Taking over a continent isn’t easy, but with North America already firmly in their grasp, sisters Bonnie and Marla Schaefer have taken on the challenge of conquering Europe.
The sisters share chairman and CEO duties at Pembroke Pines-based Claire’s Stores Inc., which sells costume jewelry and accessories targeted at teens and young adults. To achieve the same level of success in Europe as they have in North America, the sisters are overcoming a number of challenges, including finding the right locations, getting the right products and hiring the best people.
“Right now in the U.S., we’re everywhere we want to be,” says Bonnie Schaefer. “As new developments open, new malls, new lifestyle centers, as new opportunities come up, we grab them. It’s not like it used to be when we were opening stores fast and furiously. Things have slowed down quite a bit in that respect. Europe is like the next frontier. It’s open for the taking. It’s exciting.”
At the end of October, 3,048 stores carried the Claire’s banner, including 1,688 in North America and 750 in Europe. With the North American market saturated, the European market is appealing. It will serve as a growth engine for the company, which posted fiscal 2006 revenue of $1.37 billion and increased its net income from nearly $65 million at the start of 2001 to more than $143 million at the start of 2005.
The sisters are looking to add to their success by building their European expansion with a combination of acquisitions and organic growth.
Creating a footprint
Claire’s established a beachhead in Europe with a blitz of acquisitions that netted a significant number of stores in a short time.
The company entered the United Kingdom in 1996 with the purchase of the 48-store chain Bow Bangles, one of three acquisitions it made that year. Austria, Switzerland and Germany joined the Claire’s family in 1998 with the $13 million acquisition of 53-store chain Bijoux One.
“One of the biggest advantages of doing it through acquisition, you acquire 40 or 50 stores and overnight, you have your brand out there,” says Marla Schaefer. “When you do it yourself organically, it’s one store, then two stores … it takes a little longer to establish your brand.”
Two years later, the sisters introduced Claire’s to France with the acquisition of 42-store chain Cleopatre.
“We did the same thing we did with every other country,” Bonnie Schaefer says. “We acquired them and proceeded to retrofit. As the opportunity for remodel came up, we transplanted our prototype Claire’s store over there. So far, we have found it to be very, very successful everywhere.”
The Schaefers change the acquired stores as soon as possible to the Claire’s name to keep the brand consistent, except with a location they don’t want to keep. In those cases, they let the store close under the acquired brand name so it doesn’t appear that a Claire’s store is going out of business.
“We decided if we’re truly going to be a global brand, we need to be consistent,” Bonnie Schaefer says. “Consistency is very important. We want every store to basically look the same. We want every customer to have the same experience, and we want to offer the same type of value and merchandise in every store around the world. To that end, we needed to call it Claire’s.
“Having all these different names was confusing. It seems to work now that we’re called Claire’s across the board.”
In places where an acquisition is not possible, Claire’s expands by opening its own stores, as it did in Spain and Holland.
Every year, Bonnie Schaefer attends a large real estate convention in Europe to stay current with the latest real estate trends so that the company can identify the best locations.
“We see what’s new in the form of malls, where other retailers are going and what’s really hot, what countries are really on fire,” she says. “We’ve wanted to go into Spain. As there was no acquisition, we decided to (open stores) ourselves.
“We stomped around Madrid. In three days, we looked at 35 locations. Out of 35 locations, we picked five. It was based on what I know we need. We need to be in areas that are very, very well traveled a lot of foot traffic because we’re not a destination, we’re an impulse type of shop.”
Foot traffic is key, but the Schaefers must consider all the factors that go into establishing a new store and what return they’ll get for their efforts.
“If a 15 percent return doesn’t work for us based on cost, construction, payroll, what have you, then we go back to the drawing board,” Bonnie Schaefer says. “So, even if somebody else is picking out the location and it is excellent, if it’s too expensive for our needs, we either have to rework it or walk away from it. But, for the most part, we can rework it and deal with it. If we can’t do 15 percent, we have no business being there anyway.”
Once the locations are open, the company adjusts the product offerings to fit the country
“We have historically kept the (merchandise) mix pretty much consistent with the United States with what we call just a little bit of a layer of the domestic buys indigenous to that country,” Bonnie Schaefer says.
