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Property Special: Swedish chain Lindex talks plans for the UK

Lindex is the latest European retailer to land in the UK. It is starting small with two stores, but its country boss is confident more will follow.

Swedish high street stalwart Lindex has a challenge on its hands. The 61-year-old mainstream women’s and kids’ wear retailer has just launched a plan to crack the highly competitive UK market. Under the ownership of Finnish listed retail group Stockmann since 2007, Lindex is a big deal across Scandinavia, eastern Europe and the middle East.

Endorsed in the past by american actresses Gwyneth Paltrow and reese Witherspoon, the business trades from nearly 500 stores in 16 countries, and across 28 nations online. On march 27 it opened its first UK store, taking 11,400 sq ft at Westfield Stratford city shopping centre in east London, and come October it will open its second, a 7,500 sq ft shop at Westfield London in Shepherd’s Bush.

Yet despite taking a cautious approach, it is feeling quietly confident. Lena Provén, the retailer’s UK regional manager who moved to London from Lindex’s Gothenburg hQ in December to lead the push, is coy about further expansion plans and refuses to give any clues as to how large the store portfolio could become. But she insists: “The plan is to grow, definitely to grow, and to open many stores. But how fast and when is not decided yet. attracted to London as “the European number one fashion metropolis”, she justifies this cautious strategy by adding: “It’s a good way to start in a new country, not doing too many at the same time. It’s important for us to show an inspiring store with good visual merchandising and customer service, and wecan do that in the best way when we do it like this.”

Looking to grow: Lena Provén has moved over from Gothenburg to leadiLindex’s UK business lindex profile 8 Drapers Property Special / march 28 2015
Chief executive Ingvar Larsson is equally reticent about revealing the plans, perhaps owing to the competition he knows the contemporary womenswear and kidswear retailer could face from the UK’s most established and best loved high street names. Both appear unconcerned by this competition,
but Larsson tells Drapers from Sweden that securing suitable rents and stores of between 6,500 sq ft to 12,000 sq ft will be “an important factor that will decide the pace of our expansion”. He adds: “We will start with London and concentrate our expansion around the London area. However, we are of course interested to expand into other regions as well.”

Hugh Radford, chairman of central London retail and strategic adviser for shopping centres across Europe, the Middle East and Africa at real estate services firm CBRE, which advised Westfield on the two UK deals with Lindex, explains that if the initialLondon stores work well he could see the business creating “a hub” in the capital with five to six stores.

After this Lindex - first established as a lingerie store in 1954 in Alingsås, northeast of Gothenburg - is likely to have major regional cities such as Manchester, Birmingham and Glasgow on its hitlist, with the potential to create a portfolio of around 30 shops in the next three to four years. One location likely to be high on the priority list is London’s Oxford Street, while the company is said to have also considered space at Bluewater shopping centre in Kent. With the business’s mass-market appeal, leasehold shops in high footfall city centre or large regional shopping centres are expected to form the focus of its property search, but Provén says regional high streets will also be considered. But to beat the competition and anchor itself in the UK market, Lindex needs a point of difference and Provén thinks this could be its children’s clothing. The entire upper floor of the two-storey Stratford store is dedicated to this. “We do think our kidswear is one big advantage in the UK market,” she says. “We are really good at kidswear and market leaders in many countries. It is very good quality, functional and fashionable.”

It is this quality that Provén hopes will help Lindex compete with the price-led supermarket chains. Alongside this, she believes the business’s contemporary womenswear offer has the potential to tap into the UK’s current “big interest in Scandinavian fashion”. However, not everyone is convinced the offer is distinctive enough for Lindex to become a market leader. Maureen Hinton, global research director at retail consultancy Conlumino, explains: “They will find it difficult to find a niche here as it’s such a competitive market. These days you have to be very targeted. The fact they are focusing on women and children suggests they are aiming at 25 to 45-yearolds, which is Next’s core market, and of course supermarkets.

It will be a challenge.“When continental retailers come over here, like [Danish brand house] Bestseller with Vero Moda and Jack & Jones, they often don’t realise their brands really need to stand out to break into this market.” But she believes Lindex is pursuing the right strategy to test its model in the UK - opening withWestfield and taking it slowly. “Westfield is a good first step as it has such high footfall, so the retailer can get a quick reaction to its
ranges,” she says. “Operating costs and competition are issues, which is why it’s best to take it easy and see whether it can carve out a niche before opening lots of stores.” Having signed two leases with Lindex, Westfield is optimistic about the concept. Keith Mabbett, its director of leasing, explains: “It has a history of delivering creative, of-the-moment fashion that consumers love. This is exactly the type of retail experience we look to bring for our customers.”He points to Lindex’s “forward-thinking approach”, which he believes will help it stand out in the crowded market. In particular, in the month
before opening its Stratford store the retailer used the hoarding surrounding the space to display an interactive game that encouraged passing shoppers to play for the chance to win a £200 spring 15 wardrobe, while browsing the collection and learning more about the company.

For Larsson, success in the UK is not in doubt: “London has been in our planning for a long time; now was the time for us to open.” This comes despite Stockmann having had “a difficult year in 2014”, according to its financial results for the calendar year. Last month it agreed to a management buyout of its other major fashion chain Seppälä, enabling it to focus on Lindex and grow it “into a truly global fashion brand”. For Lindex’s full year to December 31 eurodenominated revenue dropped 5.4% to €650.6m (£481m), but revenue in comparable currency rates was said to be on a par with the previous year. It
recorded an operating profit of €30.8m (£22.8m), down from €52.9m (£39.1m), while gross margin was 61.9%, down from 62.6%. Still on the expansion trail, the retailer increased its total number of stores by 12 last year in countries including Finland, Norway and Slovakia. It plans another 15 this year, including Westfield Stratford, while it is also investigating options to open franchise stores in China.

The debut UK store will be a new concept for Lindex, which will be rolled out across future UK and international openings. Provén describes the concept as “very Scandinavian”, combining a monochrome palette with pops of red - the company’s logo colour - and oak. The seven-metre high glass-fronted entrance creates a sense of light, while helping to showcase Scandinavian style: the store in Oslo, storefits in Gothenburg and pieces from the spring 15 range ‘It’s important that the customer feels they are getting inspiration just by looking into the store’ Lena Provén, UK regional manager, Lindex march 28 2015 / Drapers Property Special 9 the products to passers-by, and a grand staircase at the entrance instantly gives shoppers the choice of browsing the women’s range on the first floor or immediately ascending to kidswear on the upper floor.“It’s important that the customer feels they are getting inspiration just by looking into thestore,” she explains, adding that the concept has more “inspiration areas” than usual, full of mannequins displaying the spring 15 collection as well as iPad stations to seamlessly link the store and online offer.“The customer should be able to feel the same inspiration whether she’s looking online or in oneof our stores,” she says.

And it’s for this reason that Lindex has put a huge focus on matching its visual store merchandising with its extensive editorial content on its ecommerce site - launched in the UK in May 2014 - and via social media. This includes its “two ways to wear” features and “forever denim” style guides. For spring 15, this editorial content is pushing Lindex’s take on the big trends including a 1970s twist, boho chic influences and bold Aztec prints. Alongside this core womenswear range, and reflecting the typical Scandi pared-back look, Lindex also offers its more premium Extended collection, which comprises basics in neutral colours, featuring loose and longer-length fits and prints inspired by stones, the ocean and wood. Picking out her season favourites from the rail behind her, Provén highlights a textured marbleeffect collarless coat at £69.99 and a lightweight long waterfall jacket for £59.99. Retail prices for kidswear range from £2.99 for a headband to £39.99 for a ski jacket. Womenswear starts at £3.99 for a pair of tights up to £159 for a leather jacket in the Extended collection. Lindex has collaborated with high-profile designers over the last six years - including Missoni for autumn 12, Matthew Williamson for autumn 13and Jean Paul Gaultier for autumn 14 - and Provén suggests the UK launch means future collaborationscould feature prominent UK designers.

But it’s not all about store and product expansion.The company announced in February that it will be closing its menswear line LXM after spring 15. Instead, it has launched its own cosmetics range, which was debuted at Westfield and will go into other stores next month. Stockmann announced in February that Lindex will be pulling out of Russia and is now in the process of closing its 19 company-owned stores there, due to loss-making operations and an uncertain retail market outlook. While expanding into the more stable UK market looks like a logical next step for an ambitious Scandinavian business seeking global growth - providing a launch pad for potential expansion into western Europe and even to the US - it will not be easy. But Lindex seems to be taking the right steps so far, pursuing cautious expansion and biding its time. This retailer will not be rushed.

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