Continental Shift

Groupe Zannier USA General Manager, Salvador Gamito, chats about the rapidly changing childrenswear scene in Europe, Asia and North America.

By Jennifer Cattaui.

There’s no way Majorca-born Salvador Gamito, general manager of Groupe Zannier USA, could forget his first day on the job 12 years ago. French label IKKS had hired him as a buyer, but when he arrived, he learned that family-owned childrenswear powerhouse Groupe Zannier had acquired the brand that day, along with children’s labels Catimini and Jean Bourget. For Gamito, opportunities for growth and expansion became exponential, as IKKS and all of the brands under the Zannier umbrella could take advantage of the group efficiencies and resources that the childrenswear aggregate had amassed since it first launched in 1962.

Groupe Zannier began as a small hosiery workshop run by Roger Zannier and his sister, Josette, in the Loire region of France. First producing and distributing women’s and children’s goods regionally, they soon decided to focus on the children’s market. Over the years, they expanded by creating their own line Z (pronounced “Zed”) and by strategically acquiring high-quality French brands and licenses like IKKS. Less than two years after he began purchasing for IKKS, Gamito was tapped to travel east to open the first buying office in China. He spent eight years building and managing a 150-person production team in Shanghai, and two years ago, Gamito relocated again to the United States to direct the business development of the company in America.

With his worldly view and business background, the affable Gamito is leading the charge to increase the visibility of this familiar European company in the crowded American children’s marketplace. Relaxed yet direct, Gamito’s honesty about the business is disarming, and his studied assessment and drive to grow suggests that it’s only a matter of time before the company’s brands become synonymous with a global childhood.

Group Zannier produces both its own brands and licensed brands for large luxury fashion houses. Why did you go into the licensing business? What makes Groupe Zannier unique for a luxury company looking to produce a kids’ line?
Since 2000, more and more adult brands have wanted to go into the kids’ market. It reflects the current tastes and brand-focus in childrenswear and, of course, it’s profitable. These days, mothers and fathers want their kids to wear the same style of clothes as they do. The idea is, ‘If I like Paul Smith, my daughter or son would like Paul Smith.’ It’s also a part of this brand-first globalization. It applies not only to countries but also to different markets: women’s, men’s, children’s and home.

Usually companies first try to produce their own children’s collections, but for one reason or another it doesn’t work, or they realize it isn’t going to be their mainstay, so they come to us. We have been specializing in childrenswear for more than 50 years. Our policy is that for each license or brand that we produce, we dedicate a specific team to the brand. For instance, Jean Paul Gaultier (Junior Gaultier), Kenzo and Levi’s (which we have the license to distribute in Europe) each has its own designer team—because each brand has its own DNA. Each team has to adapt the brand to the children’s business.

When we create the children’s collections, we don’t just copy adult fashion. Often, the trends seen in men’s and women’s are shown a year later in childrenswear. Even with Paul Smith in London and Jean Paul Gaultier in France, the brands’ designers show us what they did in the adult market in the past and we adjust it for children.

How do you compare the American luxury childrenswear market to that in Europe?
First, I’ll tell you what really surprised me—it’s incredible here in the U.S. There are so many brands on the market. I was shocked going to ENK and seeing how much choice is out there. In Europe, there aren’t nearly as many brands. Here, there is a lot of competition.

The other thing I’ve noticed is that Americans are less risky with their kids’ fashion than Europeans. It seems to me that here people are more conservative and are generally afraid to stand out from the crowd. In Europe, this is less taboo. For instance, in Europe, we don’t mind the color pink for boys. Europeans don’t really think about it.

With our brands at Groupe Zannier, we have tried to create global collections that work in Africa, Asia, America and Europe. Sometimes there are certain pieces that don’t work everywhere—and we find that there are trends and segments of the collections that work better in different places. But today, fashion is becoming more and more global.

You spent eight years building a buying office and production in China. Why produce in China? What was that like? How did you see that market develop and grow?
I arrived with my luggage and my family in 2001. I was the first person in the company to develop buying offices in Shanghai and oversaw 150 workers in production.

