America, 1968. Susie and Doug Tompkins are travelling through California in a station wagon filled with homemade clothes. Theirs is an unconventional method of selling – from the back seat of a vehicle – but even their very first customers are delighted, and one of the world’s most successful young fashion brands is born: Esprit.
As the Esprit headquarters developed in Europe (Düsseldorf) and Asia (Hong Kong) in the 70s, the founder company Esprit USA gradually became an entirely self-sufficient company. What began in Germany with young sportswear fashion for women marketed under the name of Esprit de Corp soon became one of the most successful young fashion brands on the European market. The American rights were bought back in April 2002, and since then the Esprit group has been one of few global companies to hold 100% of a brand worldwide. In the first six month of the 2003/04 business year Esprit Holdings Limited achieved consolidated sales of 810 million Euro (per 31.12.03) – an impressive growth of 32% compared to last fiscal year. The Esprit Holdings Limited share price is listed on the Hong Kong stock exchange (second listing in London), the Hang Seng index and the MCSI index Hong Kong, as well as the FTSE All World Index for Hong Kong.
A team of international designers translates the Esprit attributes into regular collections self-confidently, naturally, stylishly and sensually: twelve collections are produced for six order dates per year and product line for Women Collection, Men Casual, Kids, edc youth, Shoes + Accessories and Esprit Sports Women, Men + Kids; the twelve edc and Women Casual collections can be ordered monthly. Four collections are produced a year for Esprit Bodywear and Men Collection.
Although the company focuses on the product and price/performance ratio, Esprit also invests continuously in quality and fit – high standards that are also maintained in manufacture. “Our customers expect us to produce contemporary, high quality and yet affordable goods”, explains Heinz Krogner. “And not only do we have to do so, but we have to make sure we do so continuously and over a long period of time”.
The consistent implementation of the image includes a distinct appearance on the outside, and for years now Esprit’s in-house “Image office” has been responsible for ensuring that the brand is shown in the same look all over the world. This office is responsible for developing and monitoring every means of communication for advertising, promotional activities and point-of-sale, and co-ordinates and carries out the shoots for Esprit’s current image campaigns – in short, everything that visually represents the Esprit company. The Global Image Office is based in New York.
The lifestyle idea is at the very heart of Esprit’s philosophy. From pure product to overall service strategy: since 1990 successful license partnerships have supported the company on its global development into a lifestyle group. Co-operations with companies with a strong market presence have helped to create what is now a large pool of Esprit licenses. Please see “US license partners” for more information.
Esprit is an international youthful lifestyle brand offering smart, affordable luxury and bringing newness and style to life. The Group offers 12 product lines encompassing women’s wear, men’s wear, kid’s wear, edc youth as well as shoes and accessories through over 640 directly managed retail stores and over 12,000 wholesale points-of-sale worldwide, occupying over 817,000 square metres directly managed retail space in more than 40 countries. Esprit licenses its logo to third-party licensees that offer products bearing the same Esprit quality and essence to consumers. Esprit also operates the Red Earth cosmetic brand which includes cosmetics, skin care and body care products. “Penetrating into existing markets while entering new ones.” The Group will continue to penetrate into existing markets and expand newer ones through wholesale distribution channels in the new financial year. Over 200 partnership stores, 500 shop-in-stores and 700 identity corners are planned for FY2005/2006.
In Europe, partnership stores will be used to gain penetration in core markets such as Germany, Benelux and France where the Esprit brand already has substantial brand presence. Shop-in-stores and identity corners concept with department stores and multi-label retailers will be used to enter new markets in order to minimize capital expenditure requirements. U.K., Italy and Spain will be the newer European markets of focus for FY2005/2006. USA
Esprit is faced with difficult times in its US operations. Key department stores have discontinued sale of the brand (Nordstrom is the only major store to carry Esprit and Dillard’s, Macy’s East, Macy’s West and Marshall Field’s have all received their last wholesale shipments), a number of licensing agreements have been put on hold and the brand will stop US distribution of Collection women’s suits and career apparel, as well as the entire men’s wear line. Furthermore, three executives have recently resigned. Having recently reintroduced the brand in the US after an absence of 15 years, Esprit is facing up to the fact that brand recognition is not what it used to be and changes have to be made. The company intents to revise its US strategy, confessing that it had misjudged its popularity there. “I have overestimated our brand power in America,” said chief executive Heinz Krogner. “Sixty percent of the women knew our brand, but they didn’t see any relevance. We have made mistakes.”  Asia
Asia wholesale initiatives for the fiscal year include entering the India market as well as expanding the distribution channels to duty free stores in Thailand, the Philippines and Vietnam. In November 2005, Esprit announced that it will step up garment sourcing from India. The company plans for a new store in partnership with Madura Garments, part of the Birla Group, and sourcing from India will naturally increase. Although China and Taiwan are still the biggest source of products for Esprit, the company already sources products like shirts and trousers from India. Esprit is increasing its efforts to penetrate the Indian market, with the partnership with Madura Garments marking a beginning to that effort. Stores have already been launched in Mumbai and Bangalore. COO Thomas Johannes Grote told the Economic Times that India would become “one of the most important markets” for Esprit within the next 10 to 12 years. What do they sell?
Esprit Holdings Limited is engaged in the sourcing, retail and wholesale distribution and licensing of quality and lifestyle products designed under the globally recognised Esprit brand name.
It has been a listed company in Hong Kong since 1993 and has a secondary listing on the London Stock Exchange since December 1998.
