Effective Diversity Marketing in Retail: A Look at MEXX in 2006

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In 2001, the international fashion brand MEXX was introduced in the U.S. After 5 years of riding the topsy turvy retail waves, the U.S. division employed aggressive diversity marketing tactics in hopes of reviving the brand and reaching under-served consumers.

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Effective Diversity Marketing in Retail: A Look at MEXX in 2006

  1. 1. Business Strategy For Effective Diversity Marketing Adrian Parker www.theparkmark.com
  2. 2. OVERVIEW Who is ? A division of Liz Claiborne, Inc. (NYSE: LIZ), MEXX is optimistic, nonconformist, inspiring and fun. The dual gender fashion line markets an extensive range of fashion apparel and accessories for women, men and children through a multi-channel business: wholesale, retail and home shopping. Founded in 1980 and acquired by LIZ in 2001, the brand is available in Europe, Canada, the Middle East, the Asia Pacific region and more than 65 countries worldwide. The contemporary and affordable products were brought to the United States in 2004 with the opening of 11 east coast locations. In 2006 however, the chain’s plans to bring “The GAP of Europe” into the U.S. hit several hurdles, including severe distribution channel issues, lack of consumer clarity, decreased corporate expenditures and aggressive competition. The U.S. store base, which was slated to evolve into a 100+ door chain, was reduced to just 4 stores, 2 in NYC and 2 in Washington D.C.
  3. 3. OVERVIEW FASHION SNAPSHOT Crisp Clean lines Classic Basic elegance Bold colors Sleek blacks Flexible & active Effortless Flirty Edgy Confident Tapered fits
  4. 4. OVERVIEW FINANCIAL TOPLINE 2006 WHERE THEY WERE WHERE THEY WANTED TO BE 2006 2007 2009 S a le s $20M $22M $50M % o f L C I re ta il 2 .8 % 2 .8 % 4 .0 % 4 -w a ll D O P 6 .9 % 8 .3 % 1 6 .0 % S a le s /s q . ft. $502 $524 $540 G ro s s M a rg in 6 3 .2 0 % 64% 64% D o o rs 4 8+ 25+ % o f L C I re ta il 0 .8 % 1 .5 % 3 .3 %
  5. 5. OVERVIEW STRATEGIC BUSINESS SURVIVAL REQUIRED GROWTH In order to remain profitable to LIZ and meaningful to the consumer, USA must evolve into 100+ door domestic chain, grow viable e-comm presence and unite with international business partners.
  6. 6. OVERVIEW Competitive Landscape: Where They Were vs. Where They Needed To Be Coldwater Creek GAP Limited
  7. 7. OVERVIEW Who is the consumer? Demographics Competitive Set • Dual-gender • Zara • Ages 20 – 34 • Club Monaco • NYC and DC • H&M • Esprit Psychographics • Express • Creative with fashion • Benetton • Fashion aware & involved • A/X • Diverse, unique style • Social • Influencer • Up to date • Against American casual uniformity
  8. 8. THE REAL DEAL The Goal Overall, their goal was to give shoppers an inspired, Euro-City experience of buying fashion products at attractive costs from intelligent, caring and friendly people. Then they had to bring the shoppers back. And find others just like them.
  9. 9. THE REAL DEAL Strategy Targeted, non-traditional diversity marketing was truly the only approach for increasing store traffic, transactions and overall awareness in such a formidable environment. Why? At its best, diversity marketing empowers the consumers you care about to more easily access your products/services. It removes barriers to engagement. They used it as a Mechanism to transform challenges into opportunities for results.
  10. 10. CHALLENGE #1 Marketing budget Allocations were anemic. Down 71% to ’04, 59% to ’05 and 8% to LY despite higher sales plan per store.. Opportunity “Because we didn‟t have the luxury of a reasonable marketing budget, we were forced to spend every $1 where it would yield not only positive ROI, but also the best ROI.”
  11. 11. CHALLENGE #2 Brand awareness among mainstream US Beyond fashion-aware shoppers, brand recognition is negligible Opportunity “Within the U.S., our brand had no equity or position among the general market. Instead of shouting at the crowd and hoping they would listen, we chose to talk directly to our evangelists who would spread the gospel for us.”
  12. 12. CHALLENGE #3 Brand value Attrition of more than 50% of consumer-base and closing of 64% of stores has degraded perception. Opportunity “Simply put, the formidable task of reviving the ailing brand created a “do or die” energy that afforded us a “by any means necessary” approach to gaining traction. Our micro-brand created the perfect opportunity to isolate and test diversity initiatives.”
