Zone Industrielle Villemilan
France's Du Pareil au Même (DPAM) wants to dress the world's kids. The Wissous-based company has captured one of the largest shares of the French infant and children's clothing market, offering high-quality, fashionable garments at low prices. Nearly all of the company's success has been built on word-of-mouth advertising. The company's publicity budget remains among the smallest in the business. DPAM also does not manufacture its own clothing designs, but instead subcontracts production to manufacturers in lower-cost areas such as India, China, Taiwan, and Malaysia. The company engages in a policy of rapid product turnover, eschewing the typical seasonal base of the retail clothing market to turn out as many as 2,400 new clothing items each year. Few DPAM garment styles remain for long in the company's chain of more than 100 company-owned French stores and 45 international stores, including 17 company-owned subsidiary stores, in 20 countries. The rapid turnover of styles helps to encourage shoppers to overcome any reluctance to purchase an item immediately—the style might not be in the store the next time the customer returns. As such, DPAM has gained one of the highest sales-per-square-meter ratios in the French market. Since the late 1990s, DPAM has pursued growth along two strategic paths: the first, the continued expansion of the company's own and franchised stores on the international market. The second, the continued rollout of new yet related retail concepts. These include the DPAM Bébé retail chain of infant furniture and accessories, also present as "corner" shops within the larger DPAM retail concept. While the company has had less success pursuing the adolescent market—which has shown a preference for name-brand goods over DPAM's inhouse designs, DPAM is hoping to translate its DPAM Enfant touch to the children's shoe market, launching DPAM Chaussures as an independent and "corner" shop concept in 2000. Founder Simon Benharrous continues to help guide the company's design activity. Presiding over day-to-day management and future expansion is Bernard Denet. DPAM is traded on the Euronext Paris Stock Exchange. Investment house Argos Soditic owns a majority share of the company.
Something Else Entirely in the 1980s
Simon Benharrous entered the garment manufacturing business with a background as a costume maker for France's theater and movie industry. Benharrous launched his own company, C'Mauve, in 1982, with the idea of creating a unique line of children's fashions. The market for children's clothing in France was rather small, dominated by just a few well-known and somewhat old-fashioned brands. Benharrous sought to shake up the market with brightly colored, contemporary designs.
Benharrous soon turned to the creation of his own retail concept to distribute his clothing designs. In 1986, he launched a new retail store brand, "Tout Autre Chose," translatable as "Something Else Entirely." By the end of that year, Benharrous's company had opened four Tout Autre Chose stores in Paris.
Parisian parents snapped up Benharrous's designs and Benharrous quickly discovered that word-of-mouth advertising was enough to fill his stores and empty the clothing racks. By 1988, Benharrous was ready to expand outside of the French capital and begin to conquer the provincial markets. In that year, the company opened its first store in Lyon. A year later, the company's sales had grown to nearly FFr 60 million.
Yet Benharrous's dreams of future growth of the Tout Autre Chose retail chain were interrupted in 1990 when the company discovered that the brand had already been claimed by a manufacturer of ready-to-wear clothing. This setback, however, only seemed to inspire Benharrous, who quickly invented a new brand name: "Du Pareil au Même," translatable as "From the Similar to the Same." The new name seemed to inspire Benharrous's customers as well and quickly became one of the fastest-growing retail chains in France in the early 1990s.
Benharrous's playful and colorful designs were matched by a strong retail concept. Among the leading factors for the chain's success was its policy of avoiding the traditional seasonal base for its clothing factors, in which stores introduced new lines of clothing designs just four times a year. Instead, DPAM, as the chain was quickly nicknamed by its customers, rolled out new designs on a nearly continual basis. Stores received new clothing items nearly every day, and the company launched as many as 2,400 new designs each year.
DPAM's customers learned that they could expect to find something new with every visit to the store. To encourage customer purchases, DPAM rarely kept its designs in stores for more than two weeks. At the same time, the company, willing to accept lower margins than many of its competitors, offered its clothing for prices as much as 40 percent lower than other children's clothing sellers. Yet the company remained committed to quality, avoiding synthetic fibers in favor of primarily natural materials. DPAM also carefully chose its locations, sticking to France's downtown centers, rather than moving out to the growing numbers of suburban shopping centers. The DPAM formula proved successful even during the long crisis that marked the French economy during the first half of the decade.
Benharrous's company, still known as C'Mauve, changed its status to a limited liability company in 1990. In 1993, C'Mauve absorbed the Du Pareil au Même brand name before the company changed its name to its flagship brand in 1995 in concert with the company's listing on the Paris stock exchange.
By the time of its introduction on the stock exchange, DPAM had grown to a chain of more than 40 stores, with 380 employees, and an average of 20,000 customers per day paying an average of FFr 225 per visit. With some 7 percent of the French children's clothing market, DPAM had also achieved one of the domestic industry's highest annual sales-per-square-meter rates, some FFr 143,000. Annual sales had topped FFr 370 million in 1994. The stock exchange listing reduced Benharrous's ownership to just over 86 percent of the company.
