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David Sancho

Mango’s senior vice president international expansion (China) is making a bold effort to crack the Chinese market by accelerating its store opening programme.

It’s just a couple of months since David Sancho, senior vice president international expansion (China) at Spanish chain Mango, moved to Shanghai and he is enthusiastic about the opportunities that China offers the business.

The Barcelona-based retailer has been trading in China longer than most of the global mid-market fashion players who are now all rushing to enter the market, having had a presence since 2002. But after building at a steady pace to 134 points of sale, Mango is now looking to push aggressively ahead with the aim being to get to 500 stores in the next four years.

Sancho says there are many reasons why the womenswear retailer has decided that now is the right time to push forward. Firstly, the market is now truly opening up to mid-market fashion players, with the growth of a new middle class. Secondly, the growing sophistication and size of the domestic players in the same space means that international retailers need to move faster to take up a position and start to create brand awareness in the market.

Sancho’s task is to ramp up Mango’s infrastructure in the region to achieve this growth. The retailer opened a Shanghai office in February and has taken on 50 staff to create a support network to drive forward expansion plans. The new Chinese office will include a commercial team chasing and managing store and partnership opportunities as well as buying, PR, logistics, quality control and HR personnel. “We are building a local team. I’m the only one in the office who isn’t Chinese. That is the way we wish to structure the business so we have people who really understand the market,” says Sancho.

Mango’s China strategy is to open company-owned stores in the top 25 first- and second-tier cities on the mainland and concurrently develop local partnership stores and points of sale in third and fourth cities.
Sancho says: “The market is moving fast and we have to develop with it. This year alone we have an opening target of 70 stores to reach a total of 200, 40 of which will be our own stores.”

Strong partnerships
Mango already has 22 partners who have opened stores or shop-in-shops with the retailer. Sancho explains: “Where we have local partnerships in the top 25 cities we will stick with our partners and build on that. At Mango we respect our partners.

“It’s difficult to say how fast we could accelerate the brand in the long term, as China is changing so fast that actually looking at things in any great detail further than one year ahead is difficult.

“What we bring to the market is our international brand status. I hope we can offer something that these local brands are still missing in terms of product and shopping experience and we are working very hard on customer service levels to ensure that.”

Mango’s standalone stores in China will be 300 sq m (3,300 sq ft) on average, standard for the business, with flagships up to 500 sq m (5,382 sq ft). Shop-in-shops and corners go up to 100 sq m (1,076 sq ft) in the Chinese department stores.

Sancho believes high street locations now work well in China’s top cities as well as malls. He says that although department stores will remain important for the business, younger shoppers are now starting to prefer malls and high street stores. “Some of the shift won’t happen for another two or three years, but that’s where the trend is and it will move faster as the retail development gets more sophisticated,” he explains.

Intense competition
With global brands eyeing up the Chinese market as a big prize, does Sancho feel there will be a race for space? And how will Mango fare against this intense competition? “The more international retailers that come into China the better for Mango, as it means the Chinese customer becomes more sophisticated about wanting non-logoed mass-market brands,” he says. Mango’s fourth channel of distribution in China is via the internet; it has opened a store on Taobao, the Chinese language website similar to eBay. “It is a complementary channel of distribution for us which will grow as the market grows,” he says.

Mango’s designers travel to its markets often in order to hear about their needs and China is high on the list. But Sancho says the collection remains a global one and a head office team tuned into China’s needs selects from the global collection. He adds: “The only market-centric things we might do would be to put in something more special for the Chinese New Year, which again we would do in other markets such as for Ede in the Middle East.”

Mango’s like-for-like sales in China rose by just under 50% in 2010. Sancho says this confirms the massive opportunity in the Chinese market and the need to capitalise on it. “Currently China accounts for just 2.4% of our global sales and we hope to take that to 4% in the next 15 to 24 months,” he says.

The top three markets for the retailer are Spain, France and Turkey. Sancho is keen to see that change and get China into the top three. He says: “It’s a strategic market for the company. The scope to do well here is incredible; there is no reason why the Chinese business could not be challenging for one of those spots in the next few years. When you see how China is growing and the pace of growth not just in fashion but across all sectors, it’s difficult not to be optimistic about our prospects here.”

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