Essentiel, one of the last independent Belgian boutique brands, is cutting deep into the flesh because of corona: a third of the 920 outlets will disappear. “We’re no longer going to play the bank of the world.”
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Esfan Eghtessadi hops up the marble spiral staircase of the stately headquarters of the fashion brand Essentiel, in the heart of Antwerp’s fashion district. Downstairs, in the showroom painted light pink – remember that color – a creative team gathers. Women in colorful outfits and plump sneakers come and go. It’s moving again. Finally!’
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The business leader of the Belgian brand – in full: Essentiel Antwerp – leads us to his office on the first floor. The oval-shaped space resembles a mini version of the iconic White House cockpit. ‘Mais le mec ici est plus sympa’, says the Iranian-French entrepreneur with a smile.
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Once bankers sat here, the room has double doors: discretion assured. Today the meter-high wooden windows are wide open. Eghtessadi wants to give an insight into how corona is shaking the clothing sector worldwide to its foundations. “We’ve had a nightmare.”
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‘Completely stiff with badminton’ Inge Onsea waltzes into the room shortly afterwards. In white motor boots, a gray pencil skirt in jeans, a black top with three layers of puff sleeves, crimson nails, long earrings and rings that twist around her slender fingers like glittering strings. Less is more? Not in the universe of Onsea and Eghtessadi, who founded the brand in 1999.
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Recovering money, boosting demand, running the machine: that is now the priority.
Esfan Eghtessadi
Business manager of Essentiel Antwerp
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They have driven a varying but almost exclusively profitable course. Two years after the launch of its first colorful T-shirt line, the brand went international. Essentiel Antwerp is on sale today from Macao to Turkmenistan. This international expansion was not without a struggle. Around 2006 the company suddenly had to shrink sharply because costs derailed. “We had grown too fast,” says Eghtessadi. Onsea: “We had lost our soul.”
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Painful decisions
The year 2019 closed with figures that are once again moving to record highs: a turnover of 59 million euros and a gross operating profit (EBITDA) of 3.6 million. With equity or financial savings of 7.4 million euros – good for almost a quarter of the total balance – the house could fall back on a fairly comfortable buffer, unlike many other sector peers. And then came corona.
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Eghtessadi: ‘Our summer collection had just been delivered in mid-March. 4.7 million worth of invoices were outstanding from the retailers. We had to pay 8 million ourselves, orders for the winter collection we were making. And then sales fell by 99 percent: zero income. The uncertainty was enormous. How many stores will survive this? Will we see our money? In May, 1.1 million in accounts were still open in Italy, so we did not deliver a winter collection there. At one point I even feared that we would lose our company. ‘
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They quickly made drastic decisions. The number of points of sale fell by a third, from 920 to 619. The largest cut occurred in stores that offer brands other than Essentiel, where half of the points of sale will disappear. ‘We want to sell our products ourselves as much as possible.’
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A painful decision, Eghtessadi acknowledges, which costs the brand a lot of sales. ‘We throw millions of euros in the bin by cutting that income. But it was necessary, and it had to be done quickly. But sales through our own channels – stores and webshop – are better for profit margins. And we are convinced that the future lies in a collaboration with the strongest possible partners. That means shops in prime locations with a strong image that pay the bills quickly. We are no longer going to play the bank of the world. ‘
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Lifebuoy
The webshop turned out to be a lifesaver. Essentiel started online sales in 2012, but this has only recently started to generate serious turnover: 2.45 million in 2018, 4.7 million last year. ‘This year we can finish with the double. Online sales have exploded since April. We notice that there is a lot of demand in locations where we have strong stores, so that interaction pays off. We will certainly continue to do so: every week we receive ten questions from the United States for online shopping. ‘
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The brand was due to corona with two million euros in overstock, summer clothing that will be available in its six own outlets next year at strongly reduced prices.
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Essentiel wants and must sell as much as possible at full price in the coming years and is adapting its production to this end: only 70 percent of the budget is used up. Onsea: ‘We keep 30 percent on hand to be able to respond to what is selling well or what is missing, and that is delivered later in the season.’ The intention is to prevent too many less popular pieces from ending up on the sales rack. ‘We want to be able to buy more at full price.’
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Retailers therefore receive these collections in two parts, which they also pay in two installments. The second part comes by boat or by train – which is cheaper than by plane. Collections will be a bit smaller, the budget will be reduced by 30 percent. ‘We are certainly not going to produce too much.’ The pricing policy has also changed: there will be some more cheaper basic pieces, but also some outliers. ‘We used to sell dresses for 200 euros, today it is between 165 and 400 euros.’
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The brand is shifting more marketing budget to digital and social media and thus saves 30,000 euros per month. Twenty people left from a group of 300. Eghtessadi estimates that this year’s turnover may be a quarter lower, ‘possibly a little less if it continues to work this well online’, and makes no statements about any loss. ‘Recovering money, stimulating demand, running the machine: that is now the priority.’
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-33 %
The number of Essentiel Antwerp outlets decreased by a third, from 920 to 619.
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Two years ago, the company sought an outside lender to expand more internationally – the US remains Eghtessadi’s dream. There were talks with eight parties, but no match. ‘I am relieved today that it did not happen. Implementing rapid and radical changes, cutting turnover: just convince an investor of that. ‘
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Nevertheless, 15 new outlets will soon open with ID Look, a Korean importer that is also active in China and Japan. ‘We certainly want to go abroad, but only with a strong local partner.’
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Pink pill
Essentiel stands for glitter, glamor and a touch of kitsch. But the only clothes that sold somewhat during the first intense corona period were jogging suits, sweaters, and clothes suitable for home work and living room workouts. Essentiel says it is not bothered by this: the customer still opts for glamor, Onsea says. “The best-selling piece last season was neon pink jeans.”
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She regularly describes the brand as ‘the pink pill’, something that makes life more beautiful. Now she also tells the story behind that slogan, while her husband fights violently. “Inge, that’s private.”
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Onsea: ‘When the prototypes of a collection arrive and we see the result for the first time, we still throw away about 20 percent of the designs. That’s normal, but seven years ago all the first pieces we saw were very disappointing. Esfan panicked. “We’re going out of business,” he said, “you’ve made a super ugly collection.” So, the morning of the final collection presentation, I had an anti-anxiety remedy – a pink pill – mixed with a banana through his oatmeal. When he saw the clothes, he fell straight into the designer’s arms: ‘I love you’, he shouted. ‘
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Onsea still thinks it’s hilarious. ‘You will find pink in all our stores, it has become a trademark. We made T-shirts with that slogan: ‘I want to be your pink pill’. And it stays that way, even in times of corona. Our customers really don’t wear sweatpants all the time. ‘
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