Best Practice Brand Growth - Desigual is not the same!

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Best Practice Brand Growth - Desigual is not the same!

Montag, 17. Februar 2014
by Guido Schild

In 2002 probably 100 European fashion „junior brands“, smaller € 10m sales, had all the ingredients to become one of Europe’s most desired brands in the new century. Desigual was one of them, making total sales of € 8m.

When Manel Jadraque, Desigual’s MD, announces last month in Berlin, 2013 global sales are € 820m, 100x the size of 2002, many in the fashion industry think „this growth will not last forever“. There is a day the low innovation cycle of collections, the price-value-proposition of products or the retail expansion will stop them. But is Desigual 2013 different from 2009 or 2002? Can someone explain why so many of the 2002 junior brands with excellent innovation cycle and price value proposition didn´t reach 2013? Is there any other of the 2002 junior brands reach sales of € 1bn this decade?

Desigual is not explained by products or distribution channels, it is spirit and brand culture and it is best practice growth management.

Meeting the difference

Our first encounter with Desigual is 2012, when we start on a joint corporate development project. We agree to work a L4L performance program in 2013, review retail processes, management tools and KPIs with focus on marketing, merchandise management and store operations. Over three months and a few best-practice workshops, we jointly design programs to improve retail space productivity, sell-through and marketing efficiency.

In the weeks following our kick-off, we observe a business model similar to many other European brands. But Desigual’s organization and culture is unique. Wherever we go, we meet young, ambitious employees, always on the move to improve and try something new.

No standards but fun & profit

The company operates a solid systems architecture and tracks all types of KPI, but provides limited standards & reporting. Many great brand companies struggle with not having common retail standards (see our blog on brand retail growth struggles), and for a moment we believe Desigual’s Excel and KPI practice is similar. Yes, there are tons of data, and all hierarchy levels have access to it. But unlike in most brands, managers seem to have higher levels of alertness to make commercial decisions and track results. It seems discussions are more fact- and KPI-driven than elsewhere.

While our project workshop results need follow-up in most of our projects, we find our „to do lists“ in Barcelona most often in implementation mode days after the workshops. We observe a strong ownership of responsibility for tasks and KPIs and people truly embrace Desigual’s mission of “fun & profit”

Living the difference

Do you read “About us” websites, the marketing version of how brands became successful? Most paint a picture of success from day 1. Desigual’s corporate brochure starts the same way, but doesn’t forget paying homage to errors: “… an error is always an opportunity, and we verified it is true. We are very proud of some of the projects that sprang from errors …”

This enthusiasm to making mistakes and learning is making the difference: Yes, there is top-down guidance, but there is more “Go try it and, if it doesn’t work, learn from the mistakes.” Is Desigual creating its growth on „trial and error“? Is it people take responsibility and thrive performance because the company has limited standards, but a culture that wants people to “go for it”? How do you manage growth and productivity, when everybody tries it his way? Who says you need to, if the intelligence of many drives performance? We called it “swarm intelligence” and like to share with you one example.

Key performance features

Many successful fashion brands have strong guiding founders. Would you know one who asks employees to vote on his creative work before he brings the collection to “Bread & Butter”? Thomas Meyer, Desigual’s founder does. Like many Chief Creative Officers he and his team scout fashion trends, but when it is time to decide on next season’s collection, some 100+ Desigual managers vote which part of the collection should get the strongest buy and which to drop (Power Voting).

What looks like an unusual process to develop a collection and buy plan is possibly the process that characterizes Desigual best. “Power Voting” is one of many performance features to tell managers how to improve. But will designers & buyers obey the voting? We are confident, they take it seriously. But, in a culture that teaches “try it your way” the voting is likely not an iron decision, it is a guidance to reach better own decisions.

Kick & Rush in Barcelona

Going wholesale Europe, going retail Europe, going online Europe, going USA, going Asia, going home interior — growing the company all in one decade has meant huge strategic tasks. The Spanish word Desigual means “unequal, uneven, different, irregular, one-sided, rough, bumpy.” These adjectives precisely describe Desigual’s approach to growth and performance, and the company’s public financial filing shows, management has done an excellent job in growing up.

Where others study the market, develop an investment case and make a plan for growth, Desigual practices “kick & rush”: Desigual brings the ball into a new playing field and watches how players and play evolve. Although Barcelona is rather home of the “tiki taka” approach, “kick & rush” works for Desigual. True, not all of Desigual´s offensive plays end with the ball in the net, but it seems Desigual has found a way to win more games than others. And they appreciate the learnings of a lost game. What looks like a risky, high-speed offensive play, is not so risky – provided you groom players that have steep learn curves, and know when to storm and when to defend.

Will this system go through crises in the future? Yes, just as the FC Barcelona is not successful every season. There will be challenges and times of consolidation, but we strongly believe Desigual will master them and thrive again, just like the FCB. We had a great time and great learnings being part of Desigual’s team and wish the company and its people an excellent time on their path to growth and more fun & profit.