Some courageous initiatives deserve to be applauded, especially when they are the result of in-depth, coherent strategic thinking. One such example is Promod, a ready-to-wear brand founded in 1975 by Francis-Charles Pollet, whose son Julien is now at the helm.
This once-flourishing company - with sales of up to €1 billion and 1,000 stores worldwide - has been caught up, like so many others, by the predicted bankruptcy of mass retailing, with its deadly spiral of margin-devouring promotions, not to mention the repeated setbacks that have led to strikes, Gilets jaunes and lockouts. Caught up, too, by society's changing view of consumerism. As Julien Pollet puts it, tomorrow's retail will either be responsible or it won't be.
To "pivot its business model", Promod has chosen to start from the fundamentals of its brand, which claims authentic product qualities and a style that is eager to assert itself. Gradually, the collections are incorporating more eco-responsible materials and displaying this clearly, in an overhauled and largely digitalized communication, which seeks to create, build loyalty and involve a community of customers.
Particularly interesting is the integration of digital into the business model: online communication has become the main instrument for capturing market share, with 60% of in-store purchases prepared online. Ongoing interaction with customers enables us to anticipate sales and manage inventories as tightly as possible, right up to a form of on-demand production that is still in its infancy. It is also thanks to this digital communication that Promod intends to convince its customers that quality has a price (no more promotions) in order to generate enough margin to further improve quality and produce more responsibly.
The network: a strong point or an Achilles heel?
What about the stores? Promod's great strength is its historic network, and particularly the quality of its locations. Although only 380 points of sale remain in France and French-speaking Europe today, in order to concentrate resources on a reasonable number of stores and retain sufficient funds to finance transitional investments, the network places 80% of the French population within 15 minutes of a store. This is enough to make free in-store delivery attractive, where sales assistants will welcome customers, advise them, sell them complementary products and see them off, satisfied with the human contact they came for.
It's important to understand that this bold gamble rests on a delicate balance. The strategy capitalizes on the brand's historical qualities: a brand with potential, loyal customers and a good network. But the latter is extremely expensive: inventory, rents, staff - all of these are capital-intensive. Will the rebound in sales boosted by brand communication be enough to ensure the model's equilibrium?
Let's not forget this crucial point: proportionally, stores drain more and more qualified traffic and less and less passing traffic. In other words, they contribute more and more to building customer loyalty, but less and less to winning new customers.
Does this mean that lessors would be well advised to review their own business model without delay? Certainly, if they want to retain tenants capable of paying them rent and participate, at their level, in the increasingly urgent overhaul of the retail sector.