Alain Afflelou Sa Business Information, Profile, and History

Company Perspectives:

Always listening to the consumer, Alain Afflelou develops new concepts to improve glasswearers' daily life.

History of Alain Afflelou Sa

Alain Afflelou SA is one of the leading optical retailers in France, with a network of more than 475 largely franchised stores owned by more than 220 franchisees. Led by the charismatic Alain Afflelou, himself an optician, the company owns 27 stores and receives fees of 4.5 percent per year from each franchised store. Afflelou stores average 100 square meters, and some two-thirds of the network's stores are located in downtown locations, while the rest are found in shopping malls. In addition to its retail network, Afflelou markets its own eyeglass and sunglasses designs under brand names Le Forty d'Afflelou, Tchin Tchin, and Afflelou Les Fatales, as well as licensed brands that include Agatha, Carita, Célio, Grès, and Lolita Lempicka. Much of Afflelou's success has been due to its innovative advertising. The company was one of the first in France to run ads featuring its own CEO, a tactic which has gained it a recognition rate of more than 95 percent. Most of Afflelou's sales, which topped EUR445 million in 2001 across the entire network, including more than EUR90 million generated by the parent company itself, come from its French home base. Afflelou intends to extend its French implantation to nearly 700 stores by the end of the 2000s. Yet Afflelou is pegging its biggest growth prospects on international expansion. (The company is already present in Belgium, Luxembourg, Morocco, and Lebanon.) In order to provide funding for this expansion, which the company expects to come through extending its franchise network as well as through targeted acquisitions, Afflelou went public in April 2002, listing on the Euronext Paris Stock Exchange's Secondary Market. Alain Afflelou continues to head the company, seconded by deputy chief executive Pascal Derry.

Pied Noir Origins in the 1970s

Alain Afflelou was born in Algeria in 1948, a member of what was later called the pied noir ("black foot") community of French living in the country's former North African colonies. His introduction to retail sales came in the bakery run by his parents, and he appeared destined to take up a retail trade as well. As he told L'Entrepreneur: "I loved helping my parents in the store, it was true pleasure. In reality, I discovered at that time that I couldn't live in an office."

After Algeria's declaration of independence and the resulting war, Afflelou's family moved to Bordeaux when he was 14 years old. Afflelou gave little thought to his future career throughout his teenage years. At the age of 18, however, he became more serious about his future, telling L'Entrepreneur: "I'd met a woman. I was 18 years old. I didn't want to get involved in long studies because I was planning to get married." In that light, Afflelou chose become an optician, moving to Paris to study at the École Supérieure d'Optométrie, from which he received his optician's degree in 1972.

Afflelou returned to Bordeaux to open his own optician's shop that same year, using the trade name Optica. The optical trade in France in the early 1970s remained a staid market of traditional, clinical shops; at the time, wearing eyeglasses was still stigmatized and far from the fashion statement it was to become starting in the 1980s. Afflelou himself was to take part in the change in attitude toward eyeglasses and toward opticians themselves. With his background in retailing and a flair for marketing, Afflelou began planning his first advertising campaign. Because a single store did not give him sufficient revenues for mounting an advertising campaign, he opened two more stores in the Bordeaux suburbs in the mid-1970s. Then, in 1978, Afflelou bought up the Maison Larghi shop, one of the oldest and most-well known French opticians. The store's location, in the heart of Bordeaux itself, gave Afflelou the visibility he sought.

In 1978, Afflelou used the equivalent of a year's profits to launch his first advertising campaign, offering frames at half-price. The slogan used for the campaign--"La moitié de votre monture à l'oil," ("half of your frame for free")--already demonstrated the company's gift for word play. The ploy worked, and Affelou was soon selling more than 100 frames per day. He also attracted a good deal of media attention, particularly among optician trade journals. Before long, Afflelou began receiving letters from other opticians wishing to copy his sales techniques.

Franchising Success in the 1980s

In 1979, Afflelou decided to set up a franchise business to capitalize on the interest in his business model. By the end of that year, the company had signed up its first three franchisees--some of whom came from among Afflelou's former optician's school classmates--in Bayonne, Pessac, and Rouen. Through this network, Afflelou was able to introduce a number innovations into the French retail optical market, establishing a standardized store format, offering a wide selection of frames, as well as bargain prices and other marketing initiatives.

