Last week, Esprit announced that it was returning to the Canadian market. In 2011, the company underwent a major overhaul, including closing all its stores in Canada and the U.S. due to dwindling profits. Now, Esprit has teamed up with Montreal-based distributor Freemark Apparel Brands (FAB) to open standalone stores in Canada and roll out the brand at specialty retailers across the country.
Marketing talked to Lawrence Routtenberg, VP of sales and co-owner of FAB, about Esprit’s expansion plans and how the brand plans to reconnect with Canadian consumers.
How did the partnership with Esprit come about, and why did it make sense for your company to partner with the brand?
We weren’t actively looking for new brands because certainly we had enough on our plate with the brands we work with [including Bench and Scotch & Soda]. That being said, one of our sales agents was a former representative of Esprit when they were in Canada, and she informed me there were rumblings that Esprit was showing an interest in reentering the Canadian marketplace. The key [for Esprit] was finding the right partner. After doing our due diligence, we realized the brand equity of Esprit remained very strong despite them leaving the marketplace.
What sold us was they have a new CEO, Jose Manuel Martinez Gutierrez [a former executive from Zara owner Inditex]. He joined Esprit in 2012 with some very key mandates to reengineer design and the supply chain. A few years have passed and he’s been very successful, to the point where they’re re-launching in Canada with the eventual goal of getting into the United States. They felt we were the right partner because we are a unique breed. I humbly say there are not too many companies, if any, that have the experience of wholesale, retail, factory outlets and ecommerce that focus on multiple brands. So it seems to be a good fit.
How has the Esprit brand evolved since 2011?
There’s a key element of staying with the roots of Esprit being of San Francisco origin and California-inspired. Being wearable, comfortable and environmentally friendly is certainly still part of their DNA… The major shift is more in terms of on-trend fashion. The business model has been verticalized, allowing for shorter lead time and faster response to consumer demands, which will enable us to have freshness and newness in our marketplace every delivery. I think the brand has bridged the gap between casual and fashion, as opposed to being centred more on the casual end. They’re a lot closer to trends and fashion within all their collections.
Many retailers in Canada are struggling to compete with low-priced fast-fashion chains, and there have been a number of closures recently such as Mexx, Smart Set and Jacob. How can Esprit compete and win in today’s competitive retail environment?
We don’t take it lightly, certainly. Right out of the gate, we’re changing the footprint of our retail stores. It’s going to have a really strong boutique feel, 2,000 to 2,500 square feet as opposed to 5,000 to 10,000 square feet, which is what they were in the past.
We’re taking the liberty in our stores not to offer the entire world of Esprit, but to have the best offerings based on demographics. Some stores might be women’s only, some stores will be unisex, some stores will have more casual wear [like the EDC collection], and other stores may have more of the [higher-end] Collections line.
As far as the success or failures of other retailers, we’re looking to carve out a niche in the moderate to better positioning as opposed to moderate to low. There’s certainly all the big boxes of Zara, H&M and Forever 21, but that’s not where Esprit is going to be positioned in Canada. It’ll be very much elevated from a marketing standpoint and from a product assortment standpoint, but still offer what has always been their strength: a tremendous value proposition to the consumer.
Unfortunately, there has been a demise of some local [retail] heroes in Canada, whether they’re out of business or continuously struggling. I think part of the demise of the Canadian retail [industry] has been the international players coming in, and we feel that Esprit being a $2.5 billion global brand, we’ll be well positioned in our marketplace.
How do Canadians feel about the Esprit brand, and why do you think they’ll welcome it back?
We’ve done our homework. In our research and studies and casual discussions amongst the industry, we found there’s always been very strong brand equity. It has never waned. The consumer didn’t want to see Esprit leave the marketplace. When they left, they had a thriving wholesale business with all the major retailers and specialty chains in the country, and we’ve already validated the first selling season.
We’ve already sold into two selling windows, so we did our February/March collection and our March/April collection. We’ve already [signed on] 200 specialty boutiques and chains across the country including Sporting Life, which did really well [with Esprit] before and they are ecstatic to jump back on board.
How many bricks-and-mortar Esprit stores will be open in total?
Over the next several years, the potential is to have 25 to 35 stores in Canada between factory outlets and regular-priced stores. In spring 2016, we’ll be opening a 2,000 square foot women’s boutique in West Edmonton Mall; a 2,600 square foot unisex store in Metrotown in Vancouver; and for autumn/winter 2016, we’ll be opening a 2,000 square foot women’s boutique in Square One mall [in Mississauga, Ont.]. And we keep on looking for additional opportunities. We’re also working with Esprit on a complete omni-channel ecommerce strategy that will be rolled out in the next 12 to 24 months in Canada.
What are your plans on the marketing front?
We’re going to tackle it on a few levels. First of all, we hired one of the best PR agencies in Canada, NKPR. We’re very well versed in social media and that’s going to be definitely a big effort in terms of engaging our consumer. We’re going to implement [global loyalty program] Esprit Friends within the next 12 months, and that will tie back into social media and in-store opportunities. We’re going to focus on print advertising and outdoor media as well. We’ll be tackling [marketing] from all avenues and it won’t be a secret that Esprit is back in Canada.