Up to 2004 the Group has controlled retail space of over 400,000 square meters in more than 40 countries spanning 5 continents. It operates approximately 630 directly managed retail stores and has over 9,700 wholesale outlets.
The brand Esprit has been an international lifestyle fashion brand name applied to an extensive range of 12 lines, covering women’s, men’s and children’s apparel, footwear and accessories.
Its main line, “women’s casual” covers the largest segment of the brand’s portfolio (39% of total turnover), appealing to most consumers because of its casual and sportswear for everyday lifestyle. It constitutes the most competitive division of the portfolio.
EDC women (13% of total turnover), appeals to trend conscious women through an up-to-date mix of items that fit women’s outgoing lifestyle. Although it is one of the fastest growing segments in the company, it is not doing well considering the competition. This is the segment where Esprit losses the race among big shapers of the industry such as Spanish ZARA and Swedish H&M.
Men’s casual (11% of total turnover) provides smart and urban wear for men. The designs combine quality cutting with new fashion highlights and provide the required relaxation fit for the socially conscious after work.
Licensed products bearing the Esprit name range from time wear, eyewear, jewel and fragrance, to bedding and other home products. In addition, the Group owns the Red Earth brand name and distributes its cosmetics, skin and body care products.
Fashion companies not only sell products, but also identify with their customers through certain values. Esprit has been a pioneer in having a clear identity and a courageous thirst for sharing what they believe in with their public. The following are the main characters within the brand’s identity:
The end consumer
Esprit is a well-recognized brand, which reaches a very big audience, across 5 continents. In their own words, they are a youthful lifestyle brand that targets customers with young attitude, not age.
Although the brand counts with 12 different lines, directed at women, men and children, most customers are women, ranging between 15 and 35 years old. They turn to the brand in search of youthful stylish items that will never go out of fashion. They have simple but refreshing taste. They are looking mostly for stylish, yet comfortable clothes. They appreciate Esprit’s quality clothing, which is at all times at a democratic price.
The brand counts with a large number of loyal customers. Its “e*club”, an online membership club which rewards repeated purchases and offers special promotions and services, has a large audience across the globe.
It is impossible for us to know exactly how many people are loyal to Esprit’s core values since the birth of the brand, or how many of their customers even know about the compelling letters to prevent aids and its questioning of the way we shop in this ever more consumerism lifestyle we have seem to engaged. It would be interesting to conduct such a survey before suggesting any concrete communication strategy.
How does Esprit deliver customer satisfaction?
As we described before, Esprit’s target audience is looking for something stylish, yet not too fashionable. Its customers put quality first, before latest trends. They want their clothes to last, not to be very expensive, and to have a simple yet tasteful touch. They want their clothes to say something about them, something Esprit conveys as well: reliability, comfort, good reputation, seriousness with a little touch of playfulness, trustworthiness, honesty, credibility.
Esprit delivers customer satisfaction by not letting its clients down. By representing values its customers like to feel connected to. By being honest and not trying to sell something that it’s not suitable for the customer. Esprit stands for a traditional brand, which has steadily grown by being true to itself, to its values, by not letting other brands’ strategies change its own. Also, by not taking too many risks. And that is what its customers expect: reliable products, at fair prices, which will not imply any mayor risk.
Esprit’s shops are comforting and make one feel safe. They are attractive, yet not flashy. Taking into consideration that the brand targets not only teenagers but also grown-ups, the atmosphere has to be more calmed and stable. A regular customer who walks into an Esprit shop knows what they will find there and will never be disappointed.
Esprit makes its clients feel like part of a whole. Part of those women in society who are not intimidated by the fast moving market of clothing. Women who do not let the industry tell them what to wear, or to buy products with little quality and at ridiculous prices. That is why they are faithful to Esprit, because it makes them feel safe and confident. Obviously there is a market for these women, considering that Esprit –unlike H&M or ZARA- sells basically the same collection all over the world.
How do they attract and retain customers?
Esprit lives thanks to a loyal group of customers. However, their constant growth derives from the success in attracting new customers every year. They do so by offering an alternative option to shops like ZARA and H&M, whose quality is lower and atmosphere might be too intimidating for some people.
The fact that they sell items for the whole family in one shop also brings them repeated purchases in their different product lines. The fact that they sell the same collection all over the world also makes repeated purchases more plausible. Whether the client is in China, Germany or the United States, they can feel at home when they enter the shop.
The brand retains customers by offering a quality product, at the same time as a superior service. Unlike many other clothing shops, at Esprit employees are very attentive and strive for making customers feel comfortable and not only pleased, but delighted. That explains part of the success in keeping such a loyal audience.
Esprit also offers discounts and special promotions to loyal customers. Through e*club, its online membership club, Esprit offers credit (e*club points) in their stores for every purchase done through the e*club card. As an e*club member, customers are invited to enjoy special promotions, such as double e*points weeks and special shopping hours. Also, a member of the e*club can have access to other benefits such as free call centre service and personal access to their account balance. Joining the e*club is free.
Esprit offers as well the possibility to do online shopping, which allows customers to view the items online and request for the measures and colours they prefer. If they are not satisfied they can always return the merchandise and get their money back, which not many shops are ready to offer yet. Shipping is for free, in those countries where the programme is available.
To keep their clients informed, Esprit also offers a regular newsletter, in which they inform of the latest collections and news in the fashion industry. Subscription is for free and for every new entry clients get important discounts.