Mexx feeds market madness for value-based euro glam

DSN Retailing Today, June 7, 2004 by Emily Scardino

>From the day the first U.S. Mexx store opened on Fifth Avenue in Manhattan, it has created a stir with consumers, leading to "results that have exceeded expectations--I can't say enough good things about it." praised Paul Charron, chairman and ceo of Mexx parent company Liz Claiborne Inc. And the latest specialty purveyor of Euro style has only begun to catch fire stateside.

Liz Claiborne acquired the Mexx business in 2001. a successful retail and apparel brand founded in 1980 and originally based in the Netherlands. Mexx currently operates hundreds of stores across Europe, and Mexx product is also sold through franchise arrangements with other retailers, with more than 4,000 additional points of distribution. Claiborne also acquired Mexx Canada in 2002, formerly a separate business division, so that the parent company now has global rights to the brand. The first three U.S. stores, opened in 2003, also include locations in Union Square in New York City, and in Westchester, N.Y. The Mexx label will remain exclusive to Mexx stores in America. as the chain slowly expands, starting in the Northeast.

What makes the mix at Mexx stand out is its combination of high style and moderate prices. Its Continental assortment brings Armani Exchange or Diesel to mind while its price points are more in keeping with those at Zara or H&M. The Fifth Avenue store, located in Liz Claiborne's former flagship down the street from H&M, has not apparently suffered from price comparisons with its less-expensive neighbor.

"One thing we have found is that the price/value relationship was received as we expected it to be, especially unique for a brand with no benchmarks to position it, no retail distribution," said Amy Schecter, vp and gram of Mexx U.S.A., in an interview with DSN Retailing Today. "Customer feedback indicates that they feel the price/value relationship is a strength of the brand: They don't want disposable fashion, they want wearability for the long run."

Though the affordable women's and men's clothing at Mexx is young and trendy--more so than Liz Claiborne's standard fare--it is still more basic for the most part than the ultra-hip attire at H&M. Quality and multi-season wearability factor into the brand identity. For instance, one department features basic black attire, designed for the long haul. The core consumer is anywhere between 20 and 40 years of age, and assortments account for this broad age range.

Assortments are also being fine-tuned as Mexx carefully expands in the United States. Even in Manhattan, the company has noticed differences between the suiting separates that fly out of its uptown store and the more casual items that students snap up downtown.

While the latter two U.S. Mexx stores opened in 2003 are large, with an average of 16,200 gross square feet, the retailer's first and only mall-based location, in Westchester, N.Y., is significantly smaller at 5,500 square feet. This scaled-down footprint is representative of the average size of stores as Mexx moves to the mall going forward.

This year alone, three of the four stores that are opening will be in malls: in Roosevelt Field, N.Y., Cherry Hill, N.J., and Menlo Park, N.J. The other location will be off-mall, in Georgetown.

"We are extremely enthusiastic about these stores. They will really allow us to get a great on our expansion potential in mall-based locations," add Schecter.

Obviously, the mall format will necessitate tailoring-town down assortment. Initial results have been promising across the store--especially in the accessories and gift areas which will be emphasized even in smaller stores.

"We are pleasantly surprised by the response that we are getting in accessories we feel there is definitely a void in the marketplace in terms of a great price/value relationship," added Schecter, citing outstanding sales growth in subcategories, including fashion jewelry and ladies' handbags.

Another area doing well at Mexx, which came as a surprise to Schecter, is the lifestyle product, including books, CDs and vases. Placed in the store primarily for atmosphere, they have become such an important part of the business that they will be played tip even in the smaller, mall-based units. The company is extremely excited about holiday 2004 as a destination for gift shoppers.

Mexx's innovative store design highlights its wares. Luxe touches include water coolers in the dressing rooms, lounges featuring mod furniture and music stations and containers of free candy, all part of the Mexx lifestyle. Giving bargain shoppers a high-end shopping experience and the right balance of quality and value is already giving Claiborne an "in" with the younger consumer base it desires.

MEXX

CORPORATE HEADQUARTERS: New York, N.Y.

TOTAL ANNUAL REVENUE: $742 million

AVERAGE STORE SIZE: 4,400 square feet

NO. OF STORES 7 TRADE TERRITORIES: 3 stores in New York; 157 in Euro and Canada

All figures for Mexx Group, a division of Liz Claiborne Inc.; total store count for company-owned locations only.