Spanish fashion giant Mango forms alliance with David Jones after initial struggle

International women’s fashion brand Mango is re-launching in Australia, this time in David Jones, nearly a decade after its own local stores failed to gain traction in the Australian market.

 

The Spanish fashion brand will be sold in David Jones stores in capital cities from August and in all stores by the end of next year.

Mango first launched in Australia in 2004 under the name of MNG, with stores at Westfield Doncaster in Melbourne, Westfield in Bondi Junction and The Galleries in Sydney.

The brand has been unable to build market share, with only one store now remaining in the Melbourne CBD.

Partner at Bentleys and retail expert, David Gordon, told SmartCompany the history of the company highlights how difficult it can be for an international chain to succeed.

“This illustrates the difficulty of overseas specialist retailers building sustainable businesses in Australia. The retail model is fraught with danger for these overseas companies because our retail financial model is quite different.

“We require very high margins to cover the unusually high occupancy and staff cost we have in Australia,” he says.

Recently, more international brands have made the move to Australia, with Zara, Top Shop and soon H&M opening stores here. Gordon says their initial success can be attributed to their capacity to manage multi-seasonal ranges at one time as they operate around the world.

SmartCompany contacted Mango and David Jones, but received no response prior to publication.

Mango launched in 1984 with its first store in Barcelona. The brand has now expanded to over 1,600 stores in 107 countries worldwide, with plans to grow the brand to over 140 countries in the coming years.

For brands such as Mango opening in Australia, Gordon says they should consider opening in department stores first.

“The wholesale model is much easier. You’re essentially leaving the marketing and selling of your product to retail experts who already have the marketing knowledge and customer base.

“It’s more logical to go from being a wholesaler with the ability of generating brand following, to then grow the brand as a retailer,” he says.

Yet for all the success of international entrants, Gordon says that success may not last.

“By all accounts, the three or four most recent entrants seem to have done very well in Australia, but we have no proof that what they are doing is sustainable. For example GAP, we heard a lot about the impact on the market and then nothing.”

“How sustainable these overseas companies are going to be in the market, we don’t yet know,” he says.

Gordon says the most successful retail brands in the market are usually managed within Australia.

“The truly successful specialist retailers in Australia are, generally speaking, private companies where the private shareholders are very hands-on in the business. To create a small to medium-sized corporate without local ownership and stakeholders in Australia is very difficult,” he says.

On forums, shoppers have complained the Australian MNG stores are too expensive for the quality of the products and some hope the David Jones range will have better collections than those which were offered through the stand-alone stores.

 

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