Simon Perele CEO Mathieu Grodner speaks with Josh McDonnell about the company's plans for further Australian expansion, through the use of a strategic bricks-and-mortar strategy.
What's the idea behind a bricks-and-mortar expansion strategy?
To be honest with you, I am a true believer in physical retail strategy and I believe we should combine that with a digital retail strategy, so that is what we are trying to do.
We already have an online channel approach. But the idea of this new brick-and-mortar approach is to bring a unique shopping experience, with links to the brand's identity, to all of our consumers.
We believe there is a unique way of doing this through physical retail. Through digital retail, we can of course achieve great things and different things but in my opinion, they complete each other.
How do you make the experience unique? What makes this different from a normal strategy?
First of all, we are really targeting only prime locations around the world, only capitals, prime city centres and shopping malls which means our ambition is not to develop a national network of 100s of stores, we take a focused approach, which is why we chose this location in Bondi. This is a prime location in Australia and we made similar choices when we opened in France. Our first two stores in Paris were in prime locations within the centre of the city.
What is unique about the store itself, is how we really want it to focus on the identity and the history of the brand.
As you know we are an intimate apparel brand, we want women to feel confident when they enter the shop, to do that we bring a unique level of service.
What makes Australia a strong market and how much do we contribute to the global brand itself?
Australia is definitely one of our top international markets. It is explained by the fact that we have been in this market for many years, 40 years now.
Australia was one of our first international subsidiaries at the time and the brand quickly became popular.
Do we make the top five in international markets?
Yes, definitely in the top five. There is still potential for us to grow in Australia. Of course, alongside this we have also developed a presence in markets like the US, Canada, Germany and all Western European countries.
We also invest in, for example, the Middle East and we are starting to invest in Asia as well.
It is really a characteristic of our brand and of our group to grow this international presence, which already represents close to 80% of our total sales.
What does Australia make up of that?
It would be about 10-15% of the 80%.
Where does eCommerce factor in, are more sales from brick-and-mortar or eCommerce?
It would be both. Historically the brand is a more wholesale player, it used to account for 100% of our turnover.
At this stage, it's more than 80%, about 85% approximately. Within our strategic plan for the next five years, the ambition is that retail should represent about 25-30% by the end of our plan, so 30% of total revenue and out of that 30%, 20% should be physical retail and 10% should be eCommerce.
Will that be mirrored here in Australia?
I believe we can definitely be consistent with that objective here in Australia.
Actually, the retail part of our business here in Australia is already bigger than it is in other markets because we started to invest in retail here early, it was one of the first markets where we invested into retail so we already have that experience.
We also have some outlet shops, we started that 10 years ago in Australia and it has enabled us to build a strong relationship in the retail business in this market.
I am pretty confident we can reach, even outperform the objective I was describing for the group.
Can we expect more stores?
Well as I quickly explained the retail ambition is pretty recent for the group.
We used to be only wholesale but we've come to an understanding that to stay strong and become an even stronger brand we need to strengthen the direct contact we have with the consumer and the best way to do that is through retail.
We want to be in direct touch with the consumer and we want to bring them directly to the Simone Perele experience.
Having said that, it is a focused strategy, so we aren't looking at opening 100s of shops.
When we talk about the Australian market, yes, but the ambition is to open more shops and we're looking at opening 10-15 new shops in the next 5 years.
That is our objective for this market, which is consistent with targeting primarily top locations in the main cities and shopping malls.
What are the key locations? Capital cities?
Yes, that is pretty much it. The capital cities of each state and in any case, always in the best possible locations. So street shops in the city centres when it makes sense or in prime shopping malls when it is the best option.
How do you distribute out here? Is there a centre?
Because Australia was one of the first subsidiaries for us we have our own distribution centre and we have had it since the very beginning which give us a competitive advantage versus other international players, in the sense that we can distribute anywhere in Australia very quickly. Therefore we bring a high level of service to all of our clients and consumers.
Will you need to grow that network with the expansion?
Yes, definitely, our distribution centre capacity will need to grow in consistency with the growth of the retail operations.
You sold 2.5 million units last year, how many did Australia contribute?
As I told you before Australia contributes for 10-15% of our international turnover, so that would be about 8% of our group consolidated turnover. So the quick calculation will give you the figure of around 200,000-250,000 units approximately.
Best selling areas?
Well in Australia, Victoria is one of our strongholds because we have been there since the beginning. NSW obviously and we've always tried to distribute the brand nationwide in Australia so we are distributed in WA, SA and of course also in Queensland. But those would be our main regions.
New Zealand also is an important area for us and it is growing.
What is your New Zealand presence like?
Right now we sell through department stores, so David Jones would be our top client in Wellington.
We also have the ambition to open our own store there down the track.
In how long?
I would say the timeline we are looking at is two to three years maximum. So it could be next year, it could be a couple of years. Maximum three.