Isak Halfon, expansion director and board member, Mango

Isak Halfon, expansion director and board member, Mango

It may be ten times smaller than archrival Inditex (owner of the Zara stores) but Spanish women's fashion chain Mango is nearly as well known, thanks to clever adverts featuring glamorous movie stars and a relentless expansion which has taken it to 100 countries in recent years. And there is room for more - much more - growth, expansion director and board member Isak Halfon tells just-style.

Mango's five-year strategy aims to see the Barcelona-based retailer nearly double its size to 2,700 shops by 2015. It's a tall goal, expansion director and board member Isak Halfon tells just-style, but he says it's achievable.

With EUR1.5bn in sales, Mango boasts 1,453 stores and has stepped up this year's expansion target to 250 from 150 on the back of a fresh strategy to roll out more department-store corners. It is this move, coupled with its own flagship store plans, that should allow Mango to open 250 stores a year over the next five years, Halfon points out.

With its first Spanish shop opened some 25 years ago, its home turf now accounts for just 20% of sales while the other 80% comes from tills being rung abroad. Of the 80%, 60% of sales originate from Europe and the rest from the Middle East, Far East, South America, North America, Asia and Africa respectively.

China beckons
Amounting for a meagre 2% of sales, Asia will remain the key growth engine for Mango in coming years, Halfon notes, adding that most future shops will be installed on the booming continent.

"We hope to open 100 shops a year once we finish training our team there," Halfon says. He adds Mango is rushing to train new Chinese staff to run its franchise which so far has three flagship stores. The company is on track to inaugurate 67 outlets this year and 44 next, he reveals.

However, China is not without its challenges.

According to Halfon, the retailer is employing a "pure franchise" model in which it takes a 45%-65% royalty from franchisers but allows them to return unsold merchandise, increasing its risks.

To streamline its business there and keep costs down, Mango has set up its own manufacturing facilities and a warehouse in Shanghai which allows it to make and distribute 50% of the apparel it sells in China locally.

But perhaps the biggest obstacle is China's different culture.

"It's a huge country with not much connection with the rest of the world," he says, adding that Mango is being careful not to look as an arrogant European corporate by using culturally sensitive advertising campaigns fashioned by in-house and external PR and advertising agencies.

"We want our brand to be recognised as a European brand in China, not be a European [as if imposed] brand in China," he explains. Mango adverts and even its shopping bags (branded "Mango Barcelona") reflect this strategy, he adds.

In another market adaptation, the retailer also sells more small and medium sizes to cater for generally more petit Chinese women, he points out.

Europe and CIS
In the near future, Mango will also work to beef up in key Western European markets.

"We have 300 stores in Spain so we could easily have that number in the UK, France, Germany and Italy as these are much bigger markets," Halfon says.

Indeed, Spain will soon become an even smaller piece of the puzzle with its contribution to global sales likely to shrink to 5% in five years, he adds.

Mango is also keen to spread its business in Russia as well as in the former Soviet Union and CIS countries including Ukraine and Kazakhstan to elevate that region's revenue share to 9% from 5% now.

However, as these countries were severely hit by the economic downturn (stalling many planned retail mall expansions), Mango's growth plans there may be slightly delayed, according to Halfon.

All said, Mango will endeavour to achieve more critical mass in each market where it's present rather than enter new countries, as it is already present in most.

"We like to think of ourselves as being in a war zone, operating on as many fronts as possible," Halfon points out. "Just because we are present in a given country, it doesn't mean we cover that country. We want to have as many shops in each market as possible."

No more cheap lines
Mango will continue to position itself as a women's prêt a porter retailer, selling "high quality and fashionable garments at affordable prices," Halfon says. However, he stressed the chain doesn't want to sell discount apparel.

That realisation came from last year's failed launch of 'Think Up', a recession-busting collection that performed poorly and was shut recently.

"We don't want to compete with price and sell $19 jeans anymore," Halfon explains. "We do better selling more sophisticated garments, not cheaper ones."

Mango will introduce more selective and fashionable garments in future collections, some of which may carry higher price points, but there is no strategy to alter its brand positioning.

Regarding its other banners, Mango will continue to enlarge its HE Homini Emerito men's label, by opening 10-15 shops a year, both as standalone outlets and corners inside Mango stores, with a focus on France and the Middle East. It will also continue to grow its accessories business.

So where would Mango like to be in 10 years? Despite rumours that it could seek a flotation in the near future, Halfon says that is far from the case.

"We plan to stay private and with the system we have now which is working very well," he says. "We don't have any shareholders to answer to and we like it that way."

He also hopes Mango will be as large in every country as it currently is in Spain.

"We still have a long way to go. In fact, we are only at 20% of our target so far," Halfon concludes.