SPIKE’S MEXICAN TWIST
Byline: Katherine Bowers
LOS ANGELES — Since the passage of the North American Free Trade Agreement, producing goods cheaply in Mexico to sell them domestically has been stock-in-trade for the local industry.
Now, former One Clothing Inc. president Peter Yoo is flipping that equation, producing a line here to sell exclusively south of the border.
Yoo, who left One Clothing six months ago, has launched young contemporary label, Spike by Spikeywear, to target a youthful Mexican market hungry for American fashion.
“MTV Latin is such a big hit. And pretty much every major U.S. magazine geared toward our junior target audience is translated in Spanish for the Mexican market,” he said.
So far, the trend-driven line has been picked up by Liverpool, a 40-door department store chain; Furore, which holds the license for Diesel in Mexico as well as having its own branded doors, and El Palacio de Hierro, one of the country’s top luxury chains.
These are three of 18 retailers Yoo identified as being able to carry a higher price point in their junior departments. Totaled, these better retailers accounted for $190 million in sales in the first quarter of 2001, according to Yoo’s research.
Yoo’s arrangement follows years of strong business between Mexico’s retailers and small cash-and-carry Korean-American manufacturers in the San Pedro Mart, which supply inexpensive, immediate goods. That buyer traffic has slowed considerably since Sept. 11 due to stricter conditions at the border.
In addition, Yoo said the upper-tier retailers are becoming increasingly interested in American collections that use better fabrics and aren’t bought widely by lower-end stores.
“A couple of my existing customers come to the San Pedro Mart on a regular basis,” he said. “But they are willing to pay a much higher price for customized colors and a merchandised collection.”
Yoo’s Spikeywear wholesales for about 20 percent more than many junior producers, with T-shirts at $10 and bottoms between $15 and $30.
The roomier margin allows him to produce here and airfreight product there. The five-week turn keeps the line reasonably apace with trends in the U.S. market.
Yoo estimated his company will do a modest $3 million this year, but he plans to build volume swiftly as he did with One Clothing’s Mexican business, which caters to large discount retailers like Wal-Mart. Yoo said he took that volume from zero to about $8 million in three years.
So far, sales of Spikeywear mirror selling patterns in the U.S., although Mexican consumer preference is for strong color rather than neutrals, Yoo noted. Novelty blouses trimmed with lace and ruffles are hot, as is novelty denim.
Despite the overwhelming number of denim facilities in Mexico, Spikeywear denim is produced locally because it calls for fashion washes and novelty embellishments, techniques that have been bungled by producers down south.
“A lot of manufacturers are cutting and sewing down in Mexico, but bringing it back here for washing and embellishment,” he said. “Those services haven’t been well-established in Mexico yet.”