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Kellwood Finds Mexico a Slow Sell

MEXICO CITY -- Kellwood Co. -- even with its 15 divisions racking up more than $1 billion in sales and offering a wide range of products to the moderate market -- has found that breaking into Mexico is slow going.<BR><BR>"Retailers are so saturated...

MEXICO CITY — Kellwood Co. — even with its 15 divisions racking up more than $1 billion in sales and offering a wide range of products to the moderate market — has found that breaking into Mexico is slow going.

“Retailers are so saturated with local manufacturers. That’s all they’ve had for years and they are loyal to them. It can be difficult,” said Yvonne Gutierrez, Kellwood’s general manager in Mexico City.

The diversified soft goods maker, based in the St. Louis suburb of Chesterfield, Mo., has been testing the Mexican market for a year, pitching the majority of its apparel lines.

So far, Kellwood’s sales in Mexico have totaled just under $5 million. Sears de MÄxico, with 45 stores, is carrying Kellwood’s California Ivy, En Chante, Cape Cod-Cricket Lane and Melrose women’s apparel lines, the Smart Shirts men’s private label program and Kellwood’s lingerie line, Ilise Stevens. (Sears, Roebuck is an old associate of Kellwood, which was originally started by a group of Sears’ private label suppliers.)

Other Mexican accounts include the Liverpool department stores, with nine units, which carries Melrose and Smart Shirts, and Salinas y Rocha, with eight stores that sell apparel, offering Melrose.

Although Kellwood positions its apparel as being fashion-forward at a moderate price, when Mexican duties and freight costs are added, the wholesale price can be hiked 30-35 percent. All apparel manufactured at U.S. factories with North American textiles eventually will have their duties eliminated under the 15-year phaseout plan of the North American Free Trade Agreement, but for now they are still largely in place.

Until the tariffs change and the Mexican market creates more buying power — what all business in Mexico is banking on — Kellwood is looking to sow new territory: the mass market catering to the bulk of the country’s 85 million people.

“The reality is there are only so many large retailers,” Gutierrez said.

But since Kellwood’s current lines don’t have prices to match the low-end market, the company plans to come up with one. Suburbia, a chain of 28 department stores owned by Mexican mass market giant Cifra SA, has expressed interest in this idea. Gutierrez’s next step is to pick a sample of Suburbia’s inventory to send back to Kellwood’s designers to see if they can develop an appropriate line of women’s sportswear within the chain’s price points.

Gutierrez operates out of a three-room office in downtown Mexico City just off the Reforma, the city’s scenic main drag. The rooms are virtually empty, save for a smattering of furniture and a few nightwear samples hanging from a wall, the beginnings of a showroom, another step in servicing the Mexican market. Most large retailers have buying staffs that travel out of the country to shows and apparel marts where they can see Kellwood’s lines. But the company plans to put together a representative range of samples this year in Mexico for in-between buying and for stores that don’t widely scour the markets.

But even bringing in samples to Mexico can be problematic. Gutierrez said a routine sample order of four women’s panties dispatched from St. Louis to Mexico City via Federal Express got stalled at Mexican customs for several weeks, even though the package was marked “Not for Resale.”

“I was told the panties had to be distressed or be labeled with country of origin” under the NAFTA rules, Gutierrez said. She sent them back to be properly labeled. They then passed through without a hitch.

–J.R.