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Retail Group of America is embarking on a plan that’s as bold as it is opportunistic.
RGA, the U.S. operating arm of Fawaz Al Hokair Fashion Retail, the Saudi global franchise giant, has signed a 52-lease package with Pyramid Management Group, the mall developer whose centers include the 2.2-million-square-foot Palisades Center in Clarkstown, N.Y.
RGA is launching a dozen European brands in the U.S. and opening 175 to 200 stores in the next 12 months, with the ambitious goal of operating more than 2,000 stores in five to seven years. Aaron Eisenberg, chief executive officer of RGA, forecast $1 billion in sales in five to six years.
The French, Spanish, German and British brands were chosen from Al Hokair’s portfolio of 70 fashion properties and include Promod, Jennyfer, Cortefiel, Women’s Secret, New Yorker, Ziddy, Sergent Major, Suite Blanco and Lipsy. All are new to the U.S. market.
RGA, which in 2012 bought the licenses to sister chains Monsoon and Accessorize from the U.K. retailer, plans to ramp up expansion of both concepts, which operate 24 stores in the U.S. “There’s an opportunity for European fashion to be introduced on a larger scale,” Eisenberg said. “If you look at all the malls, you see a sea of sameness. The malls are showing great brands, but there’s not a lot of diversity. This is something new for landlords to present.”
RGA is taking a page from Al Hokair’s playbook and working it backward. Al Hokair distributes in Saudi Arabia and other markets fashion brands including Gap, Banana Republic, Topshop, Marks & Spencer, Mango, La Senza and Desigual and is the largest distributor of Inditex labels such as Zara in the region. “We’re doing it in reverse, bringing a lot of the European brands here,” Eisenberg said.
While the brands RGA is bringing to the U.S. may not spark any recognition, Eisenberg said they’re all “very well developed in their own countries. Each has north of 300 to 400 stores in their native market. They never really had a partner that was able to collectively introduce [so many] brands together. We offer operational scalability.”
RGA believes in strength in numbers and wants to open as many stores as possible in a single mall. “We’re trying to do five or six stores per mall,” he said. “Each of the brands are stand-alone brands. We’re trying to work on loyalty and rewards programs based on the parent company. Once the first 12 brands are rolled out, we’ll take another 12 and launch right behind, building momentum for each truncheon of stores,” Eisenberg said. “This will continue for the next five to seven years.”
Stores will range in size from 500 square feet for Accessorize to 15,000 square feet for New Yorker. The median footprint is 2,000 square feet.
The diverse group of concepts includes footwear, accessories, cosmetics, kids, fast fashion and men’s.
E-commerce for the brands will launch along with the stores. “We’re going to get the message out and become transactional and interactive with our consumer base,” Eisenberg said. “We’ve got to make an immediate splash. We’re not launching one brand.”
Eisenberg said that RGA “will try to learn from other brands that launched in the U.S.” and initially faltered. “We have to push the profile of the brand out there. The marketing aspect is critical. We’re an American team. This is our native market. We know what works.”
“We have wholesale in our future plans,” Eisenberg added. “It’s a timing issue. Once they [the brands] have traction and have a consumer base, we’ll do wholesale and travel retail and look at other opportunities.”