Delphine believes that she can thrive in the French start-up scene by investing in web and mobile commerce platforms. Two thirds of the company’s sales are now online. She plans to expand into both the Belgium and Swiss markets in 2015, all being well.
“A lot of customers see the products online and then buy them in the showroom,” says Delphine, from her shop front off Rue Saint-Maur in the eastern side of the city. She has just begun an MBA at ESSEC Business School nearby in France. “The variety of the students is a real wealth and is as valuable as the classes taught,” she says.
The start-up, launched in 2012, sells Scandinavian inspired furniture to mostly local clientele. “My husband and I have always been passionate about home decoration,” Delphine says.
The business is small, with a product range of about 500, but the way in which it fuses tech, a bricks-and-mortar outlet and Delphine’s personal tastes illustrates how retailers are adapting to a changing consumer base and the onset of innovation.
“Digital is constantly changing so it's important to keep up with trends and new developments in both social media and e-tail,” says Bronwyn Lowenthal, founder of Lowie, a London-based vintage fashion house.
Many retailers find it difficult to target younger consumers, who have grown up on tablet devices and smartphones, and prefer to discover brands through social media rather than on a highstreet. This has opened the way for new upstarts to make their mark, such as Lyst, a personalized fashion marketplace, and online fashion retailer Farfetch, both fast-growing groups.
While pure tech companies prefer to set-up in Silicon Valley, blended retailers are often based in Europe. They are also often products of business schools, which offer the advantage of providing angel investment and start-up mentoring.
“Oxford and other similar universities are building ecosystems with a long-term sustainability approach,” says Maria Nikolou, senior program manager at Oxford’s entrepreneurship centre, part of Saïd Business School. “These communities of founders and supporters take time to mature, and many of the important pillars are now in place.”
Sentier, Paris’ historic garment district, and Saint-Georges, home to the Moulin Rouge burlesque palace, has seen a blossoming of tech start-ups that are creating a useful network for entrepreneurs. Such clusters help entrepreneurs like Delphine, whose city base is seen as a hub for design and fashion.
“Our clients are mostly Parisian,” she says. “They like our products because they have a unique design, small prices and are perfectly designed for smaller interiors.”
Other hubs of retail start-ups which rely on e-commerce platforms to drive sales growth are popping up in Milan and New York City as well as in London, the UK’s capital.
“Retail start-ups clearly have a central role to play in growing the UK’s creative output,” says James Pattison, CEO of Startup Direct, a London-based delivery partner of the UK government’s small business support initiative.
Investment is helping to foster the city’s creative corners. Balderton Capital, a London-based venture capital firm, has invested nearly $700 million in fashion start-ups in the past ten years. The fund has pumped sizeable investments into online-focused retail groups such as Girl Meets Dress and Secret Sales.
Retail entrepreneurs in the capital are borrowing more in start-up loans than any other sector, accounting for 35% of seed funding invested in 2014 by Startup Direct, according to the organization.
This is critical for MBAs because a lack of finance will often hold back promising business ideas from bearing fruit.
“The largest segment of applicants for funding from the SBS Seed Fund has come from students within the business school,” says Maria at Oxford, about 40% of the 75 applications received in 2013.
According to Crunchbase, a data provider of start-up activity, about 50 fashion start-ups have been founded in London in the past five years.
Retail upstarts are helping to expand entrepreneurial clusters at local business schools such as City University’s Cass Business School, London Business School and Imperial College Business School.
Bronwyn, who is studying on Cass' executive MBA program, hopes to use management training to continue growing her small fashion empire.
“As part of our marketing modules there was some information taught about retail,” she says, adding that she will pursue the sector as her main EMBA project in 2015.
Lowie sells ethical women’s fashion and accessories – specializing in winter hand-knits – from a store in southeast London but it also operates on an e-commerce platform.
About 50% of sales are online, Bronwyn says, but she expects to increase website sales five-fold during the upcoming crucial Christmas trading period. She is also utilizing a click and collect portal, StreetHub, and plans to organize yoga classes to up in-store interest.
“Customers still love highstreet shopping as a leisure activity so I don't think the high street will ever die,” she adds. “[But] shops need to provide an ‘experience’ that makes customers come back for more.”
Around £731 million is now spent online each week in the UK, an increase of 10% compared with 2013, according to data compiled by the Office for National Statistics in September 2014.
It is now easier than ever before for entrepreneurs to market and sell directly to their target customers and remain in control of the selling experience.
Chloe Hoole, founder of ethical babywear brand Darlo, knows that better than most. She has used two Startup Direct loans totalling £7,500 to launch the company, which, through an online sales channel set-up in November, helps disadvantaged children in developing countries.
She launched Darlo after a trip to India and South America in 2013. Each product sold in the UK provides a week’s worth of meals for a child in India. “I was overwhelmed by the lack of support structures in various developing countries,” says Chloe, whose living room is piled high with product boxes, labels, packing, tissue paper and string from her first shipment of clothes from overseas. “I had always dreamt of starting a fashion retail business,” she says.
Chloe is one of the London-based founders that James, CEO of Startup Direct, believes are driving a “hotbed of creative ideas”.
“The online shopping revolution has come hand in hand with growing demand for unique, niche products and our entrepreneurs are grabbing the bull by the horns,” he says.
Retail entrepreneurs are receiving more investment but for Delphine in Paris business school is her key to unlocking the funds needed to expand in Europe.
“ESSEC Business School regularly organizes events for successful alumni who are entrepreneurs to come to speak with current students,” she says. “For me, I now understand how they created their networks, and how they found investors or loans.”
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