Desigual: Daring to be different
Spanish retailer Desigual makes no apologies for being unique.
Desigual’s designs are unique – no other modern fashion brand polarises the population more: you either love it or you hate it.
Never mind. The company’s leaders have a mission: “To get one Desigual garment in every wardrobe in the world”, states Joan Rouras Rodriguez, head of real estate. Of course, one for every season, not just one, he quips.
Like its colourful designs and eye-catching store fitouts, Desigual’s corporate personality is bold, brash and confident.
It might not be posting a profit right now, but that won’t dent the confidence behind an aggressive store rollout program and stellar growth over most of the 27 year old brand’s history.
Founded by a young Swiss designer, Thomas Meyer, who saw great potential from the popularity of t-shirts he was designing in the nightclub Mecca of Ibiza, Spain, Desigual now boasts around 7306 retail selling points in 75 countries. The majority by far are in Europe, but the brand now has 892 outlets in the US and 55 in Asia, with Singapore the closest market to Australia with multiple single brand stores.
Fun and profit are the business’ two core values, and while one is elusive for a short spell thanks to the recent GFC, the fun is certainly there for all to see – in its wild designs and complete disrespect for convention.
“Our vision is based on inspiration – nothing has to be conventional,” explains Rodriguez. “We have to be very, very happy to do all of this. We run very hard and it is impossible to do this if we are not happy.” The designers, he explains, are positive and “very emotional”.
“We never say we are dressing bodies; we’re dressing people. And we want them to be happy wearing our shirts. Our mission: You wear your expensive silk ties during the week when you you work 14 hours a day, but at the weekend you wear our clothes when you are happy.”
The brand is based on differentiation. Rodriguez quotes American economist Michael Porter, who asks in a world full of horses, what breed do you want to be? “You can be the best one with the best strategy. But when there is just one you never remember the second one or the third one.”
So instead of trying to be number one, Desigual strives to be different. “This way is difficult because when you introduce something different to the market everyone says ‘wow’. But wow means everyone wants to copy you.”
Desigual does not try to compete on cost – its products are decidedly mid range at around A$100 for a quality collared casual shirt. “We’re not luxury, we’re not discount, we’re in the middle, says Rodriguez, explaining the strategy thus: “You have big brother next door in H&M. You have seen Primark… seeing how low it can go and fitting in under H&M. So we decided to be absolutely different in the market. To be unique. And to continue to be unique for a long time.”
The Desigual culture is being fostered in staff through specialist schools in Europe and the US offering year-long degrees for its retail staff. “If you want a year of prosperity, grow a crop. If you want 10 years of prosperity, grow fruit trees. If you want 100 years of prosperity grow people,” explains Rodriguez.
Product and people are two of four key pillars in the business. The third is being global, the fourth innovation.
The key to Desigual’s accelerated sales success was a decision in 2000 when the company decided it had better long term growth opportunity by growing its network of company owned stores rather than wholesaling. From 2002 to 2005 it grew sales from 8 million to euro 30 million euro, but 90 per cent of turnover was wholesale.
By 2009 sales were up to 304 million euro – 87 per cent year on year. Last year they reached 440 million euro, up 44 per cent, and this year they budgeted on euro 550 million – but already expect to exceed 600 million euro.
For the first time last year own store sales exceeded wholesale, but the company stresses every channel is growing, including internet sales and department store sell-through.
The company is continuing to roll out stores and launch new sales channels, but in percentage terms the growth rate will ease back to about 30 per cent this year. Some 80 new company stores will join the network, three new country markets will open – Japan, Poland and China – and the Desigual brand will enter new categories – bodywear, premium apparel and homewares, including pillowcases, bedding and some linen. Shoes are on the horizon, but without stockrooms in its stores – “landlords never give space for free,” quips Roderiguez – carrying sufficient size range might prove a challenge.
It projects a further 1100 new points of sale in 2011, taking the total to 8400, and a steady rollout of 100 stores a year in the immediate future, generally larger than the current average.
Its newest is in a converted bull ring on the edge of Barcelona’s CBD, 9000sqft of women’s and men’s apparel, with quirky store elements including a ghoul corner and a small car apparently sunk into the cement floor.
Without stock rooms, the supply chain has to run like clockwork. Desigual’s logistics system can move 100,000 garments a day; it sold 15 million units in 2010.
A new distribution centre opened in 2008, increasing capacity five-fold, boosting productivity by 17 per cent and paring 30 per cent off logistic costs. But at current growth rates, a new platform will be needed by 2015.
Adding to the supply chain challenge is that Desigual creates around 1500 new designs every year. “It doesn’t have ‘basics’ – you won’t find black t-shirts and white t-shirts in our range. Everything gets created every year. This is very expensive,” understates Rodriguez.
“(Retailers) used to have six months to get new products onto the streets. Now if it takes you longer than two weeks you lose out to your competitors.
“This means we have to innovate all the time. Because if we don’t we won’t turn out different. Young people don’t know we’re 27 years old. They see our product one day and they compare it with what they see in the store next door.”
Speed to market is thus critical, which is possible through empowerment of staff to make decisions without a chain of approval required.
“We have to be fast. We have a very flat structure; we don’t need the president or CEO to approve every step. Sometimes the president says ‘I would not do this but if you are sure, you can do it’.”
Recent Desigual creations have included a collection for Disney and a tie-in launched on June 1 with Canada’s global Cirque du Soliel in which exclusive lines will be sold at the circus company’s many shows and in Desigual stores.
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