The sportswear market under siege: Is the spate of bankruptcies a sign of change?
The world of men's sportswear is in turmoil, after a spate of well-known and long-established European labels went bankrupt last October. In Italy, news of the bankruptcy of MCS (formerly Marlboro Classics) and of Industry Sportswear Company (ISC), the group which owned Henry Cotton’s and Marina Yachting - since 2013 both in the hands of the Emerisque Brands investment fund headed by mercurial Indian entrepreneur Ajay Khaitan - caused quite a stir. According to a union source, the group accumulated debts for €60 million in the last two years, forcing it to default. In 2012, before being sold to Emerisque, ISC generated an annual revenue of €135 million, and MCS alone one of nearly €110 million.
At the same time, in the Netherlands, the Doniger Fashion Group, owner of the McGregor, Gaastra and Adam labels, was also teetering. The latter was included in a relaunch plan to stave off a second bankruptcy filing in early September, a plan which was then aborted, presumably leading to the liquidation of the group's assets. The group had been declared insolvent for the first time last year, following a €26 million loss in 2015. The group's latest revenue figure reported by FashionNetwork, for the 2014 fiscal year, was approximately €260 million.
Why did established names like these, all of them generating a sizeable turnover, experience such setbacks? First of all, because they had problems within their organisations, though the majority of those we spoke to weren't surprised by the bankruptcies. "The market is more and more mature. But these brands failed to question their business approach. They looked authentic on the whole, but their style had not evolved and their identity wasn't strong enough. They gradually became too traditional, old-fashioned and soulless," said Isabelle Lartigue, in charge of style at Parisian trend consulting agency Peclers.
The product range, market demand and advertising media have all changed significantly since the start of the 2010s. According to several observers, there is a pre and post-Hedi Slimane divide in men's fashion. In the last ten years or so, a revolution began in menswear, driven by Hedi Slimane in his Dior days. Between 2000 and 2007, the French designer, with his sharp eye for the zeitgeist, was able to impose an uber-slim men's silhouette as the new standard, backed by the LVMH group's firepower. A style which was gradually replicated throughout the industry.
"Many sportswear labels refused to revise their collections' cuts and go in the slim-fit direction, just as they failed to make logos less obtrusive on their clothes. They didn't want to change something that worked well for them. But this caused them to lag behind, as the market evolved. I saw it coming when I worked at Gant, and we were able to embrace this change by creating the Gant Rugger line," said François-Olivier Gerreboo, the General Manager of Gant France from 2008 to 2015.
The market progressed, pushed by the arrival of new names, more in synch with the current expectations of menswear consumers. In France alone, this was signalled by the launch of The Kooples and Sandro Homme in 2008, Editions M.R in 2009 (formerly Melinda Gloss), Balibaris in 2010 and AMI in 2011. These contemporary labels captured the imagination of a generation of men who are active, uneasy about formal outfits but less than excited by the existing casual sportswear offering.
At the same time, sports brands turned to lifestyle, unleashing ultra-urban looks and stacking up their fashion credentials through designer-styled capsule collections. A new generation of retailers opened men's fashion stores in these labels' image, from French Trotters and Centre Commercial in Paris, to the Dover Street Market stores in London and elsewhere, not to mention e-tail sites such as Asos, L'Exception and the more upmarket Mr Porter.
Department stores too had to do their homework. In Paris, Le Printemps revised its range at the Printemps de l’Homme men's fashion store, notably introducing a multibrand section called L'Endroit, dedicated to directional designers and labels. This new, more trend-oriented mood is now felt throughout the store: "Previously, the range in the sportswear segment was quite standardised. But the arrival of strongly opinionated labels generated a new momentum, forcing other players to adopt a different approach," said Karen Vernet, in charge of menswear at Le Printemps. "Our fourth floor is now dedicated to what could be defined as a new take on casual wear. It is split into three main categories. Sport-chic, combining urban elegance with sports essentials, following the athleisure trend. Urban casual, with labels such as Tommy Hilfiger or Armani, which have evolved, adopting a new register and simplifying their lines, cutting down on the number of sub-brands. Thirdly, major names such as Ralph Lauren and Hugo Boss, which are in the midst of a major repositioning, redefining their brand portfolios. Long-established names are able to survive by going the way fashion goes, and to do so they need a crystal-clear market positioning, and they need to make a statement. Competition is so tough that narratives that are too vague or generalist don’t work," added Karen Vernet.
Caught in a vice between these trends, men's fashion giants must adapt to the transformation of the menswear market. Survival requires the ability to react inherent in a highly flexible, hence small, organisation, or considerable financial resources. Tommy Hilfiger seems to have found a formula for it. The label owned by the PHV group has gone decidedly contemporary, and has also adapted to the fashion industry's new rhythms, as many observers have appreciated. This new way of doing things is driven by complete mastery of the internet and social media.
The entire menswear market is now playing a wholly new game, with new rules and tricks, going to another level to appeal to Millennials hooked on social media or dashing fifty-somethings with extensive purchasing power. And even if the fast-fashion giants don't necessarily enjoy the same success with men as they do with women, the appetite for directional, innovative products has grown within men's ranks.
Men, both young and old, are caught up in the trend game and it seems that labels that are too classic, too daddy-style, aren't the stuff of dreams any longer. Men have turned into fashion aficionados, they are prone to impulse purchases, they love to be pleased and appreciate a captivating brand narrative. So long as it is credible and addressed to them.
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