New Balance to run French, German, Benelux markets directly
The status of local distribution partner can be precarious. In 2010, New Balance signed an agreement with French group Royer for the distribution of the US sport brand’s equipment and footwear in the markets of France, Germany and Benelux.
Over time, lifestyle apparel and a luggage line were added to the range. The partnership deal was renewed in 2005, and will expire at the end of 2020. New Balance, a running specialist with an extensive range of apparel products, has now decided to assume direct control of the three markets run by Royer.
“It’s a Europe-wide strategy,” said Olivier Motteau, the manager in charge of New Balance’s relationship with its distributors in Europe’s mature markets, talking to FashionNetwork.com. “Over the course of 10 years, we have gradually taken over the business in various countries, in Spain, Italy and Poland. In western Europe, Royer was our remaining [distribution] partner. We set up subsidiaries in each of those markets. [Royer] has done a very fine job. We will be able to tap Europe-wide synergies and deploy long-term policies, something a distributor doesn’t necessarily have the means to initiate,” he added.
Between France, Benelux and Germany, New Balance Europe will gradually start working with some 3,000 multi-brand retailers, beginning the transition from a distributor-retailer relationship to a direct one with New Balance. The brand’s business in the three countries is question is reportedly worth over €150 million. In France alone, according to French newspaper Les Echos, New Balance generated a revenue of €80 million in 2018.
The US group, which reported a revenue of over $4 billion last year, is busy setting up a new European organisation. New Balance has indicated that logistics operations will be managed from its European hub in Venlo, on the border between Germany and the Netherlands.
“We are working very hard to ensure that the transition will be as smooth as possible for our business,” said Fran Allen, vice-president EMEA for New Balance. “During the next few months, we will keep our leading retail partners informed, and we will provide them with regular updates on our transition plan’s status,” added Allen.
With subsidiaries in France, Germany and Benelux, New Balance is keen to exploit the solid foundations built in the course of 10 years to further boost its business. “We won't wipe the board clean on January 1 2021,” said Motteau. “There will be a transition. Retailers have already been affected by many changes this year, and we won’t add to them. But we can see opportunities, notably for our direct-to-consumer sales via our four stores in the Ile de France region [in France], our outlet stores and e-shop. We believe we have the ability to increase our penetration on the running market, and to launch new product categories too. Our data shows that apparel accounts for 30% of our e-sales: there is growth potential there,” said Motteau.
The Boston-based brand is keen to bolster its role as a challenger on the sport apparel and equipment market, and taking control of its European business is a statement of intent. Consistency will be a rare currency in 2020, after two and a half months of closures in Europe due to the Covid-19 pandemic, but New Balance, looking at positive indicators like the consumption trend of running products and the three-fold increase in its e-sales during the lockdown period, is viewing the future with optimism.
As for the Royer group, it will still be involved in the brand’s business in the next few months, looking after collection sales and restocking for the Spring/Summer 2020 and Fall/Winter 2020 seasons.
The family-owned Royer group operates an extensive portfolio of brands, both directly owned and under license. In the sport segment, it sells Umbro and the PSG lifestyle footwear line, and it recently secured the license for Everlast. Two years ago, Royer bought the Hungaria brand. However, New Balance was the main driver of Royer's business.
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