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Amazon makes foray into fashion world
By Thomas URBAIN
New York (AFP) April 2, 2016


Chinese firms snap up chunk of French fashion industry
Paris (AFP) April 1, 2016 - French ready-to-wear fashion labels Sandro, Maje and Claudie Pierlot will be taken over by China's Shandong Ruyi Technology Group under the terms of an exclusivity agreement announced late Thursday.

Hot on the heels of the announcement, French lacemaker Desseilles said Friday it is to be acquired by Chinese firm Yongsheng, in another sign of the growing Chinese presence in France's fashion industry.

In the deal for Sandro and Maje's parent company SMCP, the founder of the "accessible luxury" labels, sisters Evelyne Chetrite and Judith Milgrom, will remain minority shareholders if the deal goes through, as will their management team and the US investment fund KKR.

KKR acquired a 65-percent share of SMCP in 2013.

Shandong Ruyi gave no financial details, but the Financial Times reported this week that the deal valued the group at 1.3 billion euros ($1.5 billion), including debts.

The Chinese group will invest in SMCP "with the ambition to drive further growth and support the company's global development, including in Asia", the statement said.

SMCP sells its brands in 33 countries.

Shandong Ruyi, one of the largest textile manufacturers in China, pledged to maintain SMCP's headquarters in Paris.

On a smaller scale, high-class lacemaker Desseilles said it would be taken over by Yongsheng, following an arbitration decision by a commercial court.

Desseilles said Yongsheng's bid was chosen from the three companies in the running because it has promised to maintain the jobs of 60 of the firm's 74 employees for at least three years.

The Chinese firm also made a commitment to keep the Desseilles factory in the northern port city of Calais for at least five years.

Lacemaking has a strong tradition in Calais, whose economy has been hit hard by the presence of a large camp of refugees hoping to reach England across the Channel.

Michel Berrier, Desseilles' marketing manager, admitted that the identity of the new owners had intially created some alarm, but he insisted it was unfounded.

"As soon as you say 'Chinese' when talking about a takeover, you get a knee-jerk reaction, but in this case the fundamental point was to maintain and develop the site in France," he told AFP.

He described Yongsheng's project as "very ambitious" and said the group wanted to tap "French expertise in lacemaking" to develop clothing for the Chinese market.

Desseilles already exports 70 percent of its production to Asia.

Berrier said Yongsheng intends to invest around 4.0 million euros ($4.5 million) in the next few years and to buy the factory, which Desseilles currently rents.

"If everything goes as planned, Desseilles will take on more staff in the next three years to meet new orders," he added.

Amazon has been making moves over the past few months to position itself as a force in the ready-to-wear fashion world.

The Seattle-based online retail titan has already revolutionized how consumers shop and has been selling clothes for more than a decade.

In 2006, it bought the site Shopbop and snapped up online footwear go-to Zappos three years later.

But its steps in recent months -- some overt and others more under-the-radar -- signal that Amazon is speeding up its foray into fashion.

For one, Amazon launched a daily, free half-hour online show on fashion in early March, its first-ever live-streaming program.

It also became the main partner of the fledgling New York Men's Fashion Week, which held its second season of shows in January.

And the giant founded by US entrepreneur Jeff Bezos has also begun airing "The Fashion Fund," a reality show during which young designers face off against each other in a competition sponsored by the Council of Fashion Designers of America (CFDA) that organizes New York Fashion Week.

As for its more muted moves -- these are visible on Amazon.com where new fashion labels have popped up that, it turns out, have been trademarked by the tech giant.

The labels Lark & Ro, North Eleven and Franklin Tailored have been registered by Amazon over the past few months, according to data accessed by AFP on the website of the European Union Intellectual Property Office.

After focusing on clothes designed, made and sold by others, Amazon -- whose revenue in 2015 passed the $100 billion mark -- is developing its own clothing lines.

When contacted by AFP on the topic, Amazon declined to comment.

"I'm happy to reach out once we are ready to share news and overall strategy regarding our business," said a spokeswoman for Amazon Fashion.

"Amazon has made apparel a priority," analysts with KeyBanc Capital Markets wrote in a February research note after attending the MAGIC apparel trade show in Las Vegas.

- 'Plenty of opportunity' -

"Amazon is being viewed as a strategic opportunity and partner" in the vendor community they wrote, with some believing that "it can be a top three customer for them in the medium-term."

Customers appear to like what's in the works.

"There's... the ability to have the world at your fingertips in one place," said Marshal Cohen, chief industry analyst at the NPD Group.

"Brand sites or traditional retail sites have limited offerings. Whereas when you look at Amazon, the offer of products is mind boggling," he added.

"The ability to reach across so many brands, so many styles, so many sizes, so many options, it gives a feeling of much greater opportunity to secure the product that you want."

Amazon has the potential to make a significant mark on the fashion world, according to Cohen.

"There's plenty of opportunity to better what has been done by the fashion industry, from a basic, and also midlevel and even from a designer perspective," he said.

Analysts at the Cowen Group said in July that they expected Amazon to become the leading US apparel retailer by 2017, ahead of Wal-Mart and Macy's.

They forecast $27.7 billion in revenue next year and $52 billion in 2020 -- and that in the United States alone.

On a more international front, chains such as H&M and Zara also have reason to be concerned.

If the inauguration late last year in Seattle of a brick-and-mortar bookstore is anything to go by, Amazon one day could decide to open ready-to-wear clothing stores.


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