Doing Well in the Recession à la française

“Make no mistake,” as Grégoire Biseau writes for the French left-leaning newspaper Libération, “the crisis continues to wreak devastation.” He cites only figures for France, but they still do not make for very reassuring reading: bankruptcies, for example, are up 21.3% in the first quarter of 2009 (presumably year-on-year), and profitability for non-financial firms is at its lowest level since 1985.

The question naturally arises: Surely there must be companies, somewhere, which are still doing well for themselves despite the tough times. Who are they? Perhaps more importantly – because of the clues that may be extractable for the rest of us – how are they managing to pull that off? As chief editor and team leader, Biseau enlists his colleagues at Libération to put together an article-collection addressing these questions, under the master-title of Seven aspects of getting around the crisis.

Libération, to be sure, is hardly a business newspaper (it’s rather general-interest), and France does have its own set of magazines devoted to business affairs, although you (like me) may never have heard of most of them: Le Nouvel Economiste or Challenges, for example. Still, Biseau’s team does manage produce interesting analyses of some approaches to achieving business success even within a credit crisis. As one would expect, there are a couple traces here of left-wing attitudes which one can hardly overlook, yet, as we’ll soon see, some of his writers are also willing to hold their noses and describe some methods for earning good money in tough times straight out of the hard-bitten capitalist school.

As you would expect from the title, this article is formed around a master-list of seven ideas or business approaches, each demonstrated by the brief description of a typical company that exemplifies it. The web-structure reflects this as well: that title-page is but the home-page, providing Biseau’s brief introduction, that then links over there on the right, under sur le sujet, to the separate pages. Let me give a summary of their content; here’s how to be a business-winner against a bad economic tide:

  • Simply innovate: The French video-game maker Ubisoft has so far managed to avoid the sales-slowdown that has afflicted most of its competitors by adopting a number of against-the-grain policies (e.g. targeting “casual” video-game players).
  • Profit from the dark side (what some would call “upon being issued with lemons, proceeding to make lemonade”): More and more women are out of work? Why that’s great! That just means more door-to-door saleswoman candidates for the French sexy-undergarment firm Charlott’lingerie.
  • The low-cost approach: RyanAir. Of course. What more do you need to know, especially if you live anywhere in Europe and like to fly cheaply?
  • Be on the cutting-edge (I know: this seems very similar to point #1 above, “Innovate”): Here Libération journalist Laure Noualhat discusses the French mattress- and sheets-seller Ardelaine. This firm is a bit difficult even just to sum up within a bullet-point list; let me come back to it below.
  • Go green (of course!): The French firm Sunnco – despite exhibiting an appalling lack of imagination when it came to coming up with the company name – is doing good business these days, and they don’t even make the photo-voltaic solar panels themselves: they simply buy them and then install them for customers (mainly large business or public-property installations)!
  • Tie up your customers in long-term contracts, so that no matter what (other than by declaring bankruptcy) they have to keep paying you: These days, at least within Western Civilization, a mobile telephone is a necessity, and the French telecoms firm Orange is glad to provide network service for them, usually under the condition that you contract with them to do so over at least a year.
  • And finally, pay even more attention to product-quality: This is claimed by journalist Pierre-Henri Allain to be the approach employed by Armor Lux, an interesting firm based in Brittany which makes sportswear and uniforms.

This is a fairly comprehensive list, one must admit, because it does include some approaches you can tell that the Libération writers are not so thrilled about. That clearly includes the “tie them down with a subscription” strategy exemplified by Orange – although the writer of that article (identified only as “C.Ma.”) hints broadly that that company was picked over all the other mobile-telephone providers and other public utilities because of an additional bit of daring, and exclusive, innovation, namely offering the iPhone in France, which has gained Orange a “stratospheric return-on-investment” (although French courts have recently ruled against the legality of this iPhone monopoly). Catherine Maussion, author of the “low-cost” article on RyanAir, also clearly (if not explicitly) makes known her distaste for that particular approach by taking the obvious route: she includes at the end an enumeration of what are to many the silly additional charges RyanAir tries to tack on to its base low fairs, e.g. plus €5 for payment by credit card, plus €3 for priority boarding – as well as the idea that RyanAir chief Michael O’Leary also floated recently (no one is sure whether he is really serious) of also charging for use of the on-board toilets!

