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SINGAPORE — Korean-owned accessories label MCM’s revival from has-been to a company that did $450 million of business last year has largely been due to its focus on Northeast Asia.
Now it is looking to expand globally.
The brand has more than 110 directly-operated points of sale worldwide, mostly in Korea, and has made much of its plans to own 100 stores in China by 2016. It currently has 17 in the country. Over the next 12 months, the brand will also make a foray into Southeast Asia and expand in Europe and the U.S., said Sung-joo Kim, MCM’s chairman.
“Southeast Asia is the top emerging market when it comes to luxury. There are the nouveau riche in Indonesia and the good economy in Singapore,” she said. “We plan to discuss with several key players about [opening in] Indonesia, Thailand, Malaysia and Singapore. The earliest [a Southeast Asian store will open] is the end of this year.”
MCM, which now stands for Mode Creation Munich, will also be increasing its presence in the West. Its London flagship is moving from Sloane Street to New Bond Street, a new boutique will be opened in time for the Olympics and a shop-in-shop will be launched at Harrods. There will also soon be a presence in Printemps, the French department store, and new freestanding boutiques in Berlin and Munich. MCM will also make a renewed push into the U.S. next year, Kim said.
MCM’s bid to grow in the U.S. and Europe is a particularly significant sign of renewed ambitions. According to figures from the company, Kim closed more than 100 stores, mostly in the west, at a cost of about $30 million after taking over the tottering brand in 2005. MCM, which was founded by German designer Michael Cromer in 1975, made a name for its glitzy, cognac-colored leather accessories in the Nineties before nearly collapsing due to reasons that remain unclear, with tax fraud charges being brought against Cromer being a commonly cited cause.
Even as the company looks to the U.S. and Europe, China remains its main focus. Kim is targeting to be “one of the dominant players in five years” in China.
“It’s difficult in terms of merchandising because first-tier cities are quite sophisticated, whereas second-tier cities are 10 years behind Korea and Singapore and third-tier cities are infants,” said Kim, whose Chinese boutiques will be located in Shanghai and Beijing, as well as cities in the country’s less-developed interior. “China is five nations in one umbrella.”
Her business plan is thus city-specific, rather than country-specific. MCM will open its flagships in first-tier cities, which will mainly sell accessories made from exotic skins. The shops in second-tier cities will carry products made from less precious leathers, while smaller cities will be “more commercial” and carry more logo-driven stock.
“This doesn’t mean cheap,” she added, noting that all of MCM’s production is done in Germany, Italy and Korea and that Asian staff advise mainly on matters such as sizing and color palettes. Handbags on MCM’s online store begin at about 250,000 Korean won, or $220 at current exchange, but prices can quickly multiply.
The executive said the label needs to do a better job luring male consumers, which are a significant part of the fashion market in China. Close to 80 percent of MCM’s revenue derives from sales of leather accessories targeting women.
“Including watch sales, men make up 60 percent [of the market] in China, but at MCM in China, they are only 45,” she admitted. “We need to cultivate men.”
To that end, she will be recruiting more men, who make up less than one-fifth of her 600 employees. “They should wear what they are selling,” said Kim, who is a noted women’s rights advocate in Korea.
That “Korea is culturally close to China and we understand Asian tastes better” should also help. “We have guan xi,” she said, using the Chinese term that translates as “connections.”
Today, she claims the brand has the second-highest floor yield in South Korea, just behind Louis Vuitton, “and ahead of Chanel, Prada and Gucci,” she is quick to add. This may be partly because MCM boutiques are smaller than those of some of its competitors.
Despite MCM’s exponential growth of the last few years, the brand still has untapped potential, the executive explained.
“We haven’t done any brand extension or licensing. There’s a lot of extra mileage left,” she said.