  13. 13. CHALLENGE #4 Bigger, more aggressive competitors Direct domestic & global competition (Zara, H&M, A/X, Club Monaco, etc.) have larger resources & share-of-voice. Opportunity “Unorthodox guerilla and grassroots methods allowed our branding to be more nimble and concentrated to our locations.”
  14. 14. TARGET SEGMENT OVERVIEW SEX IN THE CITY •Professional minority woman •30 years old + •Average income $100,000+ •Single and married working mothers •Likely to have curvier, more robust figures •College graduates and advanced degrees (J.D., MBA, M.D., PH.D.) •She enjoys traveling, reading, fine dining, shopping, spa treatments, theatre, concerts and is active in her church and community •Resides in New York and Washington DC Metro Areas, Atlanta, Los Angeles, Chicago, Baltimore, Detroit, Miami, Dallas, Houston, Richmond, Seattle and Philadelphia •Shrewd, Confident, Views MEXX as conservative
  15. 15. TARGET SEGMENT OVERVIEW OUT & PROUD •Gay men •20 - 30 years old •Highly style conscious •“Discovers” fashion (Trendsetting & fashion forward) •Often have increased discretionary income due to double incomes in HH and no kids. •Very socially active and likely to use word of mouth referallas •Wields purchasing power to support brands that support them •Will check out any store at least once and is fond of European fashions
  16. 16. TARGET SEGMENT OVERVIEW SASSY SERIOUS STUDENTS •Ages 18 - 25 •Wide spectrum, mostly females •Love to shop •Somewhat more conservative •Needs clothes for work •Upwardly mobile •Somewhat insecure •Open to new fashion brands that connect and offer a chance to be “set apart.”
  17. 17. STRATEGY OVERVIEW LOOK •Advertising Expose 3 new shopper •Window Visuals segments to locations & product •Guerilla LISTEN •PR Engage new audiences by •Experiential Events Showcasing what the brand stands for •Celebrity Seeding LEARN •Loyalty/CRM Educate new & existing shoppers •Online to remain relevant in their life. •Gift/Credit Card
  18. 18. TACTICS Advertising What they did Spent $80K on media In-store Delivered 8M+ impressions during Holiday Finished October ↑11% plan and ↑17% comp Guerilla Media until year’s end with pulsing at peak weeks PR Advertised in print pubs targeted to professional commuters and in minority-rich areas. Partnership with Heart & Soul mag. Events CRM Created print partnership with OUT and INSTINCT magazines, leading gay men’s pub. Online Advertised in college weeklies around D.C. locations: The Hoya, City Paper
  19. 19. TACTICS Advertising What they did Enhanced store experience with multi-lingual copy In-store Reconfigured floor fixtures for increased SKUs on selling floor and made associates more recognizable Guerilla Small store count allows for personalized designs PR Tailored stores according to key targets most likely to shop at locations. Instead of store Events associates wearing store apparel during peak time, they wore special branded shirts. These CRM “uniforms” made them easier to recognize for patrons and increased service effectiveness. Online Offered incentives for shoppers to return with bounce-back discounts. These maximized the “new” traffic each store was obtaining.
  20. 20. •MEXX Cheque bolstered post-Black Friday ADT decline. In-Store •Recommitment to merchandising and selling Gift Cards.
  21. 21. TACTICS Advertising What they did Distribution of MEXX coupons at premier NYC In-store festivals, parades & cultural events. Guerilla PR Garnered low cost exposure at key GLBT Events events with street teams distributing branded coupons and offers at Gay Pride festivities. CRM Online
  22. 22. •Distributed 5,000 bouncebacks to target segment. Guerilla •Some parades routes passed directly in front of 5th Avenue store location
  23. 23. TACTICS Advertising What they did Secured excellent placements of product on TV, In-store print and websites (Earned Media) Produced 4 “Look Books” (style guides) that gained Guerilla attention of fashion editors and stylists. PR Shopping event featured in target publication, Heart & Soul. Sent fashion samples to celebs Events for seeding. CRM Gay men’s event featured online and in-print with additional e-mail blasts. Key placement on Queer Eye. Online Outreach to local college pubs
  24. 24. •US Weekly 11M imp PR •Queer Eye 1.5M imp •NBC‟s Today Show 6.2M imp
  25. 25. TACTICS Advertising What they did clusive event platform brought diverse groups In-store together for one purpose: fashion Also activated off-site nightlife events to position Guerilla MEXX as cool & trendy and introduce brand to new audiences. PR “Fabulous on 5th” event made concerted, deliberate effort to attract diverse audience. Events Hosted by Latino , AfAm & Gay peers. CRM Hosted Gay men’s fashion show to highlight the season’s latest looks directly to captive audience in heart of NYC Online “Sexxy, Sassy, Saturday” event invited all local college students out to shop using special discount and offered free drinks.
