'Covid-19 has accelerated all our projects for the future,' says Desigual's David Sgreccia
As it sets out on the path towards the "new normal," Desigual has resumed its expansion plans with a strategic store opening in Tokyo, a key location on its roadmap for development in Asia. It's good news for the brand founded and led by Thomas Meyer, coming after the months of unprecedented disruptions caused by the Covid-19 health crisis. Following the appointment of Jordi Balsells as head of the company's international distribution channel strategy, FashionNetwork.com took the opportunity to catch up with Desigual and get an update on its goals in Asia from Balázs Krizsanyik, the brand's general manager for Asia Pacific, and David Sgreccia, the man who, as geographies business director, stands at the helm of Desigual's international teams.
FNW: How has the Japanese market dealt with quarantine and the consequences of the coronavirus pandemic?
Balázs Krizsanyik: In Japan, the quarantine was not legally enforced by the government and was slightly shorter than what we've seen in European countries. Nonetheless, it's been a tough period. Not only because of Covid-19 itself, but also because of the restrictions on tourism, which is fundamental for the Japanese market. The postponement of the Olympics obviously has additional implications.
FNW: In our last conversation, the company pointed out that Japan was its fifth largest international market in terms of sales volume. Is that still the case? What are Desigual's business projections in the country?
BK: Yes, that's still the case. It's also still the brand's largest market outside of Europe. We have 22 stores in the country, 19 of which are company operated, as well as 14 points of sale in department stores. Following our latest opening in Ginza, we can now say that we've covered the key cities in Japan. And this presence is complemented by our digital partnerships with Amazon and Rakuten, as well as our own e-commerce platform.
Obviously, it's a complicated time and consumption has been affected, but compared to the scenarios that we were contemplating during quarantine, I think that the situation is, to a certain extent, slightly more positive than expected a few weeks ago.
"Omnichannel is the activity that consumers are looking for at the moment"
FNW: Among the objectives in Asia discussed by Jordi Balsells (former VP for Asia, Americas and CEEMEA) in 2019, he highlighted the strengthening of the company's presence on the Chinese market and expansion in Singapore, China and Malaysia. Given the complications presented by the current circumstances, what stage is Desigual's expansion at and what is its situation on these markets?
David Sgreccia: Of course, we still have the same objectives. We want to work on continuity, as well as moving forward with all of our plans. The company's concept is still the same: becoming international, expanding our digital plan and getting closer to our customers, while also approaching a younger customer base. Our omnichannel business is the most important element. At the moment, we have to reconsider and work out what the situation will be after Covid-19, but we'll only be adapting things, our continuity plans are still our main objective.
BK: In the case of India, we'll be opening our first stores in Delhi in a few weeks. We're moving forward with our plans. And since our last conversation, we've also carried out an important store opening in Singapore. We're also working on future partnerships in certain Asian countries, as well as in Australia. In many cases we're already starting out with an omnichannel offer, while in others we're only going in with the digital channel.
FNW: How has the coronavirus changed customer behaviour?
DS: Covid-19 has accelerated all our projects for the future. It's given us an incredible boost, inasmuch as we feel vindicated in our plans, which are based on digital development and an omnichannel strategy. We want to move forward with them and we must. And now we have an opportunity to do it more quickly.
"Our Japanese customers are extremely loyal"
BK: We've taken some positive things away from the experience. For example, the online behaviour of Desigual customers in China has been developing favourably over the last few weeks. In Japan it's been fundamental for the development of a personal connection. It's an ambivalent country, in that on the one hand, there's an emerging trend towards digital channels and social networks, and on the other it's a very traditional market where personal interaction is key, so the gradual search for customers who can serve as brand ambassadors is also fundamental. We're lucky that our Japanese customers are extremely loyal. During quarantine, our sales multiplied and a lot of customers bought online for the first time.
DS: Our digital focus is growing, but we need that offline contact point. So we have to integrate it and improve our omnichannel approach. That's the activity that customers are looking for at the moment. We have to be very flexible and fast on the digital front, without losing sight of this contact point, which allows us to transmit a lot of fundamental messages about the brand.
FNW: Following the appointment of Jordi Balsells to the role of channels director, how has the company's international approach been organised and what are David Sgreccia's responsibilities as geographies business director?
DS: I arrived at Desigual two years ago as retail country manager for Italy and then became country manager, in charge of the Italian market and omnichannel strategy. The aim was to really get to know the country in depth, in line with the guiding principles of the company. Throughout my career, I've developed my skills in exportation and international management, and so this appointment is a great opportunity for me to work as leader of the team of country managers. At the moment, our main objective is to continue along the lines we have established over the last year and a half. For his part, Jordi will establish a solid channel strategy and we'll work together in order to apply it to different countries with different local focuses.
FNW: What are the company's main focuses at the moment and how will it deal with the upcoming period of declines? What strategies will the brand implement in terms of stock management and sourcing?
DS: For now we're working hard on the reopening of our entire store network. What we've noticed with our customers is that we have to offer the right changes for each moment, in line with the market. In each location, we have different customers and a different positioning, so we have to find a balance. In some countries, the periods of decline have varied or have been delayed. The current situation is complex and everything is changing very quickly. We have to make decisions on a day-to-day basis with the aim of accompanying our customers as closely as possible.
We're on the same page as other companies. First we had issues related to our offering due to the situation in China and now we're facing problems related to demand because of quarantine. Our priority has been keeping close to our customers and guaranteeing the arrival of the right product at the right time and place. We're planning to partially modify our sourcing operations in order to bring them closer to the country and in question, so that we can be as local as possible.
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