El Palacio de Hierro’s in-store home goods division is taking some bold steps to maintain solid sales in the face of a downtick in the Mexican economy.
“We plan to grow around 12 percent, but we had expected a higher increase this year,” the division’s director, Rodrigo Flores, acknowledged. He said first-half sales fell after a surprise slip in the nation’s economy sapped consumption.
Mexico’s government recently revised forecasts that had called for growth of 3.2 percent in gross domestic product in 2013 to 1.8 percent, following a slower-than-expected second-quarter expansion.
So to battle the falloff, Flores said the retailer is deploying a major and unprecedented marketing and sales campaign. Profit margins, he said, should remain at 3 percent, thanks to operating efficiencies.
The marketing initiative will focus on promoting the key elements of the business — furniture, whites and kitchenware — which make up the bulk of sales.
In a first for the division, Flores’ team will launch a social media publicity effort on Facebook, Twitter and other platforms that will feature videos on how El Palacio’s home products can fit consumers’ lifestyle needs.
As part of the move, top-selling brands such as Vera Wang, Mexican furniture label Boal and British brands Wedgwood and Royal Albert will be promoted, Flores said.
To further boost sales, El Palacio will deploy an aggressive discounting effort with prices slashed as much as 50 percent, compared with around 25 percent in past years, he added. It will also publish a larger sales catalogue and introduce home-decor option packages at reduced prices.
The unit will also have introduced six to seven exclusive brands by the end of this year, matching a similar number in recent years, Flores said. One notable launch will be Finnish home accessories brand Marimekko.
In addition, El Palacio will open two new corners of its top-selling Italian furniture brand Natuzzi, for a total of nine by the end of the year.
According to Flores, the unit’s top-selling labels include Parker House, Spring Air, Natuzzi and Boal, for which it also runs corners.
El Palacio de Hierro sells a wide range of upmarket homeware and decorative items in all 12 of its department stores across Mexico. However, the division’s retailing sections vary from store to store. For example, El Palacio’s downtown Mexico City store is about 13,000 square feet, while the newer Santa Fe outpost boasts about 54,000 square feet for a broader shopping experience.
El Palacio has sold home products since it opened its first department store in the downtown area of the nation’s capital. Since then, the chain has gradually expanded its offer to include Mexico’s most exclusive brands.
Driven by Mexico’s growing middle and upper classes, the retailer has made an effort to stock more lifestyle-inspired products for young consumers.
“People are much more informed [about interior design and products] than ever before, and they are demanding brands that fit their lifestyle,” Flores said, adding that during El Palacio’s earlier days, there was a stronger focus on selling luxury homeware to older, more affluent customers.
“In the past, upscale home decor was mainly reserved for the elite,” Flores said. But with Mexico’s rising numbers of moneyed professionals, that is no longer the case, he said.
To meet these consumers’ demands, El Palacio’s newest store — Interlomas — boasts a more contemporary environment with home goods stocked under three main lifestyle themes: contemporary, classic (à la French Provincial) and classic modern.
Flores expects the Interlomas marketing concept to be replicated in other El Palacio units when they are refurbished in the next five to seven years.
The executive said El Palacio competes mainly with Zara Home and the home division of its larger competitor, Mexican department store chain Liverpool, which targets a more mass-market customer.
Unlike these chains, El Palacio has a “more exclusive” and pricier product mix, Flores noted. However, he said the division has been working to bring more affordable, designer-oriented furniture to better compete with these retailers.
“We are introducing designer [style] at accessible prices,” Flores said, adding that while it intends to remain an upmarket homeware retailer, El Palacio will introduce more midprice aspirational home goods to bolster sales in the next five years.
“We want to attract the professional thirtysomething segment and younger adults that have more decor mobility [meaning they redecorate more often],” he explained. “A 60-year-old customer is less likely to renovate her home often, but the 30- to 45-year-old professionals are in the most productive period of their lives.
“Their numbers are growing, so we are directing our efforts to attract this segment.”
El Palacio’s department store homeware business differentiates itself from the chain’s Casa Palacio freestanding units by selling conceptual and lifestyle furniture for middle-, upper-class and wealthy Mexicans. In turn, the two Casa Palacio stores market haute couture furniture, stocking the country’s priciest brands. They also offer a fully integrated interior-design service.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast