It was back in 2014 that the Design Eyewear Group (DEG) began to make waves in the global eyewear market. With the acquisition of Face à Face, one of the industry’s most recognisable brands, many began to wonder what the company’s intentions were.
Two years prior to this, DEG had quietly gone through the acquisition of ProDesign Eyewear, a Danish brand with, at the time, over 40 years of heritage under its belt. ‘But it wasn’t just a Danish company,’ says Flyvholm, who prior to joining DEG, spent several years in the UK working for Bang & Olufsen as managing director for northwest Europe and vice president for global sales.
‘ProDesign was well established in the US and outside of Denmark,’ which added to its appeal for acquisition.
The private equity group behind DEG specialises in small-to-medium sized Scandinavian businesses. Prior to Flyvholm, the CEO of the company had a special interest in eyewear, having previously owned a 100-strong multiple in Denmark.
‘What he recognised was that there seemed to be a magic ceiling for new frame companies coming to market, where they do quite well, but don’t take it to the next level where they can grow and have some scale,’ says Flyvholm.
The acquisition of Face à Face and its spin-off brand Woow coincided with the purchase of Inface, a Danish brand of eyewear pitched at an accessible price point. The geographical and cultural differences between the French and the Danish brands elements of the business meant there was a period in which the potential of the brands wasn’t being realised, says Flyvholm, who joined as CEO in September 2015.
‘When I first started, my task was to get everybody to understand that we’re one team, one group and then utilise that understanding,’ he says. ‘Some of the teams were concerned whether the DNA of the particular brand would be diluted when part of a big group.’
Flyvholm says a lot of dialogue between each brand was needed to ensure harmony among the group, a hard task given the marked differences in DNA and aesthetics between brands such as Face à Face and ProDesign. Initially there was a lot of finger pointing and a lot of, “we’ll show the Danes” or “we’ll show the French”, and it’s still there in some form no matter how much you try to change it.’
Unity
The first way Flyvholm went about instilling a more unified approach was to highlight the possibility that the brands could work in unison in new markets and see customers move from one to another.
‘Face à Face was not established in Scandinavia. Not at all. And for good reason, as it was never a major market for the brand. ProDesign had a core base in all of Scandinavia, so we looked at the top 25% of its customers and asked what percentage should be selling Face à Face? ‘We’ve taken Woow into the big optical groups in Nordics now, which means 450 shops. Woow would never have got into 450 shops in Scandinavia if it wasn’t for alignment with Prodesign,’ he says.
The individually strong groups are the heart of the company, and Flyvholm is keen not to ape the large multinational eyewear companies with license strategies. ‘We don’t want to play the game of the big guys, where it can be focused on getting a brand and then adapting frames with different logos. We also don’t want to go to the opticians and dictate what package they must take.’
‘The eyewear market is changing and I’d rather be in a company like ours which is based on in-house design and not being dependent on somebody who can quickly pull the plug on your licence.
‘Our portfolio of brands all come from the designers’ ideas about what’s going on in the market. We make sure they do not cannibalise each other, but fit together so that obviously from a strategic point of view it makes sense that if you are already a customer, you will probably be selling frames of different price points for different categories, where one of our other brands will most likely fit.’
‘Woow is a great example of applying different strategies to sales. When the brand first arrived at the Design Eyewear Group, it was sold by the Face a Face reps. That didn’t work because it’s not the Face à Face client who is buying Woow frames. We established a sales team consisting of Inface and Woow; two very different brands, but at a similar price point. We hired 20 sales rep all around the world and put the two out on the market, now Woow is exploding all around the world.’
Despite the global expansion for Woow, Flyvholm has restructured the way the company approached overseas sales. ‘When I came to the company I noticed that we were very proud to say that we were in 30 or 40 different countries, which is great. But it also meant that you need focus, because we’re not big enough to service those territories effectively.
‘So we try to say we have five plus one focus areas. In Europe, it’s the UK, Germany, France, and Scandinavia and then the US and Canada. It’s not that we don’t want to be other places, but just in terms of our energy and our investment, we try to focus on those places.’
The US represents 45% of the company’s business, ahead of France, Germany and the UK.
Buying in and being sold on
The purchase of Danish luxury brand Kilsgaard earlier this year shows that the group is still committed to expansion. The brand was close to being sold to Specsavers, but the chance to step in quickly presented itself.
‘The opportunity for Kilsgaard came about quite fast and we decided it fitted so well into what we have. Our company has two legs, French and Danish, so building on those with a company based 10 minutes away, with so much Danish heritage, was an opportunity that was difficult to say no to.’
‘In terms of acquisitions of new brands, if the right opportunity is there, we’ll go for it,’ says Flyvholm.
When a company is owned by a private equity firm, there is always going to be speculation over the long-term strategy and what the end game is. Flyvholm admits this is true of DEG’s owners.
‘The name of the game for them is buying and selling companies. That’s how they make their living. They have their investors backing them and they want a return on investment, so it’s no secret to anyone that at some point we will be sold to the right new owner.
‘When that happens and to whom, we don’t know, depends on the development. If I look at their other companies, they are kept for anywhere between five and nine years, depending on how their market develops.
‘At some point we’ll be sold and from there two routes are possible. We could be sold to somebody in the industry. We could be sold to a bigger private equity firm that wants to take it to the best level. It’s not something that we talk a lot about on a day to day basis, though.’
‘Being owned by a private equity company means you have to be ready to be sold in three days or in three years, because if somebody knocks on your door you’ve got to be able to sell immediately. But part of being sold is that they can see that the company has a plan for the next three years.’
Flyvholm’s time in the UK with Bang Olufsen in the 2000s meant he witnessed major changes in the way consumer electronics was represented on the high street, with many big brand retailers closing.
‘Retail means a lot in the UK, but it’s gone through so many changes. High street optical practice is one of the last parts of retail which hasn’t undergone the same changes as other sectors, so it’s going to be interesting to see what happens,’ he says.
‘It means you’re open to somebody who comes in and offers a very smooth, well-run machine, works with different price structures. Independents are not opening their eyes to this and they could be in for a big surprise in a very short time. What will happen? I’m not sure, but it’s going to come at some point.’