Bergans of Norway has decided to shut down its sales organizations in the U.K., France, the U.S. and Canada, to focus its product and marketing investments on the Nordics, the German-speaking countries and the Benelux countries. The changes come with adjustments in the Norwegian brand's broader sales and marketing strategy, including investments in own retailing and sustainability.
As part of the changes, the Russian joint venture owned at 75 percent by Bergans is to be fully taken over by its general manager, Helena Christiansen, who already owned 25 percent in the partnership. The majority-owned Russian subsidiary will thus turn into a distribution agreement with the same team.
At the same time, Bergans is terminating its agency in the Italian market. The change-over as a whole will entail the termination of nine employment deals and 12 agency agreements, mostly in North America. Existing accounts in France and the U.K. will thus be serviced directly from the group's German subsidiary, which already invoiced customers in these countries.
Claire Muzart, formerly with Eider, was appointed as country manager in France in 2009. Andrew Nicolson became country manager in the U.K. in 2010, after several years in the same job for Jack Wolfskin. The U.S. subsidiary was established in 2012 to cover North America under the leadership of Pat Loomis, who retired earlier this year. The transition in Europe is to take place at the end of the year, and it should be finalized in the first half of 2017 in North America.
Bergans says that the more focused approach to markets, products and brand building will enable it to improve its offer to consumers and retailers, and to reinforce the Norwegian brand in international markets. While strengthening its hiking range, with extra focus on categories such as tents and backpacks, Bergans will get started with an entirely new alpine skiing range. Another part of the strategy is to invest in retailing, with heavy investments in retail concepts ranging from brand stores to shop-in-shops and other dedicated retail space. Sustainability is in focus as well, including the offering of second-hand products, the exchange of used products amongst consumers and product rentals in shops.
The move comes about ten months after the arrival of Leif Holst-Liæker as chief executive of Bergans in December 2015, taking over from Ragnar Jensen. Holst-Liæker suggested that Bergans' resources may have been overly dispersed with expansion into several countries in a short period.
The Norwegian company already started over the summer to implement other changes with the recruitment of two senior executives to drive sales and marketing. Bergans raised its sales by 5.1 percent to 752 million Norwegian kroner (€81.0m-$90.6m) but the group suffered a pre-tax loss of NOK 17.3 million (€1.86m-$2.08m) in 2015.
Margins came under pressure as the swing in exchange rates between the Norwegian and U.S. currencies pushed up purchasing costs by 40 percent in a short time, leading to a loan of NOK 45 million (€4.85m-$5.42m) last year from the company's three shareholders. Bergans said the restructuring of operations in several European and other countries was not related to these issues. It will actually increase costs in the short term but is meant to drive sales through products and marketing that are more attuned to the local demand in the focus markets, with an adjusted brand positioning that will be detailed early next year.