Spanish fashion retailer Mango has more than 2,500 stores in 110 countries, and has been expanding across the world since 1992. Rebecca Thomson hears about its growth strategy.
Mango was one of the retail industry’s earliest adopters of an aggressive international expansion policy and Jose Gomez, senior vice president of business development, said yesterday at the NRF conference in New York said the strategy has served the company well.
“Our reasons to expand were different for every country but the goal is common - growth,” he said. The expansion drive has helped the company thrive, he added, because it diversifies risk and reduces dependency on the home market.
Mango started expanding in Europe in 1992 after reaching 100 stores in its native Spain. In 2002 it went into China and in 2006 it launched in the US. Today its biggest market is Europe, which accounts for 65% of turnover – Spain provides 17% of that – and its second biggest is Asia with 17% of turnover. North and South America account for 5%.
Gomez says he expects Asia’s importance to the business to grow significantly in the coming years.
Mango has used a variety of expansion methods. Franchise stores make up around half of its worldwide business, with 90% of these run on a consignment basis. It also uses the web to enter some new markets or support existing operations, and it has travel retail stores in places including San Francisco, Miami and London. Shop-in-shops have proved an effective way to gain a presence in difficult markets – in the US, for instance, Mango launched an exclusive collaboration with JC Penney in 2008.
Gomez said Mango has learnt a lot from its expansion projects. Knowledge of local legal regulations and local culture is crucial, as is an understanding of local competitors’ advantages and disadvantages. Gomez added: “Your supply chain needs to be ready – can you get product to the point of sale as fast or faster than the competition? The worst thing is having orders that you can’t deliver, because retrieving clients is very hard.”
It is also important to adapt your pricing policy and products without losing your brand identity. Mango products specialist collections in different parts of the world according to the climate and customs in each country – in Arab countries, for instance, the same dress will be available with sleeves or with a longer skirt. These specialised products will account for around 20% of product, with the main Mango collection still available. “This addresses local needs and allows us to sell more,” says Gomez.
It is also important to learn from mistakes, he adds. Mango’s mistakes include failing to stock size zero clothes in the US because it assumed all the shoppers would be bigger sizes, and assuming that women in Iran would want the Arab collection – they preferred the European styles. Hiring local talent, he says, can minimise these mistakes.
Mango’s plans for the coming years include focusing on multichannel and opening more stores, and in 2014 it will launch a teenage line called Rebel by Mango.