Wedding lists : A voyage from tradition to cash value
With spring, the wedding season starts again. In 2006 in France, 247,000 marriages have officially sanctioned the union of so many couples (down 3.5% from 2005). On average, the newlyweds were 30 years of age for first-time brides and 32.2 for bridegrooms (80% of marriages are first unions). Ten years earlier, the average age of marriage was 27 years for brides and 28 for bridegrooms. Wedding ceremonies are a very seasonal affair peaking between May and September. According to the French statistical office, weddings cost an average 9 to 12,000 euros. Therefore, the total market can be estimated at over 3 billion euros, with more than 800 million spent on wedding lists.
Wedding lists originate in a Christian tradition by which guests were supposed to help the new household. Since the middle Ages, it has been customary to deposit gifts for the newlyweds at their parents' home. The gifts would then be displayed publicly on the day of the wedding. In France, the idea of wedding lists as we know them today started in the 1950s as an import from the USA. Early on, many guests considered it was not in good taste to leave an envelope in a basket or to have to choose a gift from a set list. The newlyweds, however, were guaranteed they would no longer become the proud owners of an unwanted silver ice tub or the umpteenth soup tureen
Historically, wedding lists mostly featured tableware (crystal, china, silverware, and the like). Yet, by the early 2000s, many changes had occurred. For example, only one in ten marriages corresponded to the formation of a new household. Therefore, most newlyweds had already bought what they needed prior to their wedding and felt no need to be offered new knives, plates of other tableware. Conversely, travels had become the new desired gift, along with hi-tech devices (computers, HD television sets, and MP3 music players) at the expense of traditional suppliers of tableware which were now experiencing deep financial trouble. Major names such as Waterford Wedgewood had been forced into bankruptcy.
In a nutshell, in the early 2000s, the world of wedding lists had grown in variety. A few newlyweds even flatly requested to be offered cash. Thus, Le Printemps, a big French department store, decided to allow the newlyweds to collect -in cash- up to 10% of the amount of money deposited on their wedding list.
The main players in the wedding list market in France
The major department stores were the historic leaders in the wedding list market. In 2007, the manager of Printemps.com boasted 12,000 wedding lists, making his site the second largest actor just behind Galeries Lafayette's Boutique Bonheur (later renamed Lafayette mariages, which claims 25,000 wedding lists ). The two firms follow the same principle. The prospective spouses open a list with the store of their choice. The list features their selection of desirable gifts. Guests then either choose one such item or make an open gift. After the wedding, once all cash contributions have been collected, the newlyweds can use the money as they see fit. They can spend it on items listed in the store catalogue and in the catalogues of partnering businesses. For example, Galeries Lafayette made it possible to select gifts in the store of the same name or in BHV, les Nouvelles Galeries or even at Lafayette Voyages (a travel agency). Le Printemps made the same offer. The newlyweds could make purchases in several stores, including FNAC, Conforama, and Printemps Voyages. In both cases the newlyweds could manage their list on the internet, alter their choice of gifts, thank their guests, and so on. Le Printemps and Galeries Lafayette offered these young couple a whole range of related services (a free charge card, discounts on items purchased in the store, standard lists, advice on how to organize the wedding ceremony, games, and others).
The major department stores see three advantages in this activity. First, wedding lists contribute substantially to their revenues. Indeed, the pool of money cannot be entirely withdrawn in cash; a sizeable proportion of it has to be spent on items featured in the store's catalogue or that of partner businesses. Second, wedding lists offer the opportunity to attract cohorts of young and promising new customers. As mentioned by Ghislain Morterol, Le Printemps.com's manager: "We target the top income earners, and I think the attraction is reciprocal".
Lastly, the contributors themselves constitute a potential resource to enhance the name.
