As G-Star’s popularity continues to rocket, founder Jos van Tilburg reveals his plans to maintain the brand’s cool credibility while driving the franchise business.
Branded young fashion retailers faced a rocky ride in 2007, culminating in the collapse of high-profile independents such as Sheffield-based Brother 2 Brother and Birmingham’s Diffusion. Multiples, led by USC, racked up losses of millions of pounds. Yet denim brand G-Star has comfortably ridden out the storm.
Although the owners of Brother 2 Brother and Diffusion had their fingers badly burned by young branded fashion, they remained so confident in the G-Star brand that they made a comeback last year by converting some of their old multi-brand stores into G-Star franchises in Sheffield, Nottingham and Birmingham.
What’s more, well-respected retailers Lawrence Davies, owner of Essex-based mini chain Choice, and Martin Schneider, who owns Accent in Leeds, have also opened G-Star stores in the past 12 months. They were bold enough to take sites in London’s Covent Garden and the Arndale Centre in Manchester, where independents can normally only dream of handling the rents and rates involved.
To date the stores are performing “very well”, according to G-Star founder and chief executive Jos van Tilburg. This is backed up Carl Peddie, who runs G-Star stores in Birmingham, Derby and Newcastle. “G-Star is a leader in the denim market at the moment. The franchise deals make sense financially and we get a decent margin and a lot of support from Amsterdam. As a business model, a franchise is slightly easier than a multi-brand business – you buy from one supplier and there is no central processing of deliveries. As long as you have a decent manager in-store, it’s pretty self-sufficient.”
Historically, brands that have embarked on opening standalone stores have come in for heavy criticism from their stockists. While a store may be designed to boost a brand’s profile, it can also pinch business and dilute sales at nearby independents, multiples and department stores.
However, van Tilburg does not believe the new stores have had any impact on existing business and says that for new openings he targets towns and cities that are “under-distributed”. “We are well aware of the impact of over-distributing the brand,” he explains, insisting there are no target store numbers being bandied about at head office. “It is not exactly mathematics,” he says. “When I started the business I thought we could have 75 stockists in Holland – now we have 500.”
Global brand director Shubhankar Ray adds: “We think of the UK as a mix of cities that are connected, but sell to different customers. London is different to Birming-ham, Manchester and Dublin, for example.”
Van Tilburg is philosophical about distribution issues. “Retailers always want exclusivity for a country. It’s a discussion we have and delicate questions are asked, but we treat all sides very fairly. We hardly ever lose customers,” he adds. “We have a very loyal group of customers in the UK but we can only have that if we don’t cheat them.”
He believes distribution can straddle and survive the explosion of mono-brand, multi-brand, department store and multiple retailers in the UK. He says: “It is not our goal to open lots of stores. I believe in good mixed distribution through department stores and multi-brand stores to keep the brand attractive.”
Van Tilburg is philosophical about the current talk of doom and gloom in the UK market, but says his G-Star stockists reported “fantastic results” last year. “I have talked to our stockists and they don’t have this negative experience,” he explains. “I have not had a request to help them yet. But of course, as a supplier, when it is raining I will give them an umbrella and try to help wherever I can.”
However, van Tilburg’s support is dependent on retailers sticking to his strict terms. “We want to represent 34% of total turnover per store. When a store is old-fashioned and stocks 70 brands, for example, with so many brands I am in a limited position to help.”
He advises retailers to build their business on five main brands and to “test”, at most, 10 to 15 peripheral brands at any one time.
Interestingly, van Tilburg is supportive of those retailers with own-brand offers, such as Republic. “Strong private-label business is good for us because it makes the retailer stronger, which will make our business with them stronger too,” he explains.
On the flip side, G-Star was among the brands to receive a letter from House of Fraser last autumn demanding new terms. Van Tilburg says the brand is in negotiations with the department store chain. “It’s always been a game. The retailer wants to put margin responsibility on the wholesaler and the wholesaler wants to put it onto the retailer. That’s business. 4,000 customers buy our collection and I believe the wholesaler and retailer should share the margin responsibility. This makes for a sharper relationship,” he says. “This keeps the tension and stress, which results in better product. The job of the retailer is to be better at organising buying and selling to become more profitable.”
G-Star itself has learned lessons via its retail stores, and is developing its womens-wear collection on the back of sales information from its shops. Sales are split about 65% menswear to 35% womenswear, but van Tilburg plans to grow this to 50/50 “without shrinking menswear”, he jokes.
“Our stores have made us stronger, especially on women’s denim which we will improve,” he says. “We will create a better balance in our women’s collection and make the fittings and the washes better. I feel we are on the right track now, we are just fine-tuning the outlines.”
Brand director Ray adds: “Women are only just discovering the brand and the stores are helping to connect them to the product. The women’s jeans market is very different. There isn’t really a classic style like the Levi’s 501 for men, but we hope that what we make today will be a classic tomorrow.”
As well as developing its womenswear, G-Star launched its debut footwear collection under its first licensing agreement with footwear supremo Stephen Palmer’s Overland Group licensing company for autumn 07. Palmer, who is the former licensee for CAT footwear and Paul Smith footwear, has experienced success with the range, especially given the current trading climate.
Van Tilburg says G-Star can learn about licensing from the partnership. “We have only just started, but we are getting used to co-operating on product development. We want to learn how we can optimise relationships better, because we want other licences.Overland has fantastic skills with shoes. It doesn’t just make shoes and put the G-Star name on them, it makes G-Star shoes.”
This “G-Star DNA” ethos may be marketing speak, but van Tilburg is passionate about his design and brand philosophy and says G-Star is as much influenced by vintage Levi’s as by computer firm Apple. Ray says G-Star wants to be a “futuristic” denim brand, and van Tilburg displays contempt for those brands influenced purely by their cowboy heritage.
He says: “We respect vintage, but we also respect high-tech and modern and mix the two together. We like to be free as a brand and don’t want to be stuck in the G-Star position. When there is a beginning to a [product] lifecycle then there is always an end, so we need to be able to be cowboy or spaceman, elegant or tough, sexy or functional, or modern but vintage.”
G-Star is already working on its next development in denim to ensure its success in future. Head of design Pierre Morisset says: “For men there is a need for change. I am investing and developing a new kind of shape. The demand is not yet there, but guys with advanced taste are ready for it – in two seasons we will see it come through.
“Three or four years ago it was all about loose fit, then we moved to the low waist, then into the slim fit. There is too much of that in the market now and I can feel a new definition coming through. What’s next is the easy crotch and longer back – 3D pants with an engineered straight leg.
Brands always ebb and flow through seasons as their popularity wanes and grows, and if G-Star is to stay at the top of its game it will need to stay true to van Tilburg’s philosophy of flexibility and Morisset’s eye for product. Keeping on-trend is all that matters in this fickle market.