Desigual faces up to pandemic with "gradual" adjustments for stores and staff
Thomas Meyer spoke publicly for the first time in the history of Desigual in mid-February. At the time, Covid-19 still seemed like a distant problem, something that would affect the productive and sourcing capacities of the fashion industry in China more than anything else. Nonetheless, the founder of the Catalan company highlighted the importance of investing in omnichannel development and innovation, emphasising the need for renewal reflected in the new identity presented by the brand in 2019.
On top of these challenges, over the last few months the brand has had to face up to the problems posed by the pandemic, a situation which has made the question of reinvention more urgent than ever, forcing companies to revise their objectives and readjust their businesses. Under these circumstances, Desigual spoke to FashionNetwork.com about its new route map.
"Our priority has been ensuring the survival and stability of the company and, for this reason, we established the following objectives: ensuring liquidity, revising our cost structure, reducing our purchases in order to adapt to falling sales, and ensuring that our suppliers, who are also suffering, continue operational," explained Desigual CEO Alberto Ojinaga of the company's crisis management efforts.
The Catalan company is no stranger to fighting against adversity, having set about implementing a reorganisation plan in 2015, when its sales began to fall. In fiscal 2019, the brand's sales declined 10% to 589 million euros. "We've found where we need to be," said Meyer of Desigual's business at the time.
As has been the case for many companies, institutions and events in the fashion sector, the pandemic has acted as an accelerator for projects that the brand was already working on, such as "the digital development of the company and the transformation of its product," said Ojinaga. "We have continued to progress with activities with good results, such as the growth of the digital channel, the consolidation of our omnichannel model and brand relevance," added the executive. In particular, he optimistically pointed out the positive data from the company's online channel, which has seen a 70% increase in sales since May, as well as the strong performance of the digital showroom through which the brand works with its wholesalers.
As brick-and-mortar stores suffer, online operations take off
Despite the improving performance of Desigual's online channel, which accounted for 14% of the brand's revenues in 2019, coronavirus-related restrictions continue to negatively impact the company's physical stores. Desigual has therefore been forced to shutter its flagship store at 47 Paseig de Gràcia, Barcelona, one of the most iconic locations run by the brand in its hometown, which also occupied a privileged position across the road from tourist hotspot Casa Batló. The company currently operates some 500 stores in 92 markets, having closed around 40 locations in the last fiscal year.
Additionally, in light of the most recent round of coronavirus-related measures implemented in various regions around Spain, Desigual has temporarily closed 11 stores in Catalonia, all in malls, which were closed under the latest restrictions imposed in the region. Three Desigual stores have also been temporarily closed in Asturias, and as of 10 November, the company's locations in Andalusia will have to stop operations at 6PM.
Managers also fear that confinement measures will reduce traffic in stores, a fact which "determines the need for in-store staff and other positions linked to the brick-and-mortar network." Desigual is therefore working on new roles for its stores, which will also serve as facilities for shipping, the collection of online purchases, and returns.
At the international level, the company has had to temporarily close its points of sale in the UK, Belgium and France. On the French market, Desigual explained that "some stores will continue internal operations in order to fulfil online orders." Furthermore, the brand is "evaluating possible ways to expand its customer service capabilities and give new roles to its stores within the digital channel, such as locations for Click and Collect."
Desigual rules out "drastic changes"
In terms of its teams, which employ some 1,500 people in Spain, including store staff, office employees and logistics, Desigual said that it is "gradually adapting its workforce to the new situation and seeking to limit the impact on jobs." Although the brand has not yet confirmed the number of positions that will be eliminated, the figure should be no higher than 30. The company, which has ruled out "drastic changes," was keen to explain that it is "taking advantage of natural rotation to overhaul some positions and reorganise its structure," while also "strengthening areas that are aligned with its strategic priorities: digital development and the transformation of its distribution channels."
As for Ojinaga, he remains optimistic, despite the uncertainty of the situation. "2021 will be a complicated year, but we are accelerating some very relevant changes in terms of product, the repositioning of the brand and our distribution network. We're convinced that we will come out of this situation stronger," concluded the CEO.
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