Recently, an international chain of fashion retail clothing known to most of us, C&A, decided to close down four of its stores in the Netherlands due to poor performance. Among them is the flagship store in Utrecht. We were astonished to hear the large amount of negative feedback from press and unions, since we think that the company is making a smart move.
Constantly increasing competition, ever-changing fashion trends and shopping behaviour, new concept stores, the rise of environmental concerns, are trends that make it extremely challenging for fashion brands to stay competitive. From its founding in 1841 until today, C&A stayed focused: “creating attractive, affordable, ready to wear clothing for everyday people” by adapting and caring about its employees as in this specific case they decided to close stores which do not seem to reach their targets, way before things really turn bad.
The management decided timely to face the facts and take action. Leaving them the opportunity not having to fire personnel, but relocating them to other branches and stores, as the company is still in a healthy enough position to preserve employment.
We perceive C&A and its management as a committed company with agile leadership that thinks ahead; taking immediate action in order to stay true to its core values and look after its people. What the brand has successfully done is a perfect example of ‘pruning’, cutting off under-performing parts of its activities to improve opportunities for stability and growth. Something more companies should consider. You just can’t keep it all, but have to make choices and focus on what is working to be able to make the total better. Frankly, repairing the roof when the sun is still shining.
We all too well know what happens to brands that fail to understand this. Look at V&D. Their management never came to understand the importance of pruning and just carried on too long with brands and branches that were not performing. We know where that got them.
Companies have to understand the basics of active portfolio management. Whether it’s a portfolio of branches, brands, countries. The management has to focus on actively managing its portfolio of revenue generating activities, e.g. across their P&L. More specifically, they simply need to look at what works well and what doesn’t and take the looming decisions timely. That’s what separates C&A from V&D. And that’s what separates successful companies from the ones that are struggling.
In the end, an ounce of prevention is worth a pound of cure!
Vincent Hooplot & Michiel Breeschoten