Desigual’s Thomas Meyer on the renewed focus on innovation
Media-shy Thomas Meyer doesn’t do interviews. He is reluctant to be photographed, and doesn’t seem to be interested in fame, despite founding one of Spain’s largest and best-known fashion companies. Behind the kaleidoscopic prints of Desigual lies, surprisingly, a reserved man with an attentive personality. Wearing an understated Desigual jacket, he welcomes FashionNetwork.com into a bright conference room at the company’s headquarters in Barcelona. For the first time in the history of Desigual, Thomas Meyer is ready to talk publicly about his company.
“I never wanted to be a public figure. I’m only stepping in because I believe that Desigual has a story to tell. And I want to be the one who tells it,” said the businessman, with a pen in hand as he glanced over a pile of documents.
“We have gone through a rough patch over the last few years. But these moments are an opportunity to reinvent yourself. This is how Desigual was born, 36 years ago. On the back of a need to adapt to the circumstances,” recalled the company’s founder.
Desigual has come a long way since it was a chain of two second-hand stores. The concept was promising, until Meyer found himself with excess denim stock. It was a trip to Amsterdam that inspired the brand’s eclectic profile, the patchwork. The result was a jacket retailing for about 20,000 Spanish pesetas (about €120 euros). Too expensive for its stores, the initiative forced Thomas Meyer to venture into the world of wholesale.
More than three decades later, Desigual is a ‘global’ brand with a presence in over 90 countries, more than 500 stores and about 3,700 employees worldwide.
“Between the 90s and 2014, we enjoyed relentless growth. During the financial crisis of 2014, there was a twelvefold increase in revenues to €970 million,” Thomas Meyer said, looking back at the firm’s golden era.
“Rapid growth like this can sometimes lead you to do things that are not perfect. And we started feeling the effect in 2015.”
Since then, the company has posted four consecutive years of declining sales. Eurazeo, the investment company, pulled out of the business, and an ambitious restructuring plan got underway.
“We had to change and innovate in order to remain being Desigual,” said the founder. “Possibly, the biggest mistake was not bringing enough novelty to the market. When you grow too much, size becomes an obstacle to creating or innovating.”
Falling down and getting back up again
After seeing revenues plummet 14% to €655 million in 2018, what can the market expect for last year’s performance?
“We are satisfied with the achievements made during the year, in line with our expectations. We are exactly where we need to be,” said Meyer.
Ahead of the release of the full year results, due to be published in spring, the businessman said that revenues at Desigual fell “less than 10% to about €600 million” last year. Meanwhile, online sales continued to grow, and now account for 14% of total sales.
“The current market conditions are what they are. In fashion, you depend on how well the market receives the designs you create. And currently, conditions are tough and we have less connection with the market.”
In a bid to reconnect with customers, Desigual is mid-way through a process of deep transformation.
“The product is central. We are trying to make it more contemporary and experiential. We are comfortable with our market position. We want to be a mainstream brand that is affordable to everyone, without changing our pricing structure or distribution,” explained Meyer, citing recent collaborations with Christian Lacroix, Miranda Makaroff and Okuda.
The evolution sees Desigual juggle two different worlds.
“We cannot talk about the ‘new’ and the ‘old’. There are clothing collections that represent what we are known for, that meet the demands of a specific clientele, and there are contemporary collections. The point is how we introduce relevant innovations,” he continued, defending the launch of a new brand identity last year.
The company’s distribution channels are also getting a new treatment, in line with Desigual’s ambition to be a multichannel retailer.
“We want to give our online platform a boost. We believe that online and offline are one and the same.”
Another aspect of the plan involves refitting the physical stores to reflect the new brand identity, with up to 100 stores getting a makeover by the end of the year.
“We want to create inspiring spaces that facilitate the shopping experience,” Meyer continued. Ultimately, the brand will emerge with a portfolio of shiny new stores, albeit with about 40 less locations.
A series of sustainable ambitions complete the firm’s game plan.
”Sustainability can’t survive if you go at it alone. We need to approach it in-house and together with the industry as a whole,” reflected the Spanish entrepreneur.
Desigual has a three-year plan designed to help it achieve up to 60% use of sustainable materials.
“We are already at that level within footwear and sports. They are smaller categories, so we can be more ambitious,” he added, underlining the importance of training teams on sustainability and seeking greater transparency.
Coronavirus: a production headache
But no plans could have foreseen the level of disruption that coronavirus will have on the fashion sector. “It's a high risk and it’s facing all brands. Our sales in China are not very significant. But we are worried about how it will affect tourist consumption. The supply chain presents another challenge we will have to face, and we are working with suppliers to analyse the extent of delays,” said Meyer.
“In theory, things should go back to normal in about four to five weeks, depending on the evolution of the disease. China accounts for 50% of our current supply chain and we are reviewing the option of using air shipping to reduce delays, as well as considering nearer markets like Spain, Morocco and Turkey.”
China might not be a big sales market for Desigual, but Japan certainly is. And the brand has recently entered into an agreement with Tablez to launch in India.
“Entering these markets is no easy task, and we prefer to go at it slowly,” said Meyer.
After buying a 10% stake back from Eurazeo in 2018, Meyer took control of the brand’s creative direction in 2019. So how does he see the future of the clothing business?
“We don’t need a medium-term partner. We want to be agile and we have enough capital.”
The CEO adds that he has enough resources to see the brand through the next three to four years.
“Beyond growth, our biggest aim is to be relevant again. The focus is on doing things right this time around.”
And although it has been 36 years since he founded Desigual, Meyer shows no signs of wanting to step down soon.
“It's not in my plans,” he concluded with a smile, as he slipped out of the conference room to return to the quiet environment he thrives the most in.
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