The success of department stores in this activity was partly built on the decline of Main street tableware shops which, after the introduction of minitel and the internet, could not compete with the depth of the big names' catalogues. Yet, Main street fought back with the name Ambiance&Styles. It started in 1989 as a group of stores, in 89 locations in 2008, with many more medium sized cities targeted. "All retailers are independent, but 80% of their offer must be common with the other members of EK France. We are not present in Paris as the cost of entry is too high there. Le Printemps and Galeries Lafayette make such broad offers that we have to focus on distribution areas which feature a minimum of 25,000 inhabitants. We manage 3,000 wedding lists every year, averaging 3,000 euros per list." said in 2007 Alain Metz, the EK French subsidiary's general manager.
This subsidiary of the German company EK Service Group gathers a number of Main street tableware and decoration stores. Ambiance&Styles is based on the same principle as that offered by major department stores (an internet site, the possibility to buy, collect and test the merchandise in stores, and the obligation to spend the full amount contributed in the network. On its site, the firm challenged entrepreneurs to join the network and « conquer 150 cities »8
Other players had tried their luck on the wedding list market. In 2004, Crédit Lyonnais proposed the "Happy Liste" service which made it possible for young couples to use, for a period of one year, an account of up to 20,000 euros credited by friends and family. It served 3.5% interest before tax. The site proposed nine « gift universes » in which contributors could participate by crediting the account. Citroën, the car-maker, was associated with the venture.
This offer aimed at capturing new customers on the occasion of weddings, which are major life events. In spite of the fact that 3,000 lists with an average credit of 4,000 euros had been opened10, the service was discontinued in December 2006.
However, new internet competition appeared with new startups such as « 1001 Listes » and « Ameliste ». Indeed, years before, department stores had made it possible to manage wedding lists and to make gifts via Minitel. The internet would allow to refine the idea.
1001 listes : 1001 listes : a fairy tale ?
1001 listes was created in 1999 by Pauline d'Orgeval, then 27. An HEC graduate, a former Otis executive, the mother of four children, she had conceived the idea on the occasion of her own wedding.
"Look around department stores and you'll see the fiancé trailing behind his bride to be. My future husband gave up after ten minutes. This was our first big fight" she said. She had taken advantage of her second maternity leave to conduct a market survey with 200 couples. This is how she saw things: "I based my offer on three findings: First, the dream image of department stores has disappeared as people get married at a later age and already own their household equipment. Their wedding list must be geared to pleasure and not to usefulness. Second, that said, department stores are unavoidable since they alone can offer quality service all over France. Thirdly, tableware, decoration and other specialized boutiques are unable to design their own lists by themselves: they distribute only one line of products, and do not have the necessary computer equipment".
She based her offer on the following principle: 1001 listes was backed by a network of 500 partners covering a broad range of products and services from tableware, of course, to travel, to decoration, home audio systems, DIY, opera tickets and even haute cuisine lessons -in all 40,000 references. It was even possible to make gifts which were not listed by any of the partners, for an extra 15% of the cost. The firm's internet site allowed couples to draw up and manage their list, and guests to make their contributions. This site was linked to a network of showrooms and partner stores where young couples and their guests could consult 1001 listes counsellors. Lastly, customer satisfaction was enhanced thanks to an information call center.
Here is how 1001 listes' founder summed up her offer: « We welcome the newlyweds in our showrooms where we display articles which are lent by our partners,. On the basis of their choices, we then extract a fully personalized list from our product database. The list is then submitted to them by e-mail. Once it is finalized, guests can make their contributions on the phone, by mail or on the internet
where they can visualize their selection. Thus the newlyweds have a list credit they can spend as they wish in our partners' shops thanks to a debit card. Each transaction connects the shop to our server and debits the wedding list account in real time. Our customers can draw up more original lists, featuring more typical objects, and at the same time, simplify the purchasing process. They can access very traditional objects, such as tableware and household appliances, as well as a wide choice of other items (decoration, contemporary design, works of art, wines and others).
