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The Right Move: Relocating To Toronto Part 2

Mango is the latest newcomer in a string of hip, pocket-book friendly, European fashion retailers to waltz their way into Toronto and the rest of Canada.

Zara, Mango’s older sister and home country rival, paved the way six years ago, opening on Bloor Street and eventually expanding to its current 13 stores across Canada.

H&M followed suit and to date, the low-cost Swedish men’s and women’s clothing behemoth has seven locations in Toronto, but have yet to penetrate elsewhere in Canada including Montreal, the traditional hub of Canadian fashion.

Mango took the same tack and chose to locate in Toronto as the catalyst for a North American invasion.

“Toronto naturally straddles between Europe and the United States,” says Jose Gomez, Vice President of International Expansion USA and Canada.

The Barcelona-based fashion giant, founded in 1984, is a multinational corporation that manufactures and markets women’s clothing and accessories.

With 5,000 employees worldwide, more than 1,000 of those work in the company’s sprawling Spanish headquarters that, according to Marie-Noëlle Durand, General Manager of the Toronto Eaton Centre location, looks as impressive and huge as a General Motors plant.

A technological wonder, the facility is able to classify, and distribute 30,000 garments per hour, helping to rank Mango as the second largest export company in the Spanish textile sector.The company currently operates 791 stores in 78 countries and doesn’t intend to slow expansion anytime soon. In 2004 alone, the company opened 87 stores and are on track to exceed that number in 2005.

Isak Halfon, Executive Vice-President of Expansion, says, “Since the beginning, Mango has wanted to be present in all the most important cities of the world. Montreal and Toronto have always been a priority which has finally been fulfilled.”

With this mandate to prioritize North American markets, it may seem strange that a successful corporation, founded nearly 20 years ago, expanded to such remote markets as Serbia and Montenegro, Honduras, Tunisia, Australia and China before flirting with the likes of Toronto, New York, or L.A.

Gomez blames the World Trade Organization’s imposed quota system on foreign imports as blockades to earlier entry.

“There was simply not enough room in the quota system for us to enter,” he says.

Principally imposed to regulate and balance imports from textile manufacturing economies, the system placed Canadian textile manufacturers at a cost disadvantage as they were charged import duties on fabric which developing countries weren’t required to pay, driving Canadian operating costs through the roof.

The effects on the local economy were evident as apparel manufacturing employment dropped from 15,300 jobs in 2001 to 13,200 in 2002. The landscape had definitely altered and proved advantageous for foreign companies like Mango who pined in preparation for one year, awaiting the North American dam to break.

As in every agreement, compromise is necessary—especially evident in the U.S. as the effects of the January 1, 2005 duty abolition continue to reverberate. According to the American Manufacturing Trade Action Committee, imports of certain garment types in America increased more than 1,000 per cent in January 2005 compared with the previous year, and there were increases of more than 500 per cent in other categories.

Today, companies are free to import textiles into Canada from anywhere in the world. This doesn’t directly improve Mango’s manufacturing productivity since they don’t manufacture in Canada, but it did allow the company to set up in Toronto and begin importing manufactured clothes from countries that, under the old quota system, would not have been permissible. This opened the door for an aggressive retail expansion plan to take shape in North America—and Mango is all about location.Site selection in prime spots in the top malls is Mango’s mantra and its biggest challenge according to Gomez. The company’s enthusiastic quarterback envisions delivering on this mantra in 20 to 30 locations across Canada.

Mango’s real estate department executes its site selection and lease negotiation internally, physically spending time in a prospective city to get a feel for the hot spots and to make a deal directly. After the site selection is made, headquarters lets go.

The three current Mango locations in Toronto (the Toronto Eaton Centre, Yorkdale Shopping Centre, and Sherway Gardens) are franchises owned and operated by the firmly established, Montreal-based Tristan & America, the first number Marie-Noëlle Durand calls when her store needs anything done even as minute as a light bulb change.

Durand says she has thousands of telephone numbers for Spain that she can call—and does—and is consistently amazed at how intimately familiar those in Barcelona are with each particular store despite the firm’s sprawling global presence. What she likes best about working for Mango is the opportunity to grow in a company that has only just broken the ice in North America. (A corporate office on this continent has yet to be established.)

As far as the clothes go, the Toronto market has some unique requirements. According to Durand, in Mango’s portfolio, Toronto is categorized as a “Siberian market.” Coats need to be thicker, boots need to be lined and warm knits need to be offered.

The company’s cultural sensitivity to specific markets often delves deeper than the weather. In Arabic countries for instance, the company refuses to carry short sleeve tops or short skirts for fear of promoting indecent exposure.

On a humid weekday afternoon in July, Mango’s first North American store at the Toronto Eaton Centre is ravaged by a sale, the first since its opening in May. On this day, business women are the primary clients, shopping while a continuous video loop of a Mango fashion show and ambient electronica pulsates in the background. A dangling sizing tag on a pair of linen MNG Basic Pants catches the eye: “E-F 44, D 42, USA 12, MEX 11, UK 16, IT 48.”

Mango is everywhere and Toronto looks like a perfect fit.

When Gomez is asked what he thinks of Toronto, he responds without skipping a beat. “I love this city, it’s one of my favourites—just beautiful and it’s the people that make it [so].”—Tim McKeague

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