Defshop CEO Franco Lucà: Pre-Covid planning certainty no longer exists
Streetwear and hip-hop culture is gaining in importance not only in the USA but also in Germany, with big fashion retailers like About You also entering this area. Berlin-based online retailer Defshop is an old hand in the streetwear trade: Founded in 2006, the platform is one of the leading e-commerce providers for streetwear and sneakers in Europe.
Franco Lucà tells FashionUnited in an interview how the company plans to expand in Europe, how it experienced the e-commerce boom this year and where new physical stores could open in the future. Lucà has been Defshop’s managing director since August 2019.
How has financial year 2021been for you so far?
We experienced strong months from the beginning of the year until the end of May. The summer months, especially July and August, were a bit complicated. It looks like people had different needs and desires again this summer compared to last year, other than buying a new pair of sweatpants or a new hoodie. Since September, we have seen an increase in demand again. By and large, we will finish 2021 at about the same level as 2020.
And how has it been compared to 2019?
Depending on December, this would be about seven or eight percent more than before the pandemic.
What is currently selling well at Defshop? What trends do you see overall in the streetwear sector?
Original streetwear products - baggy jeans, jeans in general, cargo pants, sneakers, hoodies and caps - are of course in high demand at Defshop. These products and categories are particularly strongly represented in our own brands Def, Dangerous, Just Rhyse, Thug Life or our licensed brands Rocawear and Ecko Unltd.
But of course the world and therefore our own brands continue to evolve and we already ensure that long-term trends such as small logo pieces or special colour shades are reflected in the collections.
The product range extends from streetwear classics like Fubu to sports brands like Fila and luxury houses like Balenciaga. How do you put it together and who is it aimed at?
Defshop is not defined by trends or fashion but by its cultural background and authenticity. That's what people who are interested in streetwear are looking for. And that is what they find with us. We want to offer them a shopping experience and thus access to a product range that consists of classic streetwear brands, our own brands and luxury brands.
Since November, Anta Sports has been part of your range. Have you had many new additions this season?
Yes, although the brand is still little known in Europe, with Anta, we have added one of the biggest sports brands in the world, together with Nike and Adidas. This important strategic step for Defshop characterises our attitude and our strategy.
Customers are very informed and know what's cool, what's hot and what's the latest brand. Our mission is to make these products and brands accessible to them, which is why we have added new brands to our range in recent months, such as On, Veja, Saucony, Mizuno, Kangaroos and Diadora. More [brands] will follow.
Fashion retailers are currently complaining about delivery bottlenecks. Have you had any cancellations or delays for autumn and winter goods?
We already noticed supply shortages during the first wave of Covid, especially for our own brands, which account for one third of our business and are produced in Southeast Asia.
We monitor with foresight and have already decided in some cases to partially relocate the suppliers for our own brands. As far as the situation with our third-party brand partners is concerned, we are in close contact with them and constantly monitor the situation in order to avoid supply bottlenecks and cancellations as far as possible. These challenges will accompany us for a long time. Pre-Covid planning certainty no longer exists.
You mentioned a drop in sales in the summer. What precautions have you taken accordingly?
Because the lockdown was relaxed in June, July and August, these months were a challenge for us. To avoid problems with old stock, we had to start discount campaigns early. It's not our classic business, but with the decline in e-commerce sales, we had to be proactive.
How optimistic are you about next year?
The pandemic has accelerated many trends and it is my job to find the right answers for the future of Defshop with my team. Since I became CEO of the company, I have initiated a strategy that is constantly evolving. We are constantly reviewing our positions and our assumptions. We have a clear, long-term, resilient growth strategy. We know what we want to achieve. That is what counts for me.
At the end of the day, we will have a positive 2022 because we have many opportunities - our own brands are growing very strongly and we are not yet where we could be internationally. That means the potential is huge, which will allow us - if things go normally - to have a positive year ahead. Therefore, I was not going to say optimism, but: We are implementing the things we have set out to do, step by step.
What plans do you have for the future of Defshop?
The strategy’s focus on the origin and identity of the company creates a sharp distinction from the competition and has a strong appeal for customers. The extremely positive feedback from our customers and brand partners encourages us to consistently continue and accelerate the path we have chosen for the future. We are pursuing a sustainable growth strategy that the company can achieve on its own. We have identified the growth drivers.
What exactly is the growth strategy?
For example, we will continue to work on the attractiveness of the portfolio. Keyword Anta. In this regard, I would also like to emphasise the special position of our own brands. They will increase the relevance of Defshop and in turn make Defshop attractive to new customers or customer segments that we could not reach in the past. We support this path with a very innovative communication and cooperation policy.
Which cooperations are currently going on?
We have been cooperating with Sony Music in the talent area for a year now. For gaming, we are involved with our own team. This is also an increasingly important market that has many overlaps with the street and hip-hop movement and is therefore also a focus area for us.
You are currently operating physical stores in Cologne and Berlin. Are you planning to further expand your retail network?
No. Defshop's strategic orientation is not aimed at expanding brick-and-mortar retail. However, this does not mean that we cannot open a limited number of stores in the coming months. We want to increase the customer experience, which is admittedly an overused term.
But the DefShop “street” must become a real experience for customers. Of course, this applies first and foremost to our webshop, and we work intensively on this every day. But it also applies to some of the Experience Stores. To be honest: the concept already exists. The pandemic has certainly delayed our plans. But I could well imagine a few Defshop Experience Stores in 2022. We are considering the Ruhr area and the Frankfurt area in Germany, for example.
Defshop is already available online across Europe. What are your internationalisation plans?
We still have the biggest turnover in Germany. However, we started a big project last year [with regard to internationalisation] that will launch at the beginning of next year: Our new webshop. This is crucial for us to be able to make a sustainable roll-out across Europe.
Apart from the German-speaking markets, which other ones are strong? Our strongest markets outside the DACH region are the Netherlands, France and the Scandinavian markets. However, we have by far not yet tapped the full potential there.
Do you see any differences between the German customers and said other markets?
The buying behaviour of Dutch customers is very similar. However, they like to buy from us because we offer certain brands that are not available in the Netherlands. These include, above all, our own brands, which are surprisingly well received in the Netherlands and the other markets. It is not so much the classic foreign brands, because there is also access to them via different platforms.
The article was originally published on FashionUnited.de. Edited and translated by Simone Preuss.