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The news of the closure of all 56 stores in Germany has shaken the clothing world like a veritable fashion tsunami. In addition to the shops, the company's headquarters in Ratingen will also be shut down. Due to insolvency, Esprit will disappear from Germany for the time being. Around 1,300 employees will lose their jobs. With annual sales of several billion euros and locations in 40 countries, Esprit is a true giant in the fashion business and has helped shape German fashion tastes for decades. Unfortunately, Esprit is not the first fashion giant to run into economic difficulties. Peek & Cloppenburg, Gerry Weber, Hallhuber, Sinn, Wormland – the list of fashion bankruptcies goes on.
Why is the clothing business no longer profitable for many retailers in Germany? The reasons are certainly complex. Fashion shops are mostly located in city centres, often in pedestrian zones. Of course, rents there are extremely high. In the past, this was not a problem, but now it is. Of course, shops also have to shoulder high energy costs. In addition, online retail has become serious competition. Esprit also sells online, so it is essentially competing with itself. The argument that you cannot try on clothes before ordering them online is now negated by the fact that many customers simply order several sizes and return the ones that do not fit. More than half of all items purchased online in Germany are now returned. It is no longer necessary to visit a shop.
However, Esprit is only closing its stores in Germany. That should make you sit up and take notice! Why only in Germany? Are Germans less fashion-conscious than elsewhere in the world these days? Or are their wardrobes already bursting at the seams? Money is certainly not as plentiful as it used to be. Fashion has become a luxury.
Esprit was founded in San Francisco in 1968. The founding couple, Susie and Douglas Tompkins, once drove through California in a station wagon selling clothes they had sewn themselves. Then everything happened very quickly. The company expanded to Hong Kong in 1971 and to Germany in 1976. Initially, however, it mainly sold sportswear through wholesalers in this country. The first company-owned store opened in Cologne in 1986. By the end of 2019, Esprit had 220 of its own stores worldwide and 4,500 additional sales locations around the globe. Then came Corona, and with it, a change in shopping habits. In 2020, Esprit had already applied for protective shield proceedings for several German subsidiaries. At that time, around 50 unprofitable stores in Germany had already been closed.
Like most fashion labels, Esprit manufactures primarily in Asia – in China, Bangladesh, Vietnam and India. It can therefore be assumed that the new supply chain law has presented Esprit with major challenges. Despite its departure from Germany, once Esprit's most important market, the brand remains intact. It now belongs to a financial investor. Online sales are to continue, and the shops in Germany are to remain open until the end of the year. So there may still be some bargains to be had in the clearance sale.
Further links:
https://www.zeit.de/wirtschaft/unternehmen/2024-08/modekonzern-esprit-schliessung-geschaefte
