Through its acquisition of distributors and franchise partners, SuperGroup’s global expansion is gathering momentum under chief operating officer Susanne Given.
SuperGroup has global ambitions. The UK company’s sights are set on strengthening its young fashion brand Superdry in the core European market, while continuing to expand further afield, where its operations span more than 100 countries.
In the financial year to April 26, 2014, 37% of SuperGroup’s total sales were international. The retailer and wholesaler has 354 stores outside the UK, 12% of which are privately owned and 88% concessions or franchises. It anticipates 80% of future retail space will be opened overseas. In the UK, the company operates 96 stores and 64 concessions. Its wholesale business comprises 268 UK stockists, with another 1,529 overseas.
A deal to fully enter China with a local partner by next April is also on the cards. Superdry trialled a Chinese-language website in 2013 and has been selling on China retail platform Tmall for 10 months.
“We’ve been exploring the Chinese market for 18 months,” explains SuperGroup chief operating officer Susanne Given, speaking to Drapers in the showroom above Superdry’s Regent Street flagship.
She is taking a cautious approach to China: “It is about finding the right partner and determining the right business model. Is it a joint venture or not? Own retail or franchise? Some people have gone in too fast, so we want to make sure that when we enter it’s with a well-funded, well-connected partner.”
Given has the retail experience to know when the time is right. Before joining SuperGroup as chief operating officer in April 2012, she served as senior buyer at House of Fraser (1995-2000), managing director of TK Maxx (2008-10) and fashion buying director at John Lewis (2011-12). Wearing a Superdry premium biker jacket and super-skinny jeans, she refuses to be drawn on an exact date for Chinese expansion, saying the business will not move until “absolutely satisfied”.
SuperGroup is also rumoured to be buying back its US licence from its partner of six years, SD USA LLP, which runs 14 stores in New Jersey, New York, California and Nevada, averaging 2,500 sq ft.
Given admits SuperGroup would like to run its US operation itself, but will not divulge further details. “We have discussions with them, but at this time they are very keen to continue to build up the brand in that territory. It is totally independent so we have limited opportunity to impact what goes on.”
In mainland Europe, where SuperGroup has 50 stores, plus 126 franchises and 13 concessions, 13,000 sq ft of retail space across two stores - Marseilles in France and Kitzbühel in Austria - was added to the portfolio in the first quarter of 2014.
To gain greater control of its brand overseas, SuperGroup has acquired a number of distributors over the past year. In June, long-term Scandinavian distributor SMAC Group was snapped up for an undisclosed sum, following the acquisition of Spanish distributor Osaka 68 in July 2013.
On November 1, 2013, SuperGroup bought out German franchise partner Komet und Helden, taking over seven franchise stores: in Munich, two in Berlin, Hamburg, Ingolstadt, Wertheim, and Salzburg in Austria. Pre-Christmas, SuperGroup plans to open six company-owned stores (averaging 5,000 sq ft), including a Munich flagship.
“We are going after Germany quite aggressively. Its sales densities are very similar to the UK and across all channels we’ve had a great reaction,” Given says. “We also launched our first large-format store (4,887 sq ft) in Germany 20 months ago in Oberhausen - a Bluewater equivalent in western Germany - so we have great confidence in our strategy.”
The SuperGroup business model incorporates retail (66% of revenues) and wholesale (34%), sold through company-owned stores, franchises, distribution partners, department store concessions and independent wholesale and online. The company estimates that existing partnerships will provide opportunities for at least 200 more franchise stores worldwide by 2019.
Superdry is sold in 21 franchise stores in Europe, 15 in Asia and the Middle East, two in South America and a franchise partnership in South Africa. The company typically opens 100,000 sq ft of standalone store space per annum and 50 franchise stores. During the first quarter of 2014, it opened further franchise stores in Taiwan, the Philippines and Malaysia. There are also licensees in the US and Australia. Target locations include South America and the Middle East, plus more openings in Malaysia.
While admiring the universal appeal of Superdry, Gareth Jones, head of sales at men’s young fashion label Duck and Cover, argues wholesale is less important to SuperGroup than its stores: “Superdry remains one of the market’s most important brands. My perception is that wholesale has become less important as its own store portfolio has grown. It appears not to supply retailers in towns where it has its own stores and this obviously impacts on the size of the wholesale business.”