  26. 26. •1st Event grossed $20K in 3 hours EVENTS •DJ “Scratch” event lead to 66% comp •Radio promo touched 7M New Yorkers
  27. 27. EVENTS Highlight Reel Click „play‟ icon in center. Must have internet connection to view.
  28. 28. TACTICS Advertising What they did Largest portion of ’06 budget (26%) In-store Targeted existing 30K shoppers (lifetime spend of $3.9M) Guerilla ADT of top-half of database = $89 ADT of top-quarter = $104 (avg = $73) PR Photography featured looks and key items in fashion Events environment as opposed to being worn by “European” CRM models. Sent direct mail pieces to database of target partners (OUT, INSTINCT, Online etc.) and also supplied to stores for distro at key locations, especially college hot spots.
  29. 29. •Holiday mailer in-home 11/17 CRM •Promo = $15 MEXX Cheque Card •Distro = 30K CRM, 10K Prosp, 3K Magazine
  30. 30. TACTICS Advertising What they did Launched MEXXSTYLE.com site to feature new In-store looks, event footage and store details Monthly “New Arrivals” e-mail to members Guerilla Launched branded MySpace page PR MEXXSTYLE micro-site and Events MySpace became a digital destination CRM for our shoppers to participate in the brand. They gave Online feedback on styles, events, upcoming activities, etc.
  31. 31. •MEXX Style became digital destination supported by social networking ONLINE •E-mail blast & outreach to target segments
  32. 32. 2006 MARKETING SPEND Seeding Professional Credit/Gift Fees Card Advertising Ad v e rtis in g 80 Digital E v e n ts 55 E u ro p e U s a g e 75 Events P R /L o o k B o o k 88 P o s tc a rd & B B s 125 Postcards & BBs D ig ita l 14 C re d it/G ift C a rd 12 Europe P ro d u c t S e e d in g 15 Usage P ro fe s s io n a l F e e s 27 PR & Look 491 Book $491K (2.5% of sales plan)
  33. 33. APPROACH REVIEW •Stay true to the core values & attributes of the brand. •Break the rules. Burn them. INSTORE Bury them. •ROI! Ensure every $ spent brings back more in return. ADS PR •Think Globally. Act Locally. •Show the product. Show the product. Show the product. •Use every touchpoint as an CRM EVENTS opportunity to make them LOOK, LISTEN & LEARN. WWW
  34. 34. RESULTS THE GOOD •Finished 2006 4%+ to financial plan, the brand’s first + comp year ever •4 doors pushed $19M in sales, highest sales/store ever •Delivered more than 8M impressions and $3.4M in sales during holiday E s t. In c re m e n ta l Promoted Sales Im p re s s io n s T ra n s a c tio n s S a le s L o c a l A d ve rtis in g 4 ,9 5 4 ,0 0 0 3 9 ,6 3 2 2 ,9 7 2 ,4 0 0 D ig ita l M e d ia 6 5 0 ,0 0 0 5 ,2 0 0 3 9 0 ,0 0 0 CRM 1 9 0 ,1 0 0 1 ,5 2 1 1 1 4 ,0 6 0 5 ,7 9 4 ,1 0 0 4 6 ,3 5 3 $ 3 ,4 7 6 ,4 6 0 THE BAD •Factoring in 2006 store closings, overall US division was -7% to plan THE UGLY •The entire US division was shuttered in summer 2007. There are presently no stores domestically.
  35. 35. DISCUSS 1. This is one David vs. Goliath story that lacked the celebratory ending. Was it worth it? 2. What is the common thread among the 3 target segments – professional minority women, gay men and college students ? 3. The team was tasked with 2 key challenges to solve simultaneously: proving MEXX as a viable U.S. retailer and proving diversity marketing as the correct business driver. Is it possible for one to succeed without the other? 4. Although LIZ is a Fortune 500 retailer, this 2006 case provided a micro “Petri dish” view into practical, real-world execution on an entrepreneurial level. Given the challenging state of retail in 2009, are there key learnings for other retailers? 5. MEXX remains one of the largest global fashion brands without a U.S. presence. If the brand is re-launched domestically, should it activate a more general market approach and cast a wider net?

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