Fashion & Franchising

Essay 31. 03. 2011 Fashion & Franchising Data of franchising in fashion industry testifies that over 60 % networks of known trademarks are organized by a franchise principle. In nonfood trade the greatest share of franchise market in 2008 was occupied with clothes and footwear franchises (51 %). In comparison with 2007, there was registered a strong jump in development of clothes trade which made 40. 5 %, and footwear trade – 84. 6 %[1].

Let’s consider experience of large and all known franchising chains occupied in fashion industry in the same price segment (middle class) and working in international markets: Russian corporation Sela, American corporations Mexx and Gap, and Italian company Miss Sixty. Based in 1991 Sela is the leader of Russian trade market of fashionable clothes in average price segment and is the largest retail network of clothes and accessories in Newly Independent States. The first shop Sela opened in Russia in St. -Petersburg in 1997[2]. In 2008 Sela totaled 550 shops, and the company turnover in 2007 was 220 mln. ollars, and for 5 years the corporation turnover grew in 4,5 times[3]. Today not less than 90 % of Sela shops work using the franchising system. Sela cooperates with 300 partners in 9 countries including Ukraine, Estonia, Kazakhstan, and China[4]. The co-owner of the company considers it is extremely important that Sela formulated corporate principles of franchising from the very beginning[5]. Standards of trade and financial policy were accurately registered. The cost of initial purchase of goods is 350 dollars per sq. meter. Investments into franchisee shop are assumed from 400 to 500 dollars per sq. eter. It is possible to open a shop with area from 100 to 250 sq. meters[6]. Average term of investments return is 3-4 years[7]. Let’s discuss foreign franchising chains and begin with American. The first Gap shop was opened in 1969 in San Francisco. The company is a leading international specialized retail network that offers clothes and accessories for men, women, children and babies. Today Gap Inc. numbers 3 100 shops. In 2010 corporation made 14. 6 bln. dollars incomes. Gap Inc. works with five recognized brands, such as Gap, Banana Republic, Old Navy, Piperlime and Athleta. Gap Inc. as shops in the USA, Canada, Great Britain, France, Ireland, Japan and other countries and provides employment to 134 000 employees worldwide[8]. Since 2006, Gap Inc. expands with the help franchising agreements in the countries of Asia, Europe and in the Middle East, as a result more than 70 shops of Gap franchise and about 30 shops of Banana Republic franchise opened. Today franchisees of the company work in 21 countries[9]. The company of fashionable clothes for all family, Mexx, has been based in 1981 in the Netherlands. The first franchises sailed in 1985, and since 2000 Mexx using franchising agreements works in foreign countries.

In the world there are 263 shops which are in property of the company and 130 franchisees[10]. According to the franchising agreements the company requires shop area of 80-500 square meters and advertising fee 2 %. Now Mexx shops are present at 55 countries and provide employment to more than 3 000 employees. In 2001 Mexx was bought by American company Liz Claiborne Inc. which structure includes 44 marks of clothes, accessories and perfumery[11]. Miss Sixty was based in 1991 in Italy, the brand was created as the answer to the absence in the market for women jeans. Miss Sixty also represents footwear, accessories, jewels, and perfumery.

The company network unites more than 500 retail shops, namely franchising network consists of more than 300 shops worldwide. The franchising agreement of the company requires special decoration of the stores: catchy colours, graphics and design are studied to increase the product appeal and reinforce the brands’ image[12]. Franchising has become a popular model of companies’ development in fashion industry. Famous clothes and shoes producers enter international markets and operate their business using franchising system. Franchisors provide operations manuals which contain all the information that franchisees need to run their business.

International companies provide employment and bring a piece of their culture in local countries. ———————– [1] N. Kuznetsova. Model of success // Trade News. – 2008. – ?2. – p. 26. [2] Official site of Sela. – http://www. sela. ru/about. aspx [3] Official site of Sela. – http://www. sela. ru/franchising. aspx? page=business [4] Official site of Sela. – http://www. sela. ru/about. aspx [5] I. V. Lebedev. Franchising in Russian. Myths and reality. ????????? ›???????????????????????????????????????????????????????????????????????????????????????? ›????????????????????????????????????????????????????????