French Retail Clothing Feeling the Pinch

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Similarly to Ireland, the main-street clothes retail outlets have been suffering in France, with over 4,500 business failures in the first quarter of 2014

The National Federation of Clothing (FNH), an umbrella organisation representing independent shops in the retail clothing sector, is sounding the alarm bells. More than 4,500 businesses in this sector have gone to the wall in the first quarter of 2014 because of poor household consumption figures.

“Without counting the second quarter, we have seen a 30% rise in business closures of TPE (très petites entreprises; the smallest of the SMEs) operations with one or two employees,” says Bernard Morvan, president of the FNH.

He is expecting for the final toll in 2014 to be even worse than that of 2013, which was distinguished by the disappearance of some 13,000 companies and the loss of 31,000 jobs in the sector.

“While we have had 8,500 new entries to the sector last year, which proves that our business is still an attractive one for entrepreneurs, we’re finding that it’s increasingly difficult to keep going in this business.” Figures show that clothing retailers registered an overall drop of 4% in sales this year.

Today, as in many other branches of the economy, the number one problem of the smallest SMEs involved in clothing retail is that of cash flow. The sector will this year be registering its seventh successive year of falling consumption levels from households in France. The FNH, which launched its “Marshall Plan” last February – consisting of 58 steps designed to revitalise the city-centre independent retail sector – now wants to help its members to pursue their projects and investments.

The organisation signed an agreement yesterday with the recently-formed state-aid bank BPI (Banque Publique d’Investissement) to launch a package of rescue offers (christened “Mod’Envol”, ‘Fashion-take-off’). Bernard Morvan hopes to inject more than €20 million in the prêt-à-porter and lingerie sectors.

“The idea is to allow our members to take advantage of affordable loans, at a rate of 5% up to loan values of €75,000 and payable over seven years, for modernisation plans of their businesses. They can also use the facility to open another outlet if they already own one.” The FNH initiative is part of an overall policy of revitalising city and town centres.

“If we do nothing, I fear that our city centres will have disappeared in another five years,” predicts Mr Morvan.

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