PRINT THIS STORY:

CHANGE TEXT SIZE:

FRENCH KIDS’ CLOTHING CHAIN CROSSES BORDERS

By Mark Faithfull

THERE IS A LARGE GAP IN THE U.K. children’s clothing market between basic and luxury. But there will not be for long, says French chain Du Pareil au M&ecorc;me. The chain opened its first store in Britain in October. It aims to open 20 more within five years.

Why such confidence? The chain says it spots a hole in the market for children’s apparel pricier than what’s available at H&M or Peacocks, or in the supermarkets and department stores, but below the price points of the luxury brand retailers.

This niche has brought Du Pareil au M&ecorc;me — DPAM, as the chain calls itself — to prominence in its native France, where it was founded in 1986 as a boutique chain positioned just below the premium brands, but at significantly lower prices. Du Pareil au M&ecorc;me, which sells clothes and shoes for babies and infants, takes its name from a French expression that means “six of one, half dozen of the other.”

The products cater to children from newborns to age 14. The stores began on a “boutique” scale in terms of size, though they have increased from under 1,000 square feet to somewhere between 1,500 and 2,000 square feet. Even so, the stores maintain that boutique feel, and their interiors use lively, colorful graphics. The bright colors of the clothes themselves nod more toward the primary colors of childhood than the palettes of pre-adulthood.

The prices are designed to appeal to parents aspiring to a higher lifestyle. A dress for a 2-year-old starts at as little as $15, as do romper suits. Coats, however, go for anywhere from $50 up, and shoes are similarly priced, which puts those items well above typical children’s clothing stores.

The retailer has 279 stores in 18 countries. Just over half of the stores are company-owned; the rest are franchises. Its main markets besides France are Italy, Portugal, Spain, Switzerland and Japan, and the company also has a growing presence in the Middle East. The move into the U.K. follows two robust quarters this past year. Sales through June 30 hit $84.4 million, up 8.4 percent over the year-ago period. Outside France sales jumped 24 percent year on year, to $21.2 million.

Spain and Italy have proved to be particularly strong markets, with total sales growth of 99 percent and 31.8 percent, respectively, over that period.

The chain has expanded, with 18 openings in the first six months of 2006, including two company-owned stores, one in Madrid and the other in a business park in France. Two underperforming stores in Japan were closed. At press time DPAM was saying it would ramp up its expansion during the second half of 2006. This entailed 25 new stores, including two company-owned units in French business parks, the company said. It also involved an agreement with Toys ‘R’ Us Iberia providing exclusive rights to sell children’s clothes in 40 Toys ‘R’ Us stores in Spain and five in Portugal (following a test period in those stores). The chain says it also plans to open stores in major Spanish cities. DPAM also says it will open 10 stores in Ireland (it already has two there), 23 in Greece and three in Cyprus over the next five years, and an unspecified number in Italy. DPAM says it hopes sales will grow 10 percent this year.

In Britain DPAM has appointed U.K.-based franchise operator Eurotots to run its franchises. Property agent Harper Dennis Hobbs (HDH), meanwhile, has been retained to search for U.K. store sites ranging from 1,500 to 2,000 square feet in shopping center and prime High Street locations, initially in London and the southeast. The first store opened in the Lakeside Shopping Centre, just outside London. “It’s a well established strategy, building out of the southeast,” said Tim Newman, an HDH associate director. “Lakeside was an obvious place to start. It has a great catchment area with plenty of mums visiting. The combined mall and retail park are enormous, and also, the center was prepared to do a good deal to bring DPAM in.”

DPAM’s Irish stores — on Kilkenny High Street and at Dundrum Town Centre mall — are franchises. These are owned by Hilary Behan, a former buyer for retail chains. She first noticed the brand while on vacation in Paris six years back. Two years ago she approached the firm about bringing the retailer to Ireland. The first store opened on Kilkenny High Street in March. Behan expects to open a total of 10 units over the next five years, with Cork and Athlone likely to be the next locations. ‘‘It’s been trading brilliantly since we opened,” said Behan. ‘‘Many people know the brand from their holidays abroad.”

But the U.K. may prove a tougher nut to crack. Though shoppers in mainland Europe and the U.S. are prepared to pay high prices for designer clothing, the British are less so, and they may even consider Du Pareil too expensive. Steve Davies, a retail analyst with Numis Securities, says he believes that the new-found dominance of children’s wear by grocers and strong discounters, together with Marks & Spencer’s own success with children’s wear will make it hard for any midmarket company to have much of an impact. Plenty of parents are willing to buy expensive branded goods but they tend to go for brands they recognize and buy for themselves,” Davies said. “Does Du Pareil au M&ecorc;me have a strong enough brand in the U.K?”

But Nick Bubb, a retail analyst at Evolution Securities, points to the success of New Zealand children’s wear retailer Pumpkin Patch, which has grown in the U.K., primarily through shopping center sites. “The mass market is extremely tough,” he said. “Anyone taking on the supermarkets head-to-head is going to have trouble.” But DPAM, HDH’s Newman says, sees the U.K. as a “phenomenal retail market,” and the store-opening program could be accelerated if the brand takes off. “We’re looking mostly at shopping center sites, partly because they fit the profile and they are environments DPAM is comfortable with, and partly because, quite frankly, they are prepared to offer the best deals,” Newman said.

So how about the U.S? “It’s a big leap,” he said. “But at some stage I’m sure DPAM will look to the U.S. for growth.”