Spanish retailer Mango is embarking on a bold expansion plan in the US as it looks to shed its fast-fashion image and position itself as a premium brand.
The privately held company, headquartered in Barcelona, plans to open 42 new retail properties in the US by the end of the year and aims to launch another 20 by 2025, mainly in the Sun Belt and Northeast, Mango told CEO Toni Ruiz in an interview with CNBC. .
The $70 million expansion plan includes a new logistics center outside Los Angeles and about 600 new jobs, bringing its U.S. workforce to about 1,200 employees next year.
“This is a long-term commitment,” Ruiz said. “We also have the opportunity to have larger stores in the US,” he noted, adding that Mango will open a number of multiline stores with men's and children's items.
Mango's sales grew more than 10% in the US this year and the company expects double-digit growth again next year.
Currently, Mango's largest market is its home base in Spain. While the US is among the top five markets, the company aims to grow sales in the region so it can break into the top three. The goal is part of a larger strategic plan at Mango, aimed at growing sales from approximately EUR 3.1 billion per year to EUR 4 billion by 2026.
Mango, known for its European chic basics, wants to reposition itself as a premium brand and make it clear to consumers that it is not a fast-fashion label. The design process takes between seven and eight months and everything is designed in-house in Barcelona, Ruiz said.
“Internally we have all the design, all the patterns, all the fittings – this is very important to us, so 100% is done here. We also have 500 people who take care of the product from start to finish,” said Ruiz. “We try to take it to the next level. What does that mean, take it to the next level? We think our customer really appreciates this creativity, this design, this own style. That's why we push a lot, not only in terms of quality and design and also: why no prizes? Because our proposal keeps getting better.”
Ruiz said Mango's U.S. growth plans are focused on stores, because a physical presence will allow the company to get closer to consumers and tell their story in a new way.
The company follows a string of other international competitors, such as Sweden's H&M, Spain's Zara and Japan's Uniqlo, who have turned to the U.S. market for growth. They're all vying to win over the average American household, which spends an average of $2,000 on clothing annually, according to a Lending Tree study.
Mango has opened stores in Pennsylvania; Washington, DC; and Massachusetts, but has its eyes on the Sun Belt for the next phase of growth, driven by e-commerce insights.
Mango's website now represents about 33% of its total sales and helps the retailer determine where its customers come from and what they buy, Ruiz said.
“It is a big challenge for us because we have understood that every state in the US is like a country in Europe, so because of the customer, because of the way of dressing,” Ruiz said. “It is very important to understand the difference between the states. … That's why we're trying to go step by step.”