However, Given is keen to stress the importance of wholesale in enabling SuperGroup to work with local operators in foreign markets. She uses the German expansion as an example. “In Germany we will open our own stores in large conurbations, but in secondary or tertiary territories we will continue to drive successful wholesale and franchise operations.”
The bold expansion strategy is supported by a 15.9% rise in total sales to £87m during the first quarter of 2014. Even so, SuperGroup is not immune to problems. Like-for-like sales fell 3.7% during the period, attributed to shortages of key spring 14 lines and a “highly competitive market”.
“We had a really cold spring 13 in the UK and because we do not have a Sale we can trade winter categories into April,” Given explains. “When we bought for spring 14 we probably didn’t calibrate the winter elements of our spring assortment as well as we should and therefore we didn’t buy enough spring stock on core lines such as T-shirts, shorts and dresses.
“Our sell-throughs in those core categories were very early in the season, meaning we had a slight imbalance between cold and warm weather product.”
Despite this setback, Drapers spoke to a number of stockists for whom Superdry’s spring 14 collection had performed strongly, especially in T-shirts, polo shirts and shorts. However, heavier items like hoodies and jackets proved a harder sell, according to Andy Ashman, manager of lifestyle independent retailer Javelin in Bury St Edmunds, Suffolk.
Core system updates over the past year should help prevent future stock shortages. Implemented in March, a merchandising management system centralises stock information from warehouses across the UK, Ireland, Germany, France, Belgium and the Netherlands. These systems are supported by a 500,000 sq ft distribution centre, which was relocated from Gloucester to Burton-on-Trent in Staffordshire last year to be closer to logistics partner DHL’s International hub at East Midlands Airport.
The first quarter drop in like-for-like sales has also been attributed to the competitive UK market. In May, Debenhams slashed prices on dresses by 20%, while Asos held a 60% Sale of spring knitwear. The aggressive discounting of other young fashion retailers forced SuperGroup to review its approach.
“The reason we don’t do Sales is that we want the brand to have longevity and not give the customer reason to wait until the product is marked down,” says Given. “Ultimately we decided it was more important to protect our full-price strategy than to react to what was going on in a very competitive market.”
The “boutiquey” style of spring 14 womenswear was another factor in the like-for-like sales decline. Speaking to Drapers in early September, chief executive Julian Dunkerton, who founded Superdry in 2003 as a label to sell in his Cult Clothing casualwear stores - it stood on its own from 2004 - said Superdry “needed to refocus on the core customer” by concentrate on dresses, skirts and feminine blouses.
Despite occupying 50% of retail space in Superdry stores, womenswear accounts for 33% of revenue, something Given would like to change: “We’d love it to grow another 10 percentage points over the next five years and I have no doubt that will happen.” The autumn 14 women’s range includes biker-style skinny jeans, chunky knitwear and embellished partywear, retailing from £19.99 for a vest to £374.99 for an embellished biker jacket.Menswear starts at £12.99 for basic plimsolls to £299.99 for a biker jacket.
November will see the launch of Superdry Snow, the brand’s first skiwear range of technical, semi-technical and après-ski garments (£134.99 to £249.99). Made from breathable, waterproof fabrics, the technical Glacier SkiSuit will retail at £224.99. To support the launch, SuperGroup opened a store in the Austrian Alpine resort of Kitzbühel in July.
Currently at the sampling stage, Superdry aims to launch a rugby collection in time for the Rugby World Cup, which kicks off on September 18, 2015. It will be priced about 20% to 25% lower than established rugby brands.
Etailing is another growth area, with online sales up 24% in the first quarter of 2014. In April, former Asda customer director Jon Wragg was appointed as ecommerce director. During the next six months he is tasked with devising a strategy to optimise multichannel, engaging with loyal customers and building global campaigns. This strategy will have an emphasis on social media. Over the past 18 months SuperGroup has ramped up its engagement on Twitter, Facebook and Instagram, as well as across its 18 foreign-language websites, driving country-specific content.
In store, SuperGroup has seen limited take-up of its click-and-collect service since its introduction in October 2013. Currently being rolled out across UK stores, transactional iPad minis are expected to prove more popular. Customers can have garments delivered in store before 12pm the next day or to their home. iPad functionality will go live in 30 stores before Christmas, with the rest following in spring.
International expansion, franchise agreements and product launches make for a long to-do list, but top of the list for Given is a more immediate concern - Christmas. “The only thing I’m thinking about right now is that we are absolutely fit for peak trading and making sure all operational aspects are well planned for the biggest volume part of the year.”