The Cooperative Approach

There was probably never any real chance that, in a country that still tries to disparage the entire concept of “fast food” (even as, of course, its citizens continue to flock to its various emporia), there could be much fondness for any “low cost” approach to business anyway. Rather, one can tell that it is precisely a company like Ardelaine that embodies the preferred French antidote to the bad economic times, at least as expressed in Libération. In the first place, it’s a “Scop,” which is the French abbreviation for a co-op: its employees own it, and they split up profits among themselves each year after figuring out how many there have been (if any). No stock-market listing; no bonuses; no stock options. Instead, what you have is a firm specialized in producing and selling clothes, mattresses, sheets, and the like – all made out of wool, with no chemical treatment involved.

What’s more, Ardelaine has always been like this ever since its founding in 1982, i.e. including through the go-go years, so that it has taken these economic troubles to reveal the fundamental soundness of its sober approach to business. Why, the collective leadership even rejected a few years ago a contract from Japan which potentially could have raised the company’s turnover by a full 25%, to €2 million yearly, precisely because they did not want to make themselves vulnerable to the whims of a single customer that way. Moderate, sensible growth above all! It’s easy to see why this particular company would set the pulses racing of journalists from a newspaper like Libération.

Oooh-la-la Marketing

On the other hand, Ardelaine’s tale did not really have that sort of effect on this blogger. I was much more interested in the company put forth as representative of the “make lemonade when life gives you lemons” approach, namely Charlott’lingerie. Just imagine: the French have taken the Fuller brush man door-to-door sales approach and have adapted it to pushing feminine undies! Oooh-la-la! Yes, it’s all very seductive, but it also turns out that the underlying business principle is sound, especially lately. That’s because, as Julia Pascual’s article relates, Charlott’lingerie has been besieged in recent months by women (5,000 of them since the beginning of the year) seeking to become door-to-door lingerie sales-people, attracted by the sales commissions to be earned as well as the flexibility such employment affords them to spend as much or as little time engaged in it as they choose – e.g. as one way to supplement a regular day-job salary that just won’t cover expenses sufficiently anymore. The company has been able to grow its sales-force by some 30% over that period, while at the same time the very concept of purchasing something sold door-to-door has gained considerable ground in France, mainly because of the cheaper prices (no bricks-and-mortar overhead, etc.) that that makes possible. In view of the fact that all its sales-people are paid only on commission, more sellers in a far-from-saturated market must mean more potential customers tracked down and pitched to, and so basically more sales. (There has also been a slight drop in the average-sale-per-saleswoman, but that has been more than offset by the increased combined volume of product moved by the growing sales-force.)

So you can be sure that Charlott’lingerie is one company which will tend (perversely) to hope that these bad times continue to last for some time, all while it expects to surpass in 2009 a yearly total of 2 million pieces sold, with an average margin of 20%. But again, these are not the sorts of numbers from Mlle. Pascual’s article that catch my own eye; I’m rather interested in the statistic that a full 99% of the Charlott’lingerie sales-force is female! If it’s such a good business idea for hard times – and, indeed, it does seem to be – then the next obvious step would seem to be to tap into the French male cohort to expand that sales-force. I really don’t see why that has not happened already; it must be one of those mysterious wrinkles of French culture why the fringe benefits associated with this sort of money-making for male salesmen aren’t readily apparent. No, silly, I don’t mean here the chance they would have first to try on the lingerie themselves at home in some sort of personal quality-control check – I’m rather talking about how presumably it’s the women customers who are buying this sort of product for the men in their lives in the first place, and who therefore might often be interested in donning the merchandise themselves for a try-before-you-buy evaluation before the eyes of a suitable male stand-in . . .

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