A European fashion brand’s reentry into the Philippine fashion market is elevating the way retail is being done in the Philippines
A line in the Pet Shop Boys’ classic track “Opportunities (Let’s make lots of money)” aptly sums up what’s behind European fashion label MEXX’s successful comeback in the European market in the last few years: “I’ve got the brains and you’ve got the looks.”
In MEXX’s case, it’s a confluence of both: a smarter management team and an attractive product—a combination that’s literally making the “boutique-orientated” label lots of money, as evidenced by its almost overnight jump in 2009 from being a 1,800-euro per square meter business and into a 4,000-euro per square meter business.
In a recent press briefing, MEXX Asia Pacific Senior Vice President Peter Hammond shares that this is quite the feat as the fashion brand had gone the route of Apple before it rehired founder Steve Jobs in 1997. “It just lost its way,” says Hammond. The Amsterdam-based fashion label founded by fashion designer Rattan Chadha in 1986 became a 1.45 billion-euro business back in the early 2000s, making it one of the biggest fashion brands in Europe. “It started attracting a lot of suitors,” he shares, adding that the Liz Claiborne Group eventually bought it for $264 million in 2001.
“It was,” Hammond puts it bluntly, “a recipe for disaster. Fashion brands are about character and charisma, and a lot of people get mixed up when the company gets big. They think it’s only about the numbers and volume, and if you go too far that way, you tend to lose your way a little bit.”
In 2011, as part of restructuring, the Liz Claiborne Group eventually sold MEXX to top private equity firm The Gores Group for $80 million, with the former retaining a 20 percent minority stake in the company.
Staging A Comeback
When the Claiborne group restructured Mexx back in 2009, new management came in to revamp the company. “The first thing they did was to go off to New York City to think about what to do to bring the brand back to what it was before,” Hammond shares, pertaining to what had made MEXX so popular in the 1990s: “MEXX is a European brand with a twist because the founders are actually Indian immigrants to Amsterdam. When Rattan Chadha and his brother launched MEXX they were very influenced by what their mom and sister wore, which was very contemporary Indian clothing/saris.”
What the Chadha brothers had done was take Indian fashion and build it into a European product. It’s what made MEXX among the strongest fashion labels in Europe—the exotic prints and details, the borders, the hardware used, and mostly because everything was “sexy, silk/chiffon, and flowing. These were the three big things that made it so popular,” Hammond says.
Revamping—not reinventing—the brand was really the key. “It’s not even about the designs—it’s about going back to the heart of the brand, which was Rattan bringing exotic prints and silks and chiffons, and then applying the seasonal fashion and colors to that base,” Hammond says.
Indeed, it was a move toward the right direction as MEXX has “come back to life in a big way in Europe.” In the last three years, Hammond reports that the value of the company has grown four times and is now back to being a profitable company and a relevant business. This year alone, MEXX will open 180 points of sale and are targeting 365 more stores in 2014—all this growth, amid the current European crisis.
“A crisis in Europe simply means that your demand goes from a hundred percent to 98 percent. It’s really a market share game there,” Hammond says. “If you’ve got one percent of market share, it’s very easy to steal another one percent off somebody else. In the last four months, everybody’s sales have been down 20 to 25 percent because stores are already selling summer pieces and winter refuses to finish. But MEXX has somehow maintained its demand while nobody’s growing at the moment. It’s the market share game and we still manage to pull up,” he relates.
MEXX In Manila
MEXX is actually no stranger to Philippine shores. The Rustans group had opened a store here in 2008, but as MEXX was then in a very difficult situation, supply became so big a concern that they had to close it down.
Now, MEXX is exclusively distributed by the Cinderella Marketing Corporation and has been quite aggressive when it comes to increasing the brand’s presence in the Philippines. “We just want more and more people to know that we’re here—we’re opening four stores in five months, and maybe a couple more in 2013 depending on the location and the availability,” Hammond reveals. He lauds their local partner’s commitment “for going all out. They don’t just say, let’s open one store and see how it goes. When they commit to a brand, they really commit to it. That’s really important because if you don’t believe in the brand wholeheartedly, and put it on the ground aggressively, it’s not going to get known to quickly.”
With the current glut of “big box”, mid-market high-street brands like Zara, Uniqlo and Topshop also expanding their presence in the Philippine market, MEXX is positioned “to not really compete with anybody,” Hammond points out. “First of all, we’ve got this exotic bend that other brands don’t have. We’re very blouse-, pants- and light knitwear-orientated where they tend to be very jeans-, T-shirts- and basics-orientated. We don’t want to exist in big boxes. We want to do lovely little boutiques, but have many of them in good locations, offer very personal service with a very high quality product at a very reasonable price. Our core price point in the Philippines is P2,700 to P3,000 but what you get for your money—especially if you turn the product inside-out and look at the lining, the details and everything—is really good,” he says.
According to Hammond, whose extensive experience in the retail development industry in the Asia Pacific spans 25 years, the Philippines is quite the relevant market for MEXX. Compared to other countries in the region, he says that the Philippine market is quite similar to Hong Kong in that “they really embrace European fashion and get it. It’s quite similar to Singapore because there’s a lot of middle-market brands there, but Singaporeans are still not sure about what real fashion is. Here, everyone’s fashion sense is really strong. I think that’s the big difference with the Philippines compared to most markets—the Filipino certainly knows who he/she is.”
With the amount of development happening in Manila and all over the country, Hammond says that the Philippines has finally reached its tipping point. “Now’s a good time to be back because what’s been happening here is incredible. What’s happening in Bonifacio now, Rockwell taking off in the last 10 years and becoming like a second city to Makati…I think the Philippines has reached that point where it’s now going to just take off and become a really seriously considered economy in Asia,” he ends.