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The Drapers Interview - SMCP

In brand house SMCP’s first year under new ownership, the team behind Sandro, Maje and Claudie Pierlot has hatched a plan for international conquest from its Paris base long-lasting global domination.

Last April, private equity firm Kohlberg Kravis Roberts & Co (KKR) acquired a 65% stake in French brand house SMCP, home to Sandro, Maje, Claudie Pierlot and Sandro Homme. During the first 100 days after the deal - rumoured to value SMCP at €650m (£529m) - sisters Evelyne Chétrite and Judith Milgrom (who founded the business in 1984) and group directors Elie Kouby and Frédéric Biousse were tasked with completing an ambitious five-year plan for the business.

“They pushed us to work a lot last summer,” says Biousse. “But the result is great, because we now know where we are going and have been able to plan what we will do in the next few years.”

It was, he says, a big change from life under previous investor L Capital - a private equity firm owned by Paris-based LVMH, which itself has more than 60 brands under its umbrella - that had little involvement in the running of the business.

“[KKR is] pretty involved,” Biousse says. “It’s fine as long as it brings significant added value, which is the case. It is very demanding but at the same time very supportive.”

One of the final parts of the process has been the hiring of Daniel Lalonde as group chief executive. He joined in early April from Ralph Lauren, where he was international president. Biousse, who has been chief executive since 2007 and will now take on an advisory role, describes Lalonde’s appointment as “the cherry on the cake”. “It closes that period of time when we reshuffled the business and found how we were going to operate,” he explains.

SMCP’s aims are clear - the team and its investors are confident it can become an international group with staying power.

Biousse says to do that, it needed the right people in place: “You cannot build something strong if you have four people making decisions. You need to be quick and responsive and make sure you have one single voice for the group, both internally and externally.”

The new strategy, as Biousse sees it, is to build the Sandro and Maje names internationally to reduce the “reliance” on France.

This has already started, with 70% of the group’s retail openings in 2013 taking place outside its homeland. Some 117 stores opened last year: 46 in Europe, including 13 in the UK; 60 in the US; and the first 11 stores in Asia. This raised the overall number to 714, with Sandro taking the lion’s share and Claudie Pierlot the smallest. The group operates across 24 territories and international sales now account for 35.2% of total net sales, which rose 20.6% to €422.1m (£343m) for 2013. Sandro Homme is a small part of this mainly womenswear group.

With the hiring of Lalonde, Biousse is confident this growth will continue, particularly in North America, Lalonde’s home territory: “Hiring someone who is not French is the best symbol of our ambitions abroad. Of course he speaks French, but the fact Daniel is Canadian will help - he will bring immediate added value to markets like the UK, which is a priority, as is North America.”
As well as “selective expansion” in the US, Lalonde is eyeing “interesting pockets of markets that we are beginning to tackle” in Europe, particularly Italy, Spain and the UK, where SMCP has 43 stores.

The business has concessions in the likes of Harrods, Harvey Nichols and Selfridges. Initially it was only in Selfridges’ Oxford Street store, where Sandro and Maje have sat in the contemporary department since 2010, but it is now in all the retailer’s stores and online. Sandro Homme joined the line-up in April 2012, and Claudie Pierlot was added to Oxford Street last season.

“When we first introduced the labels, there was a huge amount of interest around Parisian style and the boutique shopping experience there. Everyone would be going to Paris to stock up on well-priced, quality fashion staples and to seek out the insiders’ ‘secret’ French go-to labels,” says Selfridges buying manager Lydia King. “Sandro and Maje both cultivated loyal followings through word of mouth and strength of product offer - we were interested to see how that could translate to Selfridges.”

For those not in the know about these “secret French go-to labels”, Sandro offers an elegant take on rock chic - think muted leopard-print dresses, mesh and sheer fabrics and dyed denim - while Maje is more playful, using a lighter palette. Claudie Pierlot has a more classic approach.

According to King, the brands “successfully bridge the gap between fast fashion and luxury … Sandro and Maje mix core and cult items every season, appealing to a broad customer profile and especially a fashion literature-engaged consumer.”

While the UK is a priority for growth, Asia is arguably where much of the team’s focus will lie for the medium term, with the company having just bought out its Hong Kong and Macau partner AZ Retail.

At least a dozen stores will be opened in China between now and the end of the year, but more will sprout up over the medium term.

SMCP continues to wholesale into territories where it has not established a retail partnership - such as South Korea, Taiwan and Russia - as an alternative to franchising.

Digital is also high on the agenda, with both Biousse and Lalonde eager to create an omnichannel environment for Sandro and Maje’s savvy shoppers. They are tight-lipped about most details, although click-and-collect is definitely a part of the puzzle,
being launched first in the UK before a more general roll-out.

Online sales currently make up just 2% of total sales for the group, and the pair believe there is a huge opportunity for growth.

“The rapid development of digital has changed, in some sense, the footprint strategy for some of our brands in more remote areas,” Lalonde says. “Online shopping has to be a great experience, and that is what we have to do with our website - create a great shopping experience, one that is very much married to what we offer in store.”

In the UK, SMCP is planning a couple of stores outside London, having tested the waters through its concessions. Although specifics have not been nailed down, it is poised to move quickly when the right opportunity presents itself.

“It could be Manchester, maybe Edinburgh - we just need to find the right place, and if we find it there is nothing to stop us opening in three months,” Biousse says. “One of the keys of our success is the ability to make decisions quickly and move.”

Another route to growth is to expand through the acquisition of other brands. Although the team has been “called a lot and asked about it” by brands, SMCP has until now focused on itself - but by next year, the doors could be open to considering the right match.

“For 2014, our primary focus is consolidation - the openings we have made, the people we have hired, the room we have to grow as we are,” says Biousse. “Once this is done we might start looking at potential acquisitions. We have names and countries in mind - we are definitely interested, we are entrepreneurs - but it’s a little early to say more.”

Before that can happen, Lalonde is charged with developing the core brands. He plans to improve store formats and communication to “enhance the brands’ desirability”, but promises there will be no change to pricing, something that rival retailers - while in general complimentary - have noted is a little high. Sandro blazers come in at around £300, for example, while dresses are well above £200.

“It’s very important to maintain the current positioning, combining the best of both luxury and fast fashion,” Lalonde says. “In my 25 years I’ve seen many brands try to do many things, but I feel very strongly about where we are in the market - it’s about being more precise with how we communicate that, especially as we go out to other markets.”

As well as the mid-ground between luxury and fast fashion, Sandro and Maje’s Paris origins will feature strongly in campaigns, suggesting that despite its international ambitions the business is still truly French at heart.

“Paris is the fashion capital of the world,” Lalonde says. “We believe there is a whole chapter around that being our home.”

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