The stock ratio is about 70 percent U.S. merchandise and 30 percent local, although that can be as low as 15 percent.
“We have found, for the most part, with cable TV and the Internet, where fashion used to begin in Europe and six months later translate to the States, it all seems to hit at once,” Bonnie Schaefer says. “The rock stars that are big in the United States are big over there, and vice versa. The trends seem to all be hitting at the same time in everything not just accessories and jewelry but also outerwear.”
Claire’s brand recognition and growing footprint have helped it attract a talented staff.
“If we were just starting out with a chain of stores, it probably would be a bigger problem because you don’t have your best practices, policies and procedures nailed down as well as you do when you’re mature and you’ve made mistakes,” says Marla Schaefer. “We know what we’re looking for. We hire exactly what we’re looking for, and we have certain standards that everybody in this company has to come up to. If they don’t, they can’t really be here.”
The challenge with any growth is finding enough talented people to not just work the registers and walk the floor but also to serve as managers.
“We have a culture that has started in the United States that we are translating overseas,” Bonnie Schaefer says. “We have brought new hires to the United States to train, and we have also exported some of our key people to Europe to live and, in the process, to train people.
“Our employees, especially our long-term employees, find that they have an opportunity to actually see the world kind of like joining the service, except it’s better. They get to see the world, they get to travel and they get to do something they enjoy, which is working. We only send our very best people over there. If we have an opening in another country, I can guarantee you we’re going to have a great pool to pick from.”
And once they have great employees, the Schaefers work hard at making their stores places where those workers want to stay.
“We try to make doing business fun,” Bonnie Schaefer says. “Somebody in our company put it very succinctly. ‘If you don’t like what you do, you have no business doing it.’ For the most part, the kids that we hire in these stores love what they do. They love coming to work. They love the new stuff and the excitement of it all. We make it worth their while.”
Much of the talent arrives by conventional methods, through networking and advertising. And the company has never had a problem finding qualified people.
“It’s almost, ‘If we build it, they will come,’” Bonnie Schaefer says.
Of course, once they arrive, they must learn how to do things the Claire’s way. Best practices are conveyed throughout the company in the various meetings, training sessions and at Claire’s Stores University, the organization’s Chicago-based training program.
“They’re trained in every aspect of store operations, visual loss prevention, human resources,” Bonnie Schaefer says. “Whatever they need to learn, they do learn.”
However, translating that to other cultures isn’t easy.
“Every country has its own unique set of laws,” Bonnie Schaefer says. “Each country has its own human resource person. They interface with our people in the United States, but we have to comply with (local) laws. French law is different than Spanish law, which is different than Swiss law.”
For example, when a person leaves a job in the United States, it is customary to give two weeks’ notice.
“In Switzerland, they have to give six months’ notice,” Bonnie Schaefer says. “In Spain, the stores close from noon to three o’clock. It varies from country to country, yet we’re able to adapt and work with everybody. When I first developed Puerto Rico, I was dumbfounded because they have 26 national holidays. We don’t have anywhere near that. In Europe, people can take four weeks at a time off; I was really struck by that.”
Whatever the differences, Claire’s adapts. In France, for example, the answer is more employees on the payroll, even if it is on a part-time basis, to ensure that the stores are adequately staffed.
That may affect profitability, and the company is aware of how labor and other costs affect existing stores and the launching of new operations. All of these costs are taken into account when preparing pro forma assumptions about how individual stores might perform. And while labor costs are higher in Europe, sales per square foot are much higher as well.
With a keen understanding of the nuances that make each country unique, a strategy to draw the best and the brightest employees to the fold, an understanding of the real estate requirements and a strategy for growth, Claire’s is prepared to take over Europe.
“I wish we could go everywhere. It’s just not possible to explode all over the globe all at once. If it were possible, I’d do it,” Bonnie Schaefer says. “We definitely don’t rest on our laurels. We go every place and anyplace we can, and we don’t stop. It’s always going to be a work in progress for us.
“When will I be comfortable? I really don’t know because I don’t think I could even begin to become comfortable until I had at least 3,000 stores in Europe. I can’t tell you how long that will take.”
HOW TO REACH: Claire’s Stores, www.clairestores.com or (954) 433-3900