers and helping with Basler customer events in stores.

The last area for growth will be new product development, which for spring 07 has involved developing belts, handbags and scarves as collections. Fichtel says these have a Basler-run sales force but are manufactured by a licensee. "It's a quasi-licensing agreement where we can control the quality and distribution. The first real licence for the brand will be footwear in 2008. We decided to license it out because it is an area of expertise that the Basler business lacked." In all, licensed products should grow to 5% of overall sales within the next five years.

With a turnover target of EUR250 million (£168m) within the next five years, the label will have its work cut out. The management team says that the one area it has yet to look at is a second line, and that there could be potential for a more casual Basler weekend-wear line, similar to MaxMara Weekend.

Many of the more mature womenswear brands in Germany have aimed to maximize their business by developing new labels to target a different customer segment, such as Gerry Weber's younger Taifun brand. Fichtel says Basler would not go down this road, but he and his colleagues do not dismiss the idea that at some point the business may look to buy another brand.

"It would have to be the right label to fit in with our strategy, but something like that would only happen if the right opportunity came along," he says. "There is still an enormous opportunity for us to develop within the Basler brand before we would need to look elsewhere."

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