French online footwear specialist Spartoo to acquire footwear chain André

In a mini-version of the Amazon-Wholefoods deal, online-only footwear specialist Spartoo is to acquire the eponymous André footwear chain from the struggling clothing/footwear conglomerate Vivarte. The deal will create a footwear business split equally between stores and online.

What we’ve seen

  • In early January online footwear specialist Spartoo announced it is to acquire André, a wholly-owned subsidiary of the Vivarte group,

  • The merger will create the first retail group of any significant size to split its sales equally between a physical store network and an internet business. The new group will have a consolidated turnover close to €250 million.

Who is Spartoo ?

Spartoo was established in Grenoble in 2006, modelled on the US company Zappos. Spartoo is now present in 30 European countries including France, Germany, England, Italy, and Spain. It sells primarily footwear, but also ready-to-wear fashion for men and women and attracts over 14 million unique visitors per month throughout Europe. 

The site sells almost 3,500 brands and 300,000 models. It is funded up to €45 million by French investment banks (A Plus Finance and CM-CIC Capital Privé), European (Endeavour Vision and Sofina) and American (Highland Capital Partners) investment banks. 

An omni-channel marriage

A few years ago, we would perhaps have seen this deal in reverse, with the established retailer snapping up a young start-up to expand its online business. But here we have a relatively small online player buying up a historic footwear brand that has been around for over 100 years. 

How things have changed.....

As we saw in our report Footwear Retailing – France, April 2017, selling shoes has changed enormously in recent years, as non-specialists have captured a larger share of spending. Sports retailers are benefiting from the popularity of casual and athletic footwear, fashion retailers have focused on developing their footwear offer and online retailers, both specialists and generalists, have been moving spending online. Specialists capture only around half of spending on footwear in France, which means that more than one out of every two pair of shoes sold in France is bought somewhere else, e.g. online, in sports shops, fashion stores or in hypermarkets. 

Figure 1: France: where they shop for footwear, in-store or online, February 2017
Base: 2,000 French internet users aged 16+
[graphic: image 1]
(a) includes sports shops, clothing retailers, supermarkets and department stores (b) includes specialist footwear retailers and independents
Source: Lightspeed/Mintel

Market leader Vivarte has been hit particularly hard. Saddled with debt, the group is undergoing a massive restructuring and announced another round of loss-making footwear brand sell-offs in early 2017, including André, the group’s emblematic flagship footwear brand. Pataugas and Kookai have already been sold and the group has recently announced the sale of Naf Naf to the Chinese La Chapelle Fashion Co. 

The most recent figures officially published by André reported €101 million in sales in 2016, with losses of over €20 million. Performance has been deteriorating for three years; in 2015 sales were €114 million and losses €24 million and in 2014 sales of €127 and losses of €8 million. The brand has lost its way and missed out on the shift to digital. 

For Spartoo, the deal represents an enormous opportunity. Recognizing that as a footwear specialist, the business risked losing out to Amazon and Zalando, the management diversified into clothing in 2013, added a marketplace (for third party retailers) in 2014 and in the same year, started opening physical stores (it now has 12). The Andre deal will bring a total of 142 stores under Spartoo's wing. 

Spartoo reportedly wants to keep the André brand, but how this will pan out in practice remains unclear. There is no doubt affection for such a long established name, but how far that extends to brand loyalty is questionable. 

Some things are obvious - using André stores as click and collect points for example and having the ability to browse and order from the Spartoo online collection in-store. But we think the broader process will be challenging- merging two businesses with such different cultures and heritages will be complicated.

What it means

  • The way people shop is changing and retailers need to change too. The old models no longer work.

  • In future, selling footwear will become a much more integrated operation, with online and stores working seamlessly to support each other.

  • Shoppers increasingly make no distinction between a store-based retailer or an online retailer, it is simply the brand that counts and the overall shopping experience. 

  • This deal makes sense on paper. Marrying up a sizable store network with the complementary online expertise of Spartoo has the potential to create an integrated omnichannel retailer with solid expertise and a huge offer.

  • There is lots of scope for building on synergies and extracting cost savings, but the big challenge lies in integrating the two very different businesses, implementing best practice in each and coming up with innovative ways to blend the shopping experiences. 

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