Agatha Paris hastens makeover with FSI stake

Dubai: There is never a dull moment in the Gulf's fashion and accessories space as global brands manoeuvre for advantage. The French fashion accessory brand Agatha Paris has acquired a 75 per cent stake in Fenno Scandia International (FSI), its longstanding regional master-franchisee. Agatha Paris will acquire the remaining 25 per cent at a later date which has not been confirmed.

The multi-million-euro transaction — done with the aim of raising the French brand's profile and network in the region — also raises the operating capital of FSI.

Agatha Paris has more than 320 outlets in 20 countries, including the UAE. There are now plans to open new boutiques in Saudi Arabia and Kuwait during the year, and have a regional network of 30 boutiques by the end of 2015.

"Agatha is already a very popular brand here in the fashion jewellery space," said Isabelle Trepat-Kelly, the founder of Fenno Scandia International and now the managing director at Agatha. "The region's fashion accessories market is one of the fastest growing in the world.

"With the Agatha brand equity owners now directly controlling operations, we are looking forward to both increasing the visibility of Agatha and accelerating the expansion of our boutique and point-of-sale network."

Brand trend

The uptick in activity within brand principal and franchisee relationships has been going on since 2009-10. While new franchise agreements are getting created with the entry of more brands into the region, some brands are taking over direct control of how they want to develop their presence in the region.

Last year Maui Jim, the maker of premium polarised sunglasses, opted for a new-look arrangement in the way the regional operations were run. And it did something that was at odds with the prevailing sentiment of maximum retail coverage preferred by many brands.

"The process resulted in us reducing a lot of the stores where the brand was being sold as we felt they were too fragmented to do any good," said Martine Larroque, Maui Jim's managing director for the Middle East and North Africa. "These stores, we felt, did not respect our brand equity."

This resulted in cutting the number of store locations and then starting again on the network expansion. Currently present at 500 outlets, the brand plans to double the network this year. This would principally be done by aggressively growing its presence in Saudi Arabia which it recently entered.

"The distribution is done directly by Maui Jim and that is to maintain the same message in any market where we are present," said Larroque.

"I don't think it would have made the brand more popular if we had a regional partner. What that would have done is place the brand everywhere and that's not what we want. We are a non-discount brand and huge orders on low margins do not work for us.

"We prefer customers to buy because the brand offers the most protection via Polaroid lens and not because of the brand image. We are not into branding, but performance."

Growth incentive

Market sources are unanimous that the Gulf's retail sector will continue to witness a lot of rearrangements. One reason would be that brand principals identify the region as offering one of the highest growth rates for retail worldwide. That being the case, they are not going to miss any trick in the book — and even those that aren't — to claim an advantage in positioning themselves.

"Wherever they can, brands will work closely with regional franchise partners to develop their presence," said a retail industry consultant. "Where they feel that partners are not pulling their weight, brands will look for options."

The anything goes approach no longer applies to the region's retail space.