Clothing Retailing - UK - M
ango
Mango is one of
Spain largest clothing specialists and has also built up a sizeable
international business in Europe, Asia and the Americas. Mango predominantly
targets women aged 18 to 30 with a fashionable and sophisticated offer.
Recently, the group has expanded into menswear and it has also launched a new
affordable sub-range in reaction to the weaker consumer climate. This profile
focuses on Mango’s UK activities, but we have also provided some coverage of
the group as a whole to give some context.
Strategic evaluation
Multi-brand strategy
Rival Spanish
clothing retailer Inditex has long served the market through a variety of
fascias and it looks like Mango may choose to adopt this strategy as well. In
2008, the group launched a standalone store dedicated to its menswear range
(itself also newly launched in 2008) as well Mango Touch – a dedicated
accessories boutique, which has launched in Spain and several other countries
such as France, Romania and Russia, but not the UK. The company has also hinted
that it may launch a chain that targets younger shoppers.
The multi-brand
strategy makes sense as the new fascias could help sustain sales growth in
Mango’s more mature operations in Western Europe. However, Mango may well
choose to expand through any new concepts in Spain or markets closer to home,
rather than in the competitive retail scene of the UK.
Further expansion
Mango has also
continued to expand its core Mango-branded stores, particularly in
international markets, adding around 100 stores a year on average. Despite the
tougher economic climate, it appears that the company will not slow the pace of
expansion. The company has said it plans to invest €100 million over the coming
years, of which €85 million has been earmarked for new outlets as well as the
refurbishment of existing stores.
However, we
wonder whether it would perhaps be a wiser idea to build up critical mass in
its existing markets rather than to continue jumping into new markets. A more
focused approach would allow it to invest more money in the markets with the
greatest potential. Given the relatively lacklustre performance of Mango in the
UK, however, it is doubtful whether it would chose to do so in the UK.
In tune with the economy
Mango has
admitted that the global recession has led to sales declines in early 2009 in
markets such as Spain, Ireland, the UK and Russia. Consumers have been cutting
back on their spending, particularly on discretionary items such as clothing,
but Mango has tried to combat this by launching Think Up, an affordable
low-cost fashion range. The range will feature within the core collection –
pieces can be identified through a Think Up tag. According to the company, its
shoppers shouldn’t have to give up on “life’s
little treats” and the range seems like a good idea to attract customers
during these challenging times.
Recent history
|
2005
|
International
sales reached 75% of total group sales.
|
|
2006
|
Expansion into
Kenya, Kosovo, South Africa and Syria.
|
|
2007
|
Creates Board
of Directors, chaired by Isak and Nahman Andic.
|
|
2008
|
Announces plans
to move into Algeria, Belarus and Georgia as well as Iraq and Iran. Launches
menswear range and establishes first standalone menswear store in Spain.
Launches Mango Touch, a standalone accessories boutique.
|
|
2009
|
Launches Think
Up, an affordable clothing line.
|
Financial performance
●
Mango
is a private company and as such the financial information it releases is
limited.
●
In
2008, the company saw an 8% year-on-year increase in sales, boosted by
expansion in store numbers and the entry into new markets.
FIGURE 109: Mango Group: Group financial performance,
2004-08
|
Year to December
|
2004
|
2005
|
2006
|
2007
|
2008
|
|
|
|
|
|
|
|
|
Sales €m (excl. sales tax):
|
|
|
|
|
|
|
Mango Group
|
1,055
|
1,108
|
1,257
|
1,333
|
1,440
|
|
Mango
International
|
779
|
829
|
955
|
1,013
|
1,109
|
|
Mango Spain
|
276
|
279
|
302
|
320
|
331
|
|
|
|
|
|
|
|
|
Group sales £m (excl. sales tax)
|
716
|
758
|
857
|
913
|
1,147
|
SOURCE:
Company Accounts and Financial Reports/Mintel
UK performance
●
Mango
has not been particularly successful in the UK market in recent years, but
there seems to have been an upturn in 2008, with sales rising by 10.9%
year-on-year, although this appears to have been largely due to expansion in
store numbers.
●
The
company also made an operating profit in the UK for the first time since 2002.
●
Mango
has recently disclosed that the UK was among the markets where it was seeing
like-for-like sales declines in early 2009 as a result of the worsening
economic climate.
●
However,
the brand has expanded strongly in the UK over the last year, with standalone
stores as well as concessions at House of Fraser and Fenwick stores, so its
turnover in the UK should continue to rise in 2009.
FIGURE 110: Mango UK Ltd: financial performance,
2004-08
(£m)
|
Latest year-end: December 2008
|
2004
|
2005
|
2006
|
2007
|
2008
|
|
|
|
|
|
|
|
|
Sales (excl.
VAT)
|
26.7
|
26.4
|
24.8
|
23.8
|
26.4
|
|
|
|
|
|
|
|
|
Operating
profit
|
-2.1
|
-3.0
|
-3.0
|
-0.2
|
1.2
|
|
Operating
margin (%)
|
-7.9
|
-11.4
|
-12.1
|
-0.8
|
4.5
|
SOURCE:
Company Accounts and Annual Report/Mintel
Store portfolio
●
There
has been a decline in sales per outlet for the group as a whole over the last
five years, which can be attributed to a fall in the average store size.
●
However,
the fall in sales per m² suggests that space has also been used less
efficiently in recent years.
●
Franchising
has been a popular method for Mango’s international expansion, particularly in
the emerging markets of Asia and Eastern Europe where the company can tap into
local knowledge.
