In the courtrooms of the Paris Commercial Court, located on the prestigious Ile Saint-Louis, it has almost become a habit. For several months, the leaders of French ready-to-wear brands and their lawyers have been marching to request the placement of their company in receivership or in safeguard proceedings. Remedies that will sometimes go as far as liquidation in the worst case. Camaïeu, Kookaï, Gap, Pimkie, Don’t Call Me Jennyfer, Burton Of London… Not a week without a brand appealing for help in the direction of commercial justice. Latest victims: Du Pareil Au Même and Sergent Major, emblematic brands of clothing for the little ones, belonging to the Générale de l’Enfant group.
A vicious circle is setting in. “By dint of saying that clothing is going badly, there is a risk of being a real subject around the financing of these companies. If the tap closes, it will be very complicated”, warns the cabinet of Olivia Grégoire, Minister Delegate in charge of Small and Medium Enterprises, Trade, Crafts and Tourism. “There are companies whose shareholding has changed a lot in recent years, this does not facilitate the implementation of a long-term strategy”, adds Yohann Petiot, general manager of the Alliance du commerce, an organization which brings together more than 760 brands across France.
Surface race
The problem is actually structural. Over the past thirty years, ready-to-wear brands have multiplied the openings of new points of sale, investing in shopping centers to the detriment of independent shops, without being careful about the price of rents. “This frantic race to the surface is taken in reverse, a growing share of the value being today captured by e-commerce”, underlines the cabinet of the minister.
At the same time, the share of the French budget devoted to clothing has dropped drastically: from 10% in the 1960s, it fell to 4% in 2000 to fall to 2.5% in 2022. And inflation didn’t fix anything. “The most fragile consumers have tended to reconsider their budget choices. Fashion is sometimes sacrificed and that’s what’s happening right now. It’s a market that is changing a lot in nature”, points out Gildas Minvielle , director of the Economic Observatory of the French Fashion Institute. And it is the mid-range that is currently paying the price. “Its core clientele, which is affected by changes in purchasing power, has shifted its spending to other consumption items. The uninspiring mid-range value proposition is no longer competitive”, slice an industry expert.
Failed digital transition
Added to this is a failed digital transition, which is still struggling to set up for most brands today. “Some companies suffer from a delay in investment in digital marketing, their presence on social networks and their referencing on the Internet. We have to be able to differentiate ourselves. Yohann Petiot. Still, customer contact still keeps some of them alive. “We still feel an appetite for physical trade. People need to feel the product and the advice at the sales level”, assures Pierre Talamon, president of the National Federation of Clothing, which represents independent businesses. The latter also suffer from the economic situation. “There are more closings than openings, it hadn’t happened for a long time. When mid-range brands draw the curtain, it’s also the independent shops on the outskirts that pay the price, it’s bad for trade in general”.
The list of victims could still grow among the big brands. “A number of players will have difficulty getting through the ramp. There is no reason for that to change,” concedes a government adviser. The Fast Retailing France group, owner of the Comptoir des Cotonniers and Princesse Tam Tam brands, could follow the same disastrous path as the others. Several store closures are already planned, before a detour through the “court” box? “Professionals in the sector have known for years that these brands were in great difficulty. When you see Camaïeu’s wall of debt, at some point, with financial difficulties of such a level, it is impossible to get there. The problem does not come down to the fact that it is a brand that has not been able to renew”, thunders an observer.
Second-hand competition
The market is also being hit hard by the boom in second-hand goods. This is particularly true among 18-24 year olds, followers of Vinted. “It is becoming a real substitute product. This generation tends to turn away from traditional ready-to-wear for this more responsible way of buying and which offers a significant advantage on the price”, explains Myriam Dassa, director of the Barometer digital & payments at BPCE. Today, even traditional brands are getting into it…reluctantly. Because the threat is real: the second-hand market was estimated at 7 billion euros in 2022 in France, when clothing globally represents a turnover of 26 billion euros that same year. A part brought to grow. “Traditional brands, however, have an asset to highlight with the second hand: they can play a role of reassurance with their customers, by restoring their products, to stand out from Vinted. But they have not yet arrived at profitable models”, recognizes Yohann Petiot, of the Trade Alliance.
And a new major player is gradually chipping away at the small remaining market shares: the Chinese Shein, champion of ultra-fast fashion, is enjoying resounding success in France. Here, not a single physical store, apart from pop-up concept stores, everything is done online. The collections are renewed at lightning speed. The brand, often accused of copying its competitors, including the Spanish giant Zara, is also in the sights of the Directorate General for Competition, Consumption and the Repression of Fraud. “Making the same piece and selling it to you in two weeks contributes to the difficulties of the sector. All this comes in a context where international competition was already very strong with Inditex – owner of Zara, H&M and Primark”, insists the firm of ‘Olivia Gregory.
Lagging behind in digital, competing with second-hand and ultra-fast fashion, mid-range brands will also have to anticipate the changes to come imposed by the ecological transition. “New laws will bring more transparency to the different stages of product manufacturing, like an ecoscore, which should make it possible to choose in good knowledge of the facts the products which are more virtuous”, warns Gildas Minvielle. A turn that should not be missed.