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MEXX LANDS IN USA

Claiborne’s mid-price Dutch apparel chain arrives in New York — is a major U.S. rollout next?

BY SUSAN THORNE

Mexx’s first U.S. store opened on Manhattan’s Fifth Avenue this fall, a few doors down from fellow European newcomer, H&M.

Mexx, a European midprice apparel concept, has made a splash in New York City and its suburbs. This first step of a planned U.S.-wide rollout will mean new competition for Gap, Armani, Club Monaco, J. Crew, Kenneth Cole and the like.

Following an intensive publicity blitz, Mexx owner Liz Claiborne Inc. heralded the store’s arrival with the high-profile grand opening on Sept. 25 of a glass-fronted, two-story, 17,000-square-foot flagship on Fifth Avenue, in a space formerly occupied by a Liz Claiborne outlet. In October two additional Mexx units followed, one at Union Square in lower Manhattan and the other at The Westchester, Simon Property Group’s mall in White Plains, N.Y. The company plans to open seven more U.S. stores, but has not disclosed any locations.

“I see a huge opportunity for this brand in the U.S.,” said Simon Dallimore, vice president of retail for both Mexx and New York City-based Liz Claiborne. “We know there’s opportunity within the price point we serve, and when we look at our store environment, we’ve got a unique proposition.”

Mexx’s contemporary urban fashions, ranging from suits and dresses to athletic wear, have a Europeanized aesthetic and emphasize quality of fabric, craftsmanship and styling; the average item retail price is $55, about 25 percent more than Gap and 25 percent below Banana Republic. As such, the company offers excellent value for shoppers from different income demographics, Dallimore opines.

“If you look at price point, we have customers who run the gamut of income levels,” he said. “The woman who shops at Gucci in a Chanel suit may pick up a fashion piece, alongside a professional working woman.”

Merchandise is designed primarily for women and men ages 20 to 40.

Mexx’s merchandise is designed primarily for people between 20 and 40, but may also appeal to older shoppers with the same lifestyle aspirations, says Dallimore.

Merchandise aside, Mexx plans to make sophisticated store ambience and keen attention to customer service distinguishing features of its retail offering.

Mexx, founded in 1980 in the Netherlands, sells its branded merchandise in 840 of its own stores and 7,500 independent retail units in 40 countries worldwide. It is a leading midmarket brand in Europe under several store formats, with a range of Mexx-branded merchandise that includes bathing suits, makeup, jewelry, men’s sportswear and children’s clothing. Since 1981 the company has operated a separate arm in Canada, where it has 40 retail stores and factory outlets, plus wholesale distribution to 900 stores.

Liz Claiborne acquired Mexx for $264 million in 2001 and bought Mexx Canada in June 2002.

Mexx’s strength in Canada provides “a good sense of comfort” for the U.S. initiative, Dallimore says, because of the similarity of the two markets. For the time being, Mexx’s U.S. stores will concentrate on three key categories — women’s apparel, lifestyle merchandise and accessories — plus men’s fashions and a small inventory of the younger XX fashion subline.

“When you’re making an entry into this country, you need a focused and well-defined offering, otherwise you’ll confuse everybody,” Dallimore said.

The merchandise has been tailored for the U.S. market through such features as a looser styling for men’s pants. Furthermore, fashion selections will draw on both Canadian and European product lines.

The chain also has a Mexx Express division that is designed to react to fashion changes and move clothes quickly from the drawing board to store shelf.

Mexx’s prospects in the United States look good despite relatively weak spending by the American consumer, says a cautiously optimistic Lois Huff, senior vice president and apparel market specialist at Retail Forward, a retail strategy and research consulting firm in Columbus, Ohio.

“Mexx is a strong brand in Europe and overall, but there are a lot of specialty store concepts out there in the U.S.,” she said, pointing to such midtier chains as Ann Taylor, Banana Republic and J. Crew as Mexx’s most likely competitors. Abercrombie & Fitch, American Eagle and Forever 21 have some market overlap on the younger end. “But remember,” she added, “in the U.S. you’re really competing with everyone.”

Few stores duplicate Mexx’s positioning, she says, but Club Monaco provides a cautionary example of a strong brand in the same price category that “hasn’t been so successful.”

Overall, however, Huff sees strong potential for Mexx in malls and lifestyle centers.

“They’ve got something new and a little more European that is different from what exists in the U.S. marketplace, plus the backing of Liz Claiborne,” she said.

Mexx founder and CEO Rattan Chadha, left, and Liz Claiborne CEO Paul R. Charron, in New York City’s Times Square.

Response from shoppers at existing stores has exceeded company expectations thus far, Dallimore reports, though he declines to disclose sales figures or reveal what those expectations were. The company plans to expand Mexx market by market, he says, based on favorable results at existing stores and building brand awareness through geographic clustering of new stores, as has been done in New York. Average size for shopping center stores will be 5,000 square feet, while flagship stores could be as large as 8,000 square feet.

Robert T. Guerra, manager of The Westchester, says he is excited about having one of the first Mexx stores in the country to join Neiman Marcus, Nordstrom and Tiffany & Co. at the 825,000-square-foot super-regional center. The novelty is one advantage. “We look for retailers that are unique and different to keep our mall fresh, and Mexx is new for this area,” he said. As for Mexx’s offerings, “they are also right in line with our demographic, which is strong in the 20 to 40 age group.” Both male and female shoppers visited in good numbers during the store’s first days of operation, and he predicts that “they’re going to do well.”

Some particular urban areas are being considered for the next store groupings, but Liz Claiborne is not ready to announce them. “Once we’ve got a read from the consumer, that will dictate the scope of our growth, but there’s no reason it couldn’t be greatly accelerated,” Dallimore said. “I feel very, very confident about the long-term success of this brand.”

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