By then, Benharrous hoped to reproduce the success of the company's original clothing line, now dubbed DPAM Enfant, into three new brand concepts. The first was called DPAM Maison, (DPAM Home) and featured infant furniture and accessory items. The second was called Sérelou, French slang for "it's heavy," and was geared toward the adolescent market. The third was geared to the adult market, and was called "Fais-moi une place dans ton armoire" ("give me a place in your dresser"). Neither of the latter two brands took off—in the case of Sérelou, for example, DPAM had not taken into account the growing penchant of the ten-year-old and older set for name brands. DPAM Maison, which grew into a separate retail concept, remained nonetheless a minor part of the growing DPAM empire.
International Growth for the 21st Century
Benharrous faced a different kind of problem in 1996 when the company's auditor refused to certify its first annual report as a public company. The dispute over the method of accounting for inventory led the company to publish its inaugural report as uncertified. DPAM was to face official investigation into the matter, which remained unresolved at the turn of the century. Meanwhile, DPAM continued to mark its successful growth throughout France, and revealed its intention to boost its retail business to as many as 100 stores by the end of the decade.
DPAM also began plotting its international expansion. Among the first countries to receive the company's attention were Japan and Israel. Instead of opening stores under its own direction, DPAM conferred development in these countries to local distributors through a master franchise program. The company was particularly interested in the Japanese market, and hoped to develop a network of more than 50 stores through its franchise holder. Yet DPAM also dreamed of reproducing its success in France on the international market by extending its portfolio of company-held stores.
Moving abroad proved more difficult than expanding at home. While DPAM's own-store network grew to 86 stores by 1997 and then to 93 stores by the end of 1998, all but two of these were in France. Meanwhile, its international development had barely taken off. By the end of 1998, DPAM was present in 17 countries, ranging from Saudi Arabia to Iceland and Brazil, but for the most part its operations were limited to just one or two franchised stores in each country. The company had begun a tentative expansion, opening its own branches in Portugal and Switzerland. But in these markets too DPAM proceeded only slowly, with just two Portuguese stores and four Swiss stores at the end of 1999.
In 1998, Simon Benharrous announced his intention to sell off his holding in the company to a new company, Kokanee, set up by the investment house Argos Soditic France to acquire DPAM. The sale netted Benharrous nearly FFr 350 million; the company's founder remained to guide its designs. Argos Soditic brought in Bernard Denet, who had worked previously for Lacoste, to oversee DPAM's further growth. DPAM's new majority shareholder affirmed its interest in DPAM's development, stating to Les Echos that the acquisition was "a change for continuation. We are not raiders. We are here for an industrial cycle, that is, roughly five years."
Denet took up the mandate to continue to expand the company's French presence, renovate its stores, and especially step up the international expansion of its successful DPAM brand. At home, meanwhile, Denet sought to improve the company's margins, by reducing its stock levels and streamlining its logistics systems, but also by reducing the level of its employee turnover through higher salaries and other incentives. These measures helped to boost DPAM's sales to more than FFr 820 million (EUR 125.3 million) and also helped the company eliminate its net debt and instead build a strong treasury with which to continue its expansion.
The company stepped up its foreign store openings through 1999. That year marked a number of important developments, such as an agreement with Japan's Itochu to place DPAM corner shops in that company's 30 Ito Yokado stores. The company now boosted its target in Japan to as many as 100 DPAM stores and boutique shops. The company also took over the four-store DPAM Suisse franchise company and began to target an aggressive expansion drive in that country, expecting to reach 15 company-owned stores and as many as 25 stores throughout Switzerland.
Meanwhile, DPAM was forced to take stock of its other brands. An attempt was made to revive the flagging Sérelou concept, which had never quite taken off with France's prepubescent set. After renaming the brand and chain SRL, the company announced its decision to close these stores by August 2000. A less dramatic fate was in store for DPAM Maison, which instead was renamed as the clearer DPAM Bébé. The company announced its intention to bring DPAM Bébé corners into its DPAM Enfant stores as well. DPAM also began developing a new concept to extend its operations beyond clothing and into footwear.
The arrival of Swedish clothing giant H&M in France in 1999 gave the company new impetus to step up its international growth. The year 2000 marked a turning point for the France-focused group as it created new subsidiaries to bring it into neighboring Italy and Spain, while also adding new stores in Portugal. If international sales represented less than 5 percent of total company sales at the end of the century, DPAM now announced its intention to boost the part of foreign operations to as much as 50 percent of total group sales by 2005. At the same time, DPAM turned to the extra-national market when it launched its own e-commerce-capable web site in 1999. That site performed strongly from the start, and by 2000 was breaking even, with sales of FFr 1.5 million. The company expected its web site sales to top FFr 3 million by the end of 2001. Importantly, half of its online sales were coming from the international market, with growing numbers of orders arriving from the United States and Canada, markets where DPAM was not yet physically present.
After shutting its SRL retail stores, DPAM opened its newest retail concept, DPAM Chaussures, with the intention to bring to children's shoes what it had brought to children's clothing. If the company had not been able to prove its appeal to the adult and adolescent clothing markets, its newest retail brand, which brought the company's quality and strong designs with the same commitment to low prices, was expected to become a strong player in the French—and perhaps global—children's market.
Principal Subsidiaries:DPAM Suisse; DPAM Italia; DPAM Portugal; DPAM Espagne.
Principal Competitors:Auchan Group; Etam Developpement; Galeries Lafayette; H&M Hennes & Mauritz AB; Jacardi SA; Laura Ashley Holdings plc; Mothercare plc; Pinault-Printemps-Redoute S.A.; SMOBY SA; Toys "R" Us, Inc.
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