Advertising remained a strong component of Afflelou's business, and in 1980 the company once again attracted attention--and customers--when it announced it would begin selling certain frames at cost. The campaign was a success, attracting growing numbers of customers and franchisees. By 1985, the company's franchise network had opened its 100th store.

Afflelou had begun seeking a new name for the franchise network but had been unsatisfied with the possibilities. As he told L'Entrepreneur: "Everything we found was hackneyed: Lynx Optique, Cornée Optique. ... One day in a café someone said to me: 'I don't understand why you don't call yourself Alain Afflelou.'" Afflelou took the idea to advertising firm RSCG, which created the slogan "On est fou d'Afflelou" ("We love Afflelou").

Once again, Afflelou succeeded in raising eyebrows, becoming one of the first French business leaders to place himself in his company's advertising campaign. Nevertheless, Afflelou's advertising strategy met with success. Even more so, the charismatic Afflelou quickly proved one of the company's strongest marketing assets. The brand and Afflelou himself soon enjoyed strong recognition on a national scale.

In 1987, the company merged its two existing operations, Optica and Maison Larghi into a new company called Alain Afflelou SA. By then, the group counted more than 140 franchise outlets. An important moment for the company followed the next year, when Afflelou acquired Paris-based Leroy SA Optician, which ran a network of ten stores in the Paris area, including a store on the famed Champs-Elysées. Following the acquisition, Afflelou moved its headquarters to Paris and made the Champs-Elysées site its flagship store. The company's Paris-area stores--which, because of the difficulty of extending the franchise network into the expensive Paris market, remained company-owned--became a laboratory of sorts as the company continued to seek new innovation opportunities.

Innovative Leadership in the 1990s

Afflelou continued to build its franchise network, which expanded rapidly at the end of the 1980s to nearly 400 stores by 1992. The company continued to roll out new advertising and marketing successes, such as the campaign launched in 1989, "Quand on a une gueule, on y tient" ("When you've got a look, love it"). In 1990, the company created its Contrat Lentilles Liberté, offering special deals for contact lenses purchases.

Afflelou, which had built much of its early success on its aggressive pricing policies, now sought to emphasize the range of services provided at its network's stores, rolling out a new campaign, "Alain Afflelou et moi, ce n'est pas que pour l'argent" ("It's not just for the money"). The company boosted its services offering again in 1991 when it began promoting one-hour eyeglasses preparation. Then, in 1993, the company began selling a new series of frames that were guaranteed for life.

With the rapid expansion of the franchise network, which had topped 400 stores, and his own growing media fame, Afflelou brought in Pascal Derrey to serve as the company's chief financial officer (and later as deputy chief executive). Derrey took over the day-to-day management of the company and restructured the franchise network, while adding new accounting and financial procedures. Afflelou had also brought in new capital to the group, selling 23 percent of the company to bank Credit Lyonnais's investment subsidiary Clinvest.

By the mid-1990s, Afflelou's franchise network was largely in place. The company also enjoyed a high loyalty rate among its more than 200 franchisees, with more than 96 percent remaining in the network. Afflelou now began seeking new ways to expand sales. The company decided to begin developing its own product line to be sold throughout its network, and in 1993 launched its first line of Afflelou-branded eyeglasses. In 1994, the company reached a distribution agreement with Orcolite of the United States, later acquired by Vision Eyes, which gave Afflelou the exclusive European distribution rights to that company's new polycarbonate lenses, which were both significantly lighter and more resistant to breakage than traditional lenses. Afflelou began marketing the lenses under the brand 2AI.

In 1995, Afflelou gained exclusive French distribution rights to a new progressive lens produced by Shamir. The company then launched the new product as the "Cent pour Cent" ("100 percent"), which became another strong sales success for the company. That year also, the company launched its Price Contract, offering to reimburse the price if a customer found cheaper eyeglasses elsewhere.

