Will relocation and digitalisation help in the renaissance of France’s fashion retail sector?

Which industries, with the possible exception of emerging ones, bring only good news? Once thriving, the retail sector in the French textile and clothing industry is now facing a host of challenges. Competition from low-cost countries, the rise of e-commerce and changes in consumer habits have undermined what was once a dynamic sector. Far from being seen as beneficial in revitalising the industry, Europe and its regulations are widely castigated in the media.

However, they may well be enabling France’s fashion industry the ability to regain the position it had previously ceded to other competitors. So the question arises: do the reforms reflect changes in the industry, or are they the driving force behind them?

The textile industry in France: Between decline and over-consumption

What do the figures say? Every year, more than 100 billion items of clothing are sold worldwide, according to the French Environment and Energy Management Agency (ADEME). In France, the clothing market has grown significantly over the last decade, with an increase of one billion garments sold annually, reaching 3.3 billion items, or more than 48 items per inhabitant, as found by the Refashion eco-organisation. However, this rise in sales has not led to an increase in recruitment in the textile and clothing industry in France.

On the contrary, the number of people employed in this sector continues to fall. In 2021, around 132,000 people were employed in the French textile industry, a figure that is steadily falling, mainly due to the relocation of production to countries with lower labour costs, according to Le Monde. This is reflected in the mass closure of shops. By 2022, almost 1,500 stores will have ceased trading. In 2023, the Alliance du Commerce recorded a loss of more than 4,000 jobs in the clothing and footwear retail trade, bringing the total to 37,000 job losses in 10 years. This haemorrhage has accelerated over the past two years: in 2023, 1,130 fashion retailers filed for bankruptcy protection, an increase of 51.3 percent compared to 2022, as seen in data from Altares.

The employment market in French retail industry: The state of play

Let's take a closer look at what's happening on the job market. The retail industry in France, marked by the era of fast fashion and e-commerce, is undergoing major upheaval in terms of candidate profiles and working conditions, resulting in high staff turnover. Since the beginning of the year, recruitment in fashion and luxury retail has increased, especially for front office positions, reveals the results of the Hays France 2024 Remuneration Survey. Staff turnover is particularly high for sales advisors and department managers.

In the back office, stockists and cashiers are also in high demand. However, shop manager positions, which are less subject to turnover, are seeing an increase in demand for intermediate positions such as assistant manager or team leader. Shops offering the most attractive remuneration packages have lower-than-average turnover. In retail, staff turnover is 60 percent, well above the average of 15 percent for all sectors combined, according to the French Directorate for Research, Studies and Statistics. Although employees represent a significant cost for the company, they are nonetheless essential to the quality of customer relations and customer loyalty, making low staff turnover a crucial competitive advantage.

Clothing production and sales in France

Despite growing demand for clothing, cost pressures and international competition have hit the sector hard, leading to significant job losses and the closure of many outlets. The majority of textiles sold in France are now imported, mainly from Asia, which exported over 11 billion euros worth of clothing to France in 2020, according to the French newspaper Le Monde. As well as being made abroad, the clothes sold in France often come from foreign companies.

French retailers such as Camaïeu, Kookaï, Kaporal and Naf Naf have suffered from competition from H&M, Zara and, more recently, Shein's ultra-fast fashion. Kiabi is the exception, remaining competitive thanks to its low prices, ranking among the top three clothing brands in France alongside Zara and H&M. In 2021, Kiabi was the most popular clothing brand in France, according to Le Monde, with more than 4.5 million customers, and ranked third among men, behind Célio and Jules.

The French market has also lost ground in online sales, however. According to the annual EY-Parthénon study, "What are the French people's favourite retailers in 2024?", the Lithuanian second-hand platform Vinted is now the French favourite for adult fashion, followed by Germany's Zalando.

More resilient supply chains: Driving industrial relocation

There are signs that things may be changing. Companies are relocating their production to France, for example. Why are they doing this? Not least because European standards and legislation are encouraging them to do so. This trend, which has been underway in Europe and the US since the Covid pandemic, is set to accelerate, according to a study by Capgemini. French companies are planning reindustrialisation investments totalling 340 billion dollars between 2023 and 2026.

As Les Echos points out, this is not simply a reaction to supply difficulties during the pandemic. The industrial relocation movement is a "real groundswell" in all the countries and sectors studied. The main reason given for de-globalisation in this survey of 1,300 senior executives from industrial groups with annual sales of over one billion dollars was the quest for greater supply chain resilience. After the shortages caused by the health crisis, 70 percent of manufacturers cited the control and security of their supply chain (value chain) as a priority. Geopolitical tensions, mentioned by 63 percent of respondents, came next. Sustainability and the reduction of CO2 emissions, including indirect emissions, are motivations for 55 percent of manufacturers. Finally, 49 percent of executives are influenced by financial incentives and public policies for reindustrialisation in their countries.

But what exactly is going to happen?

What the Samsung Electronics France Smart Retail 2023 Barometer, produced with Infopro Études, shows is that the physical shop remains the preferred sales channel for the French. This trend is likely to be fuelled by better, closer sourcing, relocated in France or Europe. Despite the boom in online sales, shops still have a significant competitive advantage: they are a direct point of contact with brands, and they give consumers the chance to see products for themselves. Consumers appreciate the choice of making a purchase online or in a shop, but they have an affinity with retailers offering a customer experience.

This study, carried out in February 2023 among 268 retail decision-makers and 1,000 representative consumers, reveals that 75 percent of shopping journeys are completed in-store. This figure, which has remained stable over time (-2 percent) even during the Covid period, contradicts the generally accepted idea that the French prefer to browse in-store before buying online, a practice that is marginal (less than 4 percent of cases). Although the study covers all retail sectors, the data also applies to the fashion and clothing sector, providing valuable insight into the buying behaviour and strategies of decision-makers.

Digital in-store: An asset for the customer experience, but still far from mature

But what will drive consumers to enter and stay in a shop in 2024? According to the media outlet Points de Vente, it will be the presence of in-store digital devices. And the figures are pretty convincing: digital devices attract more than a third of consumers (36 percent) and 53 percent of them find them relevant for saving time. However, as Jérémy Taghon, director of consumer electronics B2B at Samsung Electronics France, points out, digital must enhance the customer experience without replacing human interaction. In fact, more than half of French people (56 percent) are reluctant to visit a stand-alone shop, and only 34 percent say they are prepared to try the experiment.

Retailers do see significant benefits from digital for the customer experience, including improved customer loyalty (65 percent, +21 percent since 2017), brand image (64 percent, +20 percent since 2017), and promotional effectiveness (56 percent, +22 percent since 2017). Despite 89 percent being convinced of the crucial role of digital for their development, only 27 percent of retailers consider their digital maturity to be satisfactory, down 9 points compared to 2021. Financial cost remains the main obstacle to rapid digitisation (55 percent of retailers), but demand for a digitised customer journey is growing as consumer expectations evolve.

The retail textile sector in France, once prosperous but now weakened by international competition and the rise of e-commerce, could be enjoying a renaissance thanks to relocation efforts and the integration of digital technology. French companies are investing massively to strengthen the resilience of their supply chains and meet new consumer expectations. Although digital maturity is still difficult to achieve, not least because of financial constraints, the benefits we are seeing point to a future where physical and digital retail coexist to deliver an enriched customer experience. The growing demand for a digitised customer journey offers promising prospects for the future of textile retailing in France.