Jose Gomez, VP of international business development for Mango talks to just-style

Jose Gomez, VP of international business development for Mango talks to just-style

Spanish fashion retailer Mango might have its roots firmly in Europe, but is on a growth trajectory globally, making its presence felt in most major countries. just-style spoke with managing director Enric Casi and Jose Gomez, VP of international business development, about what the future holds and the challenges of operating in today's changing retail environment.

Headquartered in Barcelona, Mango currently employs around 12,200 staff globally, from France and Turkey to China and Latin America. The retailer has expanded its base significantly in recent years and now has a presence in around 100 countries. But it is keen to ensure the roots it has planted remain firmly in place.

"Europe is our main market, it is still the most important one for us," says Casi.

Gomez concurs. "Our idea is to go deeper in the number of units we have in these countries. Mango will always be a European company, it will always be our main market. We are really a truly global brand but I don't think it's about the number of countries any more. It's about getting deeper in the ones we are in."

Mango's desire to reaffirm its current position doesn't mean, however, that the company is opposed to expanding further geographically. And it certainly intends to do so, as Casi explains.

"We have plans for expansion mainly in the Middle East and Asia, the Far East, and the Southern Hemisphere. We are developing a collection that will be sold especially in the Southern Hemisphere that meets the particularities of their climate."

European roots
Gomez also believes there is still room for Mango to grow further in Europe. The company presently operates around 350 stores in Spain and around 120 in France, with the latter country seen as having untapped potential due to its larger population.

But the company's strong presence in Europe means it faces a number of challenges in common with other apparel retailers.

"The European customer and especially the British one is a fashion expert, they are very well informed and know what they want, especially with all the information available online and in social networks," Casi explains. "They want the latest trends at a very competitive price and they want good quality, so these are all challenges for us. Also competition is very high so we have to work very hard to have the best possible collection every season."

Mango is also not immune to the aggressive discounting that many online and high street retailers choose to participate in. Casi adds: "The textile business is very globalised, so what others do affects us, and what we do also affects others."

Returning to expansion, however, Gomez is keen to point to the growth taking place in Asia and Latin America.

"We have been in China for a long time. There is definitely tremendous opportunity. Pricing pressures, labour costs, and rents are more expensive in the places you want to be in, but we are happy in China. It will be the next big consumer country if they implement lots of reforms. It is definitely a market that is very important for us, as is South East Asia in general."

Further opportunities
Latin America, he also says is a region of great potential, with the exception of Argentina, Brazil and Venezuela.

"These are very difficult and hard countries to operate in because of currency and many other reasons. Brazil is a very protectionist market. One big European player here is Zara but for a company of their size, they only have 20 units, that's it. It's a very complex environment."

The rest of Latin America, however, has enjoyed a very stable political and economic environment for the last 12-13 years, Gomez explains.

"The whole of Latin America has been growing. There is a growing middle class and the poor are moving from poverty. We have around 100 stores in Latin America at the moment, so we see a big opportunity here."

Gomez also highlights Africa as a region of interest for Mango, excluding the south and north of the continent.

"The middle section has potential but this will be much more longer-term. There are problems with infrastructure of new malls, for example. It's a slow process so it's hard to plan. It is a more unstable region for political and economic reasons, but there are some bright spots."

For all of the expansion taking place within Mango, the company's sourcing strategy remains the same.

"Expansion doesn't affect our sourcing," Gomez says. "We source primarily from Asia, countries like Bangladesh and Cambodia, and then some closer to home for a faster turnaround, like North Africa and Turkey. We ship from a centralised warehouse, so all stock goes into Spain. It is more efficient in terms of rationalising stock."

Collection ambitions
As well as expansion geographically, however, Mango is keen to widen its portfolio. Around three years ago the company changed the format of its stores in order to add more lines, including men's wear, kid's and sport's wear. The current format, Casi said, was just not large enough.

"We are very happy with the new lines. Mango Kids started with spaces of 80m2 and has now increased to 300m2 because we extended the collection. The same for Sport&Intimates. Originally we started with 30m2 spaces within the Mango stores and now we have increased the space to 80m2."

Gomez affirms Casi's point, explaining that the collection change was "putting pressure" on its format. There was a need, therefore, to find larger locations.

"Eventually, all of our smaller stores will be completely different in five to ten years' time. But it's a long process. We are investing a lot of money in that. When you make such a change you have to make the roots very deep or it all falls down."

Mango plans to expand selling space next year to 723,000sq m, which Casi says is achievable. However, he also points to the importance of having an online presence, which is another area of investment for the company.

"They are both important and they complement each other. We already do click and collect. This year around EUR200m will be invested in new openings and refurbishments, and EUR100m on logistics and IT. We are building a new logistics centre in Lliçà d'Amunt, Barcelona at the moment. This quantity will be invested in the robotics for the logistics and in IT."

Gomez adds: "The impact of the internet is something we can embrace. We are truly omni-channel, we sell online, on mobile, customers can order in-store and they can click and collect. We believe that is a great advantage. You need to give customers as much flexibility as you can. You have to give customers what they want. You need customers to trust you."

Future optimism
As for the future, both Gomez and Casi appear optimistic they can achieve more of the success they have had to date. Mango is certainly performing well and in April revealed full-year earnings of EUR120.5m (US$165.2m), up 9% on the previous year. Sales were also up 9% to EUR1.85bn, helped by the expansion of their retail space.

"We are happy with our performance, and we expect to reach EUR2.1bn in turnover by the end of 2014," Casi says.

As for growth, Gomez adds: "The economic situation is improving in Spain. They say next year will be better, but Europe will always be home, so we will always find ways to grow."