New Strategies in the Late 1990s and Beyond

Afflelou hit on a new formula in the late 1990s, that of package deals. The first of these was "La Forty d'Afflelou," a set of four matched reading glasses, launched in 1997. These were followed in the next year with "La Funny d'Afflelou," featuring a pack of four sunglasses.

By then, Afflelou had changed ownership. In 1997, the company had bought back 100 percent control of the company as Credit Lyonnais began disposing of much of its holdings. Afflelou then sold the 23 percent share to investment fund group Alpha, which specialized in investing in family-run businesses before re-launching them as public companies. That purchase gave rise to suggestions that Afflelou was preparing to take his company public.

Instead, however, Afflelou sold control of the company to Alpha and another investment group Marine Wendel, reducing his own stake to just 30 percent. Part of Afflelou's motivation came from difficulties surrounding his purchase of the Bordeaux soccer team in 1990, which resulted in Afflelou becoming involved in a fraud investigation into the soccer team's finances. The negative publicity surrounding the case had dashed hopes of taking Afflelou public--and Afflelou himself left the country to take up residence in Switzerland.

Despite its founder's legal difficulties, Afflelou continued to grow, and in 1998 the company began its first efforts to expand internationally. New franchise stores opened in Belgium, Morocco, Lebanon, and Luxembourg, backed by a new subsidiary, Alain Afflelou International. That year the company also began introducing a new range of designer fashions in its stores, selling sunglasses and frames by Célio, Carita, Lolita Lempicka, and others.

Afflelou bounced back in 1999 with the launch of another highly successful marketing campaign, the "Tchin-Tchin," which offered a second pair of eyeglasses for just one additional French franc. The company followed that campaign up the following year with a Tchin Tchin for sunglasses. In 2000, Afflelou also expanded the range of its own label eyeglasses with the license to produce a new line of products under the name of famed French actor Alain Delon.

By then, the company had hit a new setback in its domestic growth drive. In July 1999, the company had reached an agreement to acquire rival optical chain Lissac, which headed a franchise network of more than 100 stores. Despite Afflelou's intention to leave the Lissac brand and franchise network intact, a revolt by a number of Lissac franchisees forced the two sides to break off the purchase agreement at the beginning of 2000.

Instead, the company was forced to look beyond the more or less mature French market and begin to pursue its international expansion. At the end of 2000, Afflelou bought back control of the company, joined by capital investment group Apax partners. Afflelou's personal stake was raised to 58 percent of the company, while Apax's share reached 39 percent.

By the end of 2001, Afflelou's franchise network had topped 475 stores, with total revenues of EUR445 million. The company announced its intention to continue to expand its retail network in France by as many as 100 stores and also indicated its interest in pursuing new acquisitions, both in France and elsewhere in Europe, especially in Germany and Spain. In order to fuel its new growth ambitions, Afflelou at last went public in April 2002, taking a listing on the Paris Bourse's Secondary Market. Alain Afflelou's own stake in the company remained at more than 48 percent, with more than 55 percent of the company's voting rights. Afflelou, who had become one of France's most recognized media figures, continued to be one of his company's primary assets.

Principal Subsidiaries: Les Boutiques d'Alain Afflelou SA; JR & F SA; AASE SARL; SCI 169 Rue de Rennes; Alain Afflelou International SA (Luxembourg).

Principal Competitors: Fielmann GmbH; Grandvision SA.

Chronology

• Key Dates:
• 1972: Alain Afflelou opens his first optical shop, Optica, in Bordeaux.
• 1978: Afflelou acquires Maison Larghi and begins advertising eyeglass frames at half price.
• 1979: The optical firm establishes a franchise network.
• 1985: The Optica stores are rebranded as Alain Afflelou.
• 1987: The company changes its name to Alain Afflelou SA.
• 1988: Leroy SA Optician is acquired, with 10 stores in Paris area.
• 1993: The company creates it own label of eyeglasses and sells a 23 percent stake to Credit Lyonnais.
• 1997: Alain Afflelou reacquires 100 percent control, then sells 70 percent to investment fund group Alpha.
• 1998: The company's first international franchises open in Belgium and Luxembourg.
• 2000: Alain Afflelou, with Apax Partners, reacquires control of the company.
• 2002: The company goes public with a listing on Paris Bourse's Secondary Market.