Here is how the firm's business model works: couples purchase the items of their choice from partner stores at the listed price. These partners then invoice 1001 listes which transfers the funds to them, minus a fee ranging from 5 to 50% of the purchase depending on the type of partnership. Additionally, the lag between time of contribution by guests and time of purchase gives 1001 listes a negative working capital need. The firm was launched by its founder with a capital of 15,000 euros, half of which was invested in a web site; the other half went into communication. Later, the firm raised funds repeatedly, originally from Butler Capital Partners (an independent French investment firm which was 1001 listes'majority shareholder up to 2006), and then from CITA FCPRI (a risk unit trust fund managed by Kuwait Petroleum Corporation) and other French financial institutions (Banque Populaire and BNP Parisbas)
Between 2000 and 2003, the firm was successful in raising 6.5 millions euros.
By December 2006, 1001 listes had been sold to Téléshopping, TF1's home shopping subsidiary, whick held a 95% equity stake in it. Pauline d'Orgeval had sold 8% of the capital and made a capital gain of two million euros.
She kept a 5% stake in the capital and continued as the firm's CEO. Even if 1001 listes did not break even yet, the transaction amounted to 20 million euros, corresponding to a market capitalization which was equal to its revenues.
From startup to subsidiary : new developments
Since the change of shareholders, new projects have been put forward. On December 9, 2007, 1001mariages.com came on line. The site promised to « gather under one hasslefree roof all the necessary ingredients to organize the most beautiful day in you life. A transparent, user-friendly and dynamic site, 1001mariages.com puts you one click away from thousands of boutiques, precious advice, newfangled tools, and an interactive community space.
Indeed, after a free on line registration, the site opens a whole range of contents, as well as a "how to kit" to help plan the event, manage the budget, draw up the list of guests, organize the table plan, and even coordinate the work of various services suppliers. In a nutshell, the site proposed to be the command center for couples who were about to tie the knot.
As a Bouygues subsidiary (TF1 belongs to Bouygues) 1001 listes could easily collaborate with Bouygues Immobilier. As of March 1, 2008, young couples could transfer part of or all of the funds collected on the 1001 listes site to Bouygues Immobilier to finance the purchase of a newly built home. In which case, Bouygues doubled the amount deposited, up to 5,000 euros.
Just as department stores had done it before, the 1001 listes site had broadened its offer to other events which offered new occasions to make gifts, such as births, anniversaries and corporate parties. The idea was to offer the same services, but for different occasions.
But, competition was growing on the net. Ameliste, a new site, started operations in 2006 with a similar offer. Yet, there was one difference. As Eric Lassus, one of the co-founders of the firm explains it, "new needs require new services. With ameliste, guests deposit money and do not actually buy anything. The French market tends to baby customers. Department stores explain young couple what they have to purchase" According to its co-founder, ameliste's objective is "to give newlyweds a breath of fresh air" by allowing them to transfer, free of charge, the full amount of collected money to a checking account, with absolutely no obligation to make any purchases from partner stores.
The firm makes money from the internet ad space it sells to advertisers in the wedding business, and from a fee collected when newlyweds actually make a purchase from one of them. The financial partnership is with Boursorama, an online bank. Since its start in 2006, ameliste claims it has opened 2000 lists with a total of 3 million euros in gifts. Lastly, ameliste has extended its offer to the various occasions when gifts are made and also proposed a gift list service (albeit without the corresponding internet infrastructure).
Thus, the list of actors involved in the wedding list business keeps growing...
Questions
1. According to what you have learnt in the course, indicate the three macro environmental influences on which 1001 listes bases its development.
2. What strategic groups are present on the wedding list market? Justify your analysis.
3. According to what you have learnt in the course, indicate the direction for strategic development to which the launching of 1001.com corresponds for 1001 listes?
4. According to what you have learnt in the course, say what direction for strategic development was followed by 1001 listes when it launched its offer of gifts for births, anniversaries, and special occasions?
5. According to you, along what corporate rationale does TF1 as a parent propose to manage 1001 listes as one of its SBUs?
6. In your opinion, do 1001listes and 1001mariages have unique resources and core competences at their disposal? Explain why?
7. What new developments for the firm would you suggest to its CEO?