Since Liz Claiborne Inc. purchased Mexx Group BV in 2001, the American firm has used the Amsterdam apparel and accessories business as a platform to launch its stable of American brands in the European market.
But the marriage has benefited Mexx, too, explained Rattan Chadha, Mexx’s chief executive officer, who founded the masstige firm in 1986.
“From the beginning, we thought it was a match made in heaven,” he said. “Five years on, and we know that it is.”
Well-established in Europe, where it operates some 650 stores, Mexx had yet to enter the American market before the tie-up with Claiborne. Over the last couple of years, with Liz’s help, Mexx has plunged into the U.S. and now operates seven stores there.
Chadha said the firm is still on a learning curve in the U.S., having performed better in metropolitan centers than in shopping malls due to weak brand awareness. In the longer term, however, Chadha sees “enormous” potential for Mexx in the U.S.
Mexx has become the gatekeeper for Liz brands in Europe. In 2005, international accounted for 26 percent of the company’s $4.85 billion sales, or about $1.26 billion. “We’ve developed into a multibrand operator in the last couple of years,” said Chadha. The executive acknowledged it hasn’t been all “easy going” for Liz’s stable here. After all, American brands, including Gap, traditionally have met with mixed success on the Continent.
“There are different taste levels in Europe,” reasoned Chadha. “Let’s say that the European customer is more individualistic and more sophisticated.”
Chadha said many American brands also fail to recognize that Europe is hardly homogenous, compartmentalized by “taste clusters” in northern, central and Latin countries that must be catered to.
One brand might work in one country, but not necessarily in another, Chadha said.
Liz Claiborne, for example, hasn’t been “very successful in the United Kingdom” because its style is seen as too casual, but it has been a hit in Spain, resonating with that culture’s more laid-back style, Chadha said.
“Similarly, we’ve just opened a Lucky shop in [Paris’] Galeries Lafayette and it’s been very successful,” said Chadha. “Northern Europe has been more difficult.”
Chadha said Lucky represents a “great opportunity” in Europe because its positioning and image appeal to a wide audience. The brand already has opened stores to strong sales in the Benelux markets and just started to wholesale in Italy.
Monet, the Liz-owned jewelry company, has had success in France and Benelux countries, said Chadha. Ellen Tracy is being slowly tested.
As for Juicy Couture, Mexx doesn’t operate that brand because it is handled by an agent in London. But Chadha said he would like it to come under Mexx’s sphere of influence.
On a practical note, Chadha said Mexx has been working with Claiborne to adapt the various collections to European tastes, sizes and needs.
“Adjustments to the collections are subtle, but important,” he said.
Chadha said the Mexx brand has benefited from its “middle-market” position, even though many have trumpeted the demise of that market segment, squeezed by low-price competition like Hennes & Mauritz and Zara.
“The middle isn’t out,” said Chadha. “What you need is a distinctive point of view and message to succeed. In terms of fashion, we are doing the same thing as Zara and H&M. We do 12 collections a year, with [an express line] with 90-day delivery.
“The difference is that our stores are more distinctive, our service level is higher and our quality is better,” contended Chadha.
To better orchestrate its style, Mexx last year hired designer Stephen Fairchild as artistic director, and he has been coordinating and calibrating the overall message into a collective whole. “He’s been a great asset,” said Chadha, who added that Mexx plans to open about 50 stores this year, including 10 wholly owned units and 40 franchise boutiques.
Europe remains the firm’s priority, with growth opportunities in Germany and France, according to Chadha, who underlined Mexx’s strong foothold in the Benelux countries, where it has a 3 percent market share.
“In Germany, we are still short of 1 percent,” said Chadha. “We have room to grow there, as well as in Italy.”
The Middle East has also been targeted, and Mexx recently signed a deal with a local partner to roll out “a considerable” number of stores in the next three to five years. Mexx already operates 40 stores in the region.
“We’ve been making great progress since Liz came on board,” said Chadha. “Sales every year since the acquisition have grown at double digits — and they continue to do so.”