It’s difficult in the textile business. The cost of a shirt is so low that you really have to produce where the labor cost is low. This is how you have to survive. When Groupe Zannier started in 1962, it produced everything in France. Now we don’t produce in France for a number of reasons: First, the cost is too high for textiles. Also, the country’s workers don’t want to be behind machines—they’d rather work in a bank or do something else. Lastly, we have to set up production where we can find a factory. It just isn’t cost-effective to produce in France anymore.

Groupe Zannier has buying offices around the world, as we produce clothing in India, Morocco, Ukraine, Madagascar, Romania and Portugal, among others. We currently make about 20 percent of our goods in China. When choosing where we want to produce a line, we consider the specialty of that region’s manufacturers and the type of garments we are producing—different countries have different niches. You don’t ask a team in India to produce jackets—they probably don’t have the expertise because it’s too hot—but they make beautiful dresses. But China can do everything.

I miss Shanghai. I had a chance to see how fast China grew. In 2001, Shanghai was almost an undeveloped city. When I left, it was like New York City. You can find all the same things as you can in New York, every single brand. If a brand isn’t there, it’s missing the boat.

China is a growing market. Today it’s the biggest growth that we have. All of our friends, like LVMH (some of our licensed brands stem from the fashion conglomerate), are experiencing the same thing. And while the Asian market is huge, there is less growth right now in Europe. Of course, Asia is still a risky market, as everything goes so fast and you can lose control. You need to be there.

In China, they are demanding more product made outside of their country: That’s what they want to buy. And if you offer a gift in China, make sure it’s not made in China!

How do you see Groupe Zannier growing its business in the U.S.? What’s coming down the pipeline?
My job is to develop the business, market our brands to multi-brand boutiques and find other channels of growth. These boutiques represent a large percentage—about 85 percent—of our sales turnover. In the last few years, the multi-brand network (independent stores) has not been as profitable. Independent boutiques and smaller stores are suffering for two reasons: One, of course, is external to them—we are all affected by the economy. Secondly, many didn’t change their businesses along the way as market conditions changed, customers changed and the retail business changed. And right now, there are huge chains that are professional and have great customer service, and our independent boutiques have to compete with them.

These boutiques continue to be very important to us, but now we are also trying to develop more business with the department stores. We had worked with [department stores] in the past and then as the economy faltered, they did more of their own production through private labels and the like. Now we have been increasing this business again.

The challenge for most of us is to continue surviving where we are, while developing new markets. If you focus only on the market you have, you won’t make it. You have to go outside with the same business or develop another aspect of your business—whether it’s in the men’s, women’s or home markets. At the beginning of 2000, we decided to diversify. Besides being a leader in kids, we have five brands for adults, including IKKS, Chipie and One Step.

And today, there is more and more business being done online. Groupe Zannier has started selling direct to customers in Europe, and we are going to grow in this way in the U.S., as well. It’s not done yet, but it’s a strategy that we want to do—we may do some brand-by-brand and some within multi-brand e-shops.

Another way we plan to grow is to develop our own distribution streams—by building our own boutiques or creating a franchise system of boutiques. In the U.S., we are already doing this with Catimini. There is Catimini on Madison and there are franchises in California, Miami and Washington, DC.

How have you seen buyers change over the years?
Now buyers are tougher than before. They request better terms and prices on goods. They have to because the business is not easy—it’s more competitive and they need to survive. They expect better customer service, and you have to be more professional.

Before it was so easy. And when it’s easy you pay less attention. That’s not the case anymore. And it’s probably shifted for good. People aren’t going back and becoming lax, even if the economy improves. And that’s a positive thing. Due to the strained economy, companies work in a better way—they’re more responsive and efficient.

What’s your outlook on the business?
Clothes won’t disappear. People won’t walk around naked. We will continue to make changes to our business and grow online and through stores. And maybe 10 years from now, we will catch wind of a new opportunity and see where that takes us. This is not the first economic challenge and not the last. But we survived and survived well. In fact, 2010 was our most profitable year to date. We are more professional than we were in the past and we have found new ways to increase our sales, regardless of market conditions.