●
Mango
stores are in prime locations, either in shopping centres or in city centres.
FIGURE 111: Mango Group: Outlet data, 2004-08
|
Year to December
|
2004
|
2005
|
2006
|
2007
|
2008 (e)
|
|
|
|
|
|
|
|
|
Outlet numbers:
|
|
|
|
|
|
|
Mango Group
|
768
|
868
|
995
|
1,094
|
1,229
|
|
Mango
International
|
540
|
628
|
743
|
839
|
948
|
|
Including:
|
|
|
|
|
|
|
Mango UK
|
21
|
22
|
20
|
20
|
28
|
|
Mango Spain
|
228
|
240
|
252
|
255
|
281
|
|
|
|
|
|
|
|
|
Estimated sales area (000m²)
:
|
240
|
265
|
298
|
321
|
361
|
|
|
|
|
|
|
|
|
Sales per outlet (€000):
|
|
|
|
|
|
|
Mango Group
|
1,433
|
1,355
|
1,349
|
1,276
|
1,240
|
|
Mango
International
|
2,233
|
2,075
|
1,393
|
1,281
|
1,241
|
|
Including:
|
|
|
|
|
|
|
Mango UK (£000)
|
1,483
|
1,228
|
1,181
|
1,190
|
1,100
|
|
Mango Spain
|
1,249
|
1,192
|
1,228
|
1,262
|
1,235
|
|
|
|
|
|
|
|
|
Estimated sales per m² (€):
|
|
|
|
|
|
|
Mango Group
|
4,580
|
4,388
|
4,465
|
4,307
|
4,223
|
SOURCE:
Company Accounts and Financial Reports/Mintel
●
Mango’s
expansion in the UK has continued in 2009. As at September, the company
operated 42 outlets.
●
The
company has rolled out concessions in a number of House of Fraser stores and in
September 2009 opened concessions in two Fenwick department stores.
New fascias
●
The
company launched two new fascias in 2008, perhaps indicating that there is
limited room to grow with the Mango fascia in some markets.
●
‘HE by Mango’
is a fascia entirely devoted to Mango’s new menswear range. The first outlet
was opened in Barcelona in 2008.
●
Mango
Touch is a mini-boutique featuring accessories such as bags, footwear and
jewellery.
●
The
company has also hinted that it might launch a young fashion chain in the
future.
●
Mango
has not given any indication on whether the UK market will see any new fascias
introduced.
Retail offering
Market positioning
●
Mango
targets fashion conscious females aged between 18-30.
●
Youthfulness
is important to the brand and the offer is generally less focused on formalwear
and more on casualwear than fellow Spanish brand Zara.
●
However,
Mango has also tried to broaden its appeal outside these age groups, it has for
instance used former super model Lauren in an ad campaign to draw in an older
(but still fashionable) demographic.
●
The
appeal of its offer has also been broadened by offering more aspirational
ranges (eg capsule collections by designers) as well as the new affordable
Think Up range.
Brands
Womenswear
●
All
womenswear is branded as MNG, with some articles sub-branded as MNG Basics and
MNG Jeans.
●
The
brand has launched limited edition collections in collaboration with
celebrities and designers such as Penelope Cruz and Osman Yousefzada.
●
The
latest limited edition collection has been put together by young North American
fashion designer Adam Lippes. His collections were for Spring and Autumn 2009
and featured womenswear as well as menswear.
●
The
limited edition collections are more priced towards the premium end and are not
available at every store.
●
Celebrities
are also used to showcase the brand’s regular collection, eg. the Autumn/Winter
collection in 2009 was modelled by actress Scarlett Johansson.
Menswear
●
The
HE (Homini Emerito) by Mango range was first launched in 2008, but the company
has disclosed that it already accounts for 10% of its total turnover.
●
The
collection features trend-led smart/casual menswear positioned at the upper end
of the mainstream market.
●
The
2009 Autumn/Winter collection was modelled by British actor Max Irons.
Product offer
●
Mango’s
core offer is still womenswear, ranging from coats, shirts and dresses to
knits, jeans and trousers as well as lingerie.
●
The
menswear range consists of jeans, trousers, shirts, jackets, suits as well as
accessories such as sunglasses, footwear and belts.
●
Mango
Touch accessories stores feature items such as handbags, jewellery, sunglasses,
hats, scarves, footwear and belts.
●
While
there no Mango Touch standalone stores in the UK, Touch-branded accessories are
for sale in the regular Mango stores.
Pricing
●
Mango’s
pricing sits fairly mid-market, with some more premium pricing for items from
its limited edition collection.
●
Jeans
are from €37, cardigans from around €25 and skirts start at €39.
●
Limited
edition items start at €50. Evening dresses are from €219, shirts are €59.
●
The
Think Up range has t-shirts from as low as €5, coats from €35 and trousers
starting at €22.
Advertising and marketing
●
Mango
attempts to emulate luxury brands through its advertising.
●
The
company’s ad campaigns have featured well-known celebrities including Claudia
Schiffer, Naomi Campbell, Lizzy Jagger.
●
Scarlett
Johansson features as the face of the brand for the Autumn/Winter 2009 season.
e-commerce and home shopping
●
Mango
has operated a transactional website since 2000.
●
It
has continued to expand and currently serves 32 countries in Europe, including
the UK, as well as the US and Canada. In 2009, Mango plans to open a
transactional website in China.
●
According
to press reports, the company saw its online turnover reach €8 million in 2008,
an increase of 35% on the previous year.
If you want Dissertations on Mango, Contact Mahasagar Publications.
