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Carven's Struggle: Store Closures, Discounts, and a Fight for Survival

AInvestThursday, Aug 29, 2024 3:00 pm ET
4min read
Carven, the French women's fashion brand under Zhizhi, has been struggling six years after its acquisition. On August 29, a Beijing Business Today reporter discovered that Carven's store in the southern district of Taikoo Li Sanlitun, Beijing, has closed. Earlier this year, the store in Beijing SKP also shut down, leaving only one store in Beijing at Wangfu Central, while the store at Chengdu SKP was replaced by Zhizhi. Additionally, Carven has ceased its membership points system this year, and both new and old products are being sold at discounts. Industry insiders suggest that Carven, primarily targeting the European market, needs to regain its influence in its home market to grow in China. However, revitalizing Carven in the mature French fashion market poses a significant challenge, and scaling down the brand's size might be the only viable option.

Carven, nearly as old as Chanel, is closing stores and offering discounts. On August 29, a Beijing Business Today reporter found that the Carven store in the southern district of Taikoo Li Sanlitun, Beijing, had shut down. With ongoing adjustments in the Sanlitun business circle, several affordable luxury women’s fashion brands like Sandro, Maje, and Self-portrait have also withdrawn. But for Carven, this is not its only recent closure; the store in the basement of Beijing SPK closed earlier this year, and the store at Chengdu SKP was replaced by the company’s own Zhizhi.

Additionally, a consumer named Xiao Ai (pseudonym) posted screenshots on Xiaohongshu, showing that Carven notified members via SMS at the beginning of this year, stating, "Starting from January 30, 2024, Carven will stop the membership points system, and no points will be generated from both offline and online purchases." Xiao Ai told Beijing Business Today that she stopped buying from the brand after this, and her points were reset to zero.

The store manager at Carven Wangfu Central explained to the Beijing Business Today reporter that "the message about stopping the points system is part of the annual points reset policy." As for whether purchases can still earn points, the store manager said that products with less than a 10% discount cannot earn points. The reporter saw that most products in the store were on end-of-season sale with up to 30% off for 2024 models. The shop assistant mentioned that previous old models could have more discounts but were not displayed in the store and could be brought in if needed. Carven's Tmall flagship store customer service confirmed that the points system ended in July, and the online store has since canceled the points system.

Attempts to contact Carven’s parent company, Zhizhi Carven Group, for comment on the store closures were unsuccessful.

This French brand filed for bankruptcy in May 2018 and was placed under the custody of the Paris Commercial Court by its parent company to find a buyer. Due to a shortage of suppliers, Carven had to cancel orders worth millions of euros of its 2018 spring and summer collection. In 2017, Carven’s revenue fell to 21.5 million euros, with debts totaling 40 million euros. In October 2018, Shanghai Zhizhi Fashion Industry Group Co., Ltd. acquired the debt-ridden Carven for 4.2 million euros through its French subsidiary and restructured it in 2020 into Zhizhi Carven Group, with its headquarters in Paris.

Following the acquisition, Carven presented a more cautious and low-profile image. According to the acquisition plan, most of Carven's employees would remain with the company, but then-creative director Serge Ruffieux was excluded. On November 5, 2018, Ruffieux announced his departure on Instagram, leaving the brand’s design studio to take over creative duties. For several years, Zhizhi Carven Group struggled to find a suitable replacement, leaving Carven’s brand image direction uncertain.

It wasn't until February 2023 that the brand announced British designer Louise Trotter as the new creative director. Previously the creative director of another French fashion brand, Lacoste, Trotter's first collection for Carven was showcased at Paris Fashion Week in September 2023. The 2024 new collection was also designed by Trotter, featuring minimalist designs, according to Carven staff.

However, consumer feedback indicates that the new designer has not captivated the original fans. A search for Carven on Xiaohongshu reveals complaints about the new designs. A woman from Guangzhou, Wang (pseudonym), told the reporter, "This brand was once a paradise for 'petite' figures, but now the style has become very ordinary. The sales assistant recommended last year’s models with a 50% discount, but all the good styles were gone."

Regarding store expansion, Carven had planned to open 40 new stores in the Chinese market over two years post-acquisition. Though the official website does not disclose the exact number of stores, the actual situation shows limited growth, with only three high-end shopping center stores opening over two years. The CEO of Carven France noted that understanding the entire Chinese market positioning is crucial before expanding extensively like a showerhead. Currently, Carven's expansion pace in China has slowed, with only one store left in Beijing.

In France, Carven opened a 180-square-meter flagship store at 6 Champs-Élysées in 2021, the same address where founder Marie-Louise Carven established the fashion house in 1945. However, there have been no significant moves since then.

Over its history, Carven, a relatively small fashion brand, has undergone several upheavals. In 2008, French businessman Henri Sebaoun and a private equity fund acquired Carven, but quickly sold off its perfume business. In 2015, the 105-year-old Carven Madam passed away, leading to the brand halting its menswear line and being bought by Hong Kong luxury agent Bluebell Group, which stopped financial support and sought to sell it after noticing poor performance. This series of ownership changes have left Carven far behind its contemporaries like Chanel in the fashion industry.

Carven’s strategy failures, signaled by store closures and discounts, have significantly impacted its brand image, according to industry experts. The original concept of “affordable luxury” was fundamentally flawed, as balancing functionality and the aspirational value of luxury is challenging. The decline of affordable luxury brands and their inability to bear high rental costs akin to luxury brands was inevitable.

For overseas brands, success in the Chinese market hinges on their international image and supply chain strength. Despite the favorable conditions for foreign brands entering China, the competition and the necessity to understand and adapt to Chinese consumers and culture pose major challenges. Adopting a high-end approach, mimicking successful luxury brands, is likely the only viable strategy.

Carven’s challenges in reviving its influence in Europe and internationally compound its struggles in the Chinese market. The acquisition required long-term investment to yield results. Facing considerable pressure from numerous small and medium-sized enterprises in France, Carven’s negligible influence and continuity may also negatively impact the entire group’s performance. Reducing the brand’s scale might be the only feasible option.
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