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ONLY THE STRONGEST WILL SURVIVE

The second follows from the first point: if the struggle escalates, then the principle of natural selection comes into play. Representatives of the industry themselves are sure of this. They believe that due to the negative dynamics of the industry in franchising, a leapfrog will begin with the closure and opening of stores. At the same time, this situation can become fatal for new franchises, because it becomes more difficult to develop in such conditions. Representatives of franchising in children's fashion are particularly worried, where the demographic factor is added to the indicators of the industry.

 

 

Franchising in the children's fashion industry is not very developed when compared with the restaurant business, the service sector or even the adult fashion industry. In the field of children's fashion, the companies implementing the franchising direction can be counted on the fingers. This confirms the fact that this direction is unpopular and the demand for such franchises is low. 2017 and 2018 will not give us a favorable ground for the development of franchising in the field of children's fashion, since the overall indicators of the fashion market have negative dynamics, and a decrease is predicted in the children's clothing market due to a drop in the birth rate in the next 5 and 8 years. Those franchises that have already taken a stable position by this time and have more than a critical number of franchise stores, that is, such a number of stores that allows you to close and open new stores painlessly, will feel good. The process of opening and closing stores is natural for such a business direction as franchising, says the Development director of TM Choupette Anastasia Vasilkova.

 

WHAT IT SAYS: the state of the industry complicates the development of franchising. Those franchisors who have passed the "point of no return" will be in a more favorable position;: they will be able to survive this situation with less losses than others. At the same time, it will be difficult for new players to enter the market.

 

THEY ARE TO US, WE ARE TO THEM

It has always been more convenient for foreign companies to work in the Russian market with the help of franchising. This makes it possible to enter a foreign market more smoothly. Foreign brands are not going to give up on this even in more difficult economic circumstances. However, the very pace of foreigners entering the Russian market, as analysts note, is still declining. According to the results of the first quarter of 2018, 8 new network operators appeared on the market: Adolfo Dominguez, Karl Lagerfeld, Liu Jo, Coach, Lipault, GEOX Kids, Coccodrillo, Flormar. By the end of the year, an even smaller number of new brands is expected; in total, Knight Frank analysts believe that 15 of them will appear in 2018. At the same time, 37 new brands appeared on the Russian market a year earlier, so the trend is more than obvious.

 

The main players of this market are not going anywhere, on the contrary, they are strengthening their presence in shopping malls. These include: Zara, Bershka, Pull & Bear, Massimo Dutti, Oysho, Carlo Pazolini, Rendez-Vous, Moscow Jewelry Factory and Henderson. Experts believe that the current situation with a slowdown in the pace of foreigners entering the Russian market may have a positive impact on the development of Russian fashion players, but they need assistance.

"The active development of Russian designers is a great opportunity for developers not only to expand the high-quality fashion offer in their shopping centers, but also to form a unique zone that attracts people from more remote areas of the city that could not be covered earlier with a standard pool of operators," says the head of the department shopping centers of the department of retail real estate of the company Knight Frank Evgeniya Hakberdieva.

Moreover, Russian brands are also beginning to explore foreign markets. For example, a brand of children's clothing Choupette opened a corner in the largest shopping center of the capital of the United Arab Emirates – Dubai Mall. In the future, the company plans to open a full-fledged franchising point there.

 

"Extensive, i.e. geographical, development of TM Choupette is important for us. TM Choupette is already represented in the Russian-speaking territory: we have stores in Kazakhstan, Armenia, Belarus and Ukraine. Now we are developing in the foreign market. At the beginning of 2018, TM Choupette participated in the international exhibition Pitti Bimbo, and its results confirmed our idea about the possible development of the brand in the markets of foreign countries, both in wholesale sales and in the development of the franchise. Sometimes wholesale sales are just the threshold of franchising development in different countries. We hope that in those regions that we have identified as promising for the brand, wholesale deliveries of our goods will become a test for the development of franchising. Definitely now we can only say that our style, positioning and pricing are of interest to a foreign buyer. This suggests that we need to develop and think through the steps of our further extensive development," says the Development director of TM Choupette Anastasia Vasilkova.

 

WHAT THIS MEANS: foreign players prefer to enter the Russian market with the help of franchising, but in crisis conditions they do not do it so actively. And in these conditions, there is a good opportunity for Russian representatives of the industry.

 

To be continued.

 

The text is based on the materials of Buybrand

Photo: shutterstock, Buybrand, Choupette