Iestyn ROBERTS, Chief Executive - Freeport
Editor in chief "La Tribune Grande Conso"
Iestyn Roberts, Chief Executive of Freeport (3 centres in Sweden, in the Czech Republic and Lisbon in Portugal), is going to give us his account. Freeport has two projects in France, at Roppenheim with a surface area of 23000 square metres (which is at the planning permission stage) and another at Cannet des Maures in the Var. Is there a single business model to define the profession? What is Freeport’s vision, and more particularly, your own?
I will answer with a retailer’s point of view. We can distinguish four categories of model. A first one concerns High fashion business. This sector is attached to season production based on marked time projects. A second is based on price segmentation. It’s a broader conception of supplying. A third is the franchising business. People don’t deal directly with major brands. Finally, the specialists dealing with only one brand.
The High fashion business
The first category doesn’t take in account stock in its cash. Their business is based on project management and creation of genuine original products. In this case, the margins are rarely high and the firm, because it has no important stock, doesn’t need a particular margin structure of its prices.
Slightly different but very similar the price segmentation structures often offer very significant businesses, whose conception of product and supplying goes beyond what is made by such produce stores. Regarding the whole supply chain, if you are running a national sports business, you are such a big part of your supplier you probably have more production committed post to it. Your commitment goes a long way beyond what is physically in area. That whole costs you money. When your staff knows about you need to clear, it actually includes: production’s lost, raw fabric, etc. Their integration in whole, the production and their motivation maximize your profit in the whole supply chain. Sports business works for a total profitability management.
The franchising business
Concerning franchising, there are not many countries where the model occurs. Indirect business relationship can be pointed as a challenge to make sure they can supply good prices. The manager has not only relationships with local business but with brands headquarters too.
The specialists
Finally we find the specialists. They often buy their own outlets and sell only one brand or two. They create a variable stock on a specific brand. Sometimes these stores are so successful they lead the operation in their area.
As you can see, profit search can be very different. They have different margin approaches in producing some cash. For instance the outlet stores make profit thanks to their specialization. Others make profit throughout their supply chain.
The specialists base their profit on their specific relationship with their supply chain dealing directly with the brands they trade.
Olivier DAUVERS
What is the proportion of each of the categories in relation to the market as a whole?
Iestyn ROBERTS
In this analysis obviously many businesses are not completely one thing or another. They can cross two categories. The first category represents 40% of the market, the other three categories 60% in a certain global vision of the market. But you have to take in account that it depends on the local market implementation.
Olivier DAUVERS
A question on a different topic, but topical, nevertheless! Freeport has recently been bought by a fund. What is a fund looking for in this profession, is it security and regular returns, which are often an investment driver, or could it be about asset appreciation?
Iestyn ROBERTS
In a way the question has already been answered by Henrik. Many sectors of the retail market are quite mature, although this isn’t a mature market across Europe.
Olivier DAUVERS
So Freeport (and more generally your profession) is not yet perceived as an asset in terms of returns but an asset for growth?
Iestyn ROBERTS
The growth is a very important part of our story. As this isn’t yet a mature market, the professionalism that we bring offers great opportunities.
