What’s in a name? One of Europe’s largest fashion retailers has recently chosen to call itself Tendam – inspired by the words ‘tandem’, suggesting teamwork, and ‘trends’. For most of its 138-year history, the company has been known as the Cortefiel Group so the change symbolizes a new direction. The man tasked with moving the business in new directions is CEO Jaume Miquel. Tendam owns five brands – Cortefiel, Pedro del Hierro, Springfield, Women’secret and Fifty (an outlet store chain) – operates in 90 markets and in 2017/18, its last financial year, generated income of EUR1,155m (US$1,334m).
Miquel previously worked at other clothing brands including Levi Strauss & Co. and Timberland. Joining Cortefiel in 2006, he was responsible for repositioning the Women’secret brand and growing the business. In 2015, he also took the position of general manager of Cortefiel and Pedro del Hierro brands before taking over as group CEO in 2016. The reorganization that started two years ago, with Miquel’s appointment, is clearly working. Tendam’s like-for-like sales were up 4.8 percent in 2017/18 and e-commerce grew by 26 percent (it is now more profitable than the group’s bricks-and-mortar stores). The group has moved directly into significant new markets such as India and Norway and has opened new stores in eight countries. Yet as Miquel tells ConsumerCurrents in this exclusive interview, he and his management team know that the company needs to change faster, be more innovative and deepen its understanding of consumers in order to keep progressing.
We believe we have a distinct opportunity in terms of market positioning. There is a clear niche in between fast fashion and affordable luxury and we want to be strong in that niche. When you look at it globally, there are not many multiformat, multibrand or multicountry brands or companies playing in that segment, which is the natural segment for us to be in. Positioning is one part of our strategy. The other part is how you serve that segment and we believe that there are many opportunities to create brands – not chains – that help people to dream and share values that are above fast fashion. We still want to create brands that are approachable – elevated, but approachable.
Our customer relationship management program helps this happen. The card holders in our loyalty schemes are central to our strategy. We have loyalty clubs for Cortefiel, Pedro del Hierro, Springfield and Women’secret. There are more than 22 million people associated with our clubs, which gives us the capacity to generate loyalty, engagement and be more personal. Some people believe this is probably the company’s greatest asset, even more than our real estate.
It was a natural evolution. The Cortefiel brand was officially built in 1945 and was then one group, one brand. Thirty years later, Springfield was born, followed by Women’secret and Fifty. So the reality we were facing one year ago was that we were one group with four brands defined by one brand. It wasn’t the best situation to be in. Right now, with Tendam we have one name that defines the whole group and our corporate values, and one brand that has been liberated of the burden of carrying the group’s name. That way we can develop values that are much more related to the product, the store and the consumer.
Brand positioning is the same for all brands. We don’t want to be in fast fashion, but in the growing segment between fast fashion and affordable luxury. This segment accounts for around 20 percent of the total market, but it can grow easily by capturing sales from above and from below.
The Women’secret customer is aged between 25 and 45 and more cosmopolitan. The Cortefiel customer is 45 or over, and likes smart dress and casual (but mostly smart). The Springfield brand focuses on customers between 25 and 35 who want casual wear. These brands do not cater to teenagers since we see that segment as too volatile and risky.
We see growth practically everywhere. We see it across the channels, including online. We see it in all the loyalty clubs, which integrates growth between online and offline. We also see growth from a geographical point of view. I would like to explain what I mean when I say practically everywhere. There are markets in which we are not present. Sometimes I’m asked why we are not in the UK and I always answer the same: too expensive, too crowded. But there are other markets with a big appetite for our brands, such as Russia, Mexico, the Middle East, Africa, and India, in which we are growing. In China, our presence with Springfield is growing. In Spain and Portugal we still have plenty of room to grow. In our group’s five-year plan, we are considering an increase of around 500 stores, 45 percent operated by us and 55 percent by franchisees.
You cannot go against reality. People get informed and buy through mobile phones, online or in store. This is a big opportunity. With our shoppers, who were only buying in physical stores and now are buying online too, the incremental spend is stronger. If we look at people who were only buying online and then started buying also in our physical stores, the spend is also incremental. From that perspective it is positive. We have made an effort to become one channel so that people can keep buying online and offline seamlessly. We have also focused on profitability on the digital side. This has probably been one of the industry’s biggest challenges – to make sure that we are paying attention not just to the growth, but also to profitability. Right now if our EBITDA margin overall for 2017 has been 14.7 percent and our EBITDA margin from online is close to 26 percent, I don’t see this as a threat, but as a clear opportunity.
In 2016 and 2017 we carried out a big store portfolio rationalization to make it more efficient. That implied a reduction of the total surface of our own operative stores globally by 5 percent and in the case of Cortefiel by around 10 percent. In the future you will have the stores you really need. They will not be the same. The level of connection with online will be stronger. The client decides where and how they want to buy and where and how they want to collect the product or have it delivered. We need to move to a format of a store that is fully flexible, that doesn’t have the same size and type of product per country and with a stronger omnichannel presence than we have today.
Lots of research. Every quarter we research every brand deeply, looking at ourselves and the competition, in terms of window product, pricing, promotion and advertising. We have created an online research club in which we test the reactions of customers with our apps, competitors’ apps and in other web pages. We are also working on personalizing CRM, incorporating experts in analytics, AI and machine learning to get better insights. Our capacity to capitalize on the 22.3 million loyal customers of our clubs is very high. Right now we are just scratching the surface.
Even after the best ever season in fashion, there is always something you can improve
The customer has always had the power. The difference today is that now they know they have the power. They also have the power to make their voice heard. In the past, social media was not so evident and their voice was not so loud and clear. Consumers now have so much you have to be more creative to encourage them to buy new things. The fact that customers are more sensible about – and critical of – corporations and countries than they used to be, is a good thing for countries and for companies.
We have to be loyal to the plan and not only enjoy the success. One thing is to celebrate and another, to relax. Sometimes people confuse both. We have just finished a final year results presentation and we said to the analysts that a 48 percent rise in EBIDTA is very good, but if you sit and just enjoy you won’t even grow by 5 percent next year. You have to stay focused and alert to stay successful. You also have to be intelligent, by reading the markets, the consumers and the signals, looking at all the opportunities, always thinking what to improve and ready, when necessary, to adjust the plan. In fashion, even after you’ve had the best season ever, there’s always something that can be improved. That is something we should never forget.
Some say you should only innovate to a degree, say 6 percent. People are starting to realize that is the wrong approach and we are totally reworking our basics with nearly all the brands. We did it three years ago with Women’secret and we are doing this now with Springfield, Cortefiel and Pedro del Hierro because we need to upgrade and change our approach. There are other programs related to innovation in technology and sustainability. We have created a new position in the group, Chief Customer Officer. The idea is to encapsulate the one channel strategy and to accelerate it. At the same time there is one new area within this structure that we call ‘next store’, which is trying to identify what stores will be like in 10 or 15 years’ time and to start moving towards that. Is this enough? Probably not, but at least we are starting to innovate.