Jorge Gay de Montellá Estany is Expansion Manager at Mango. 32 years old, bachelor´s degree in Law and MBA from IESE. Married and about to have his first kid. Runner and motocross fanatic.
Jorge Gay de Montellá: I live in Barcelona, where I was born and raised. I love the sea, the country side, and the fact of Barcelona being such a small city, or large village having very nice beaches and ski resorts at about 1 hour drive. Something unique.
I go running every morning before the sun rises, to start thinking about the issues I will need to face during the day, and the decisions I’ll need to make, both in my day-to-day personal and professional life. I also love doing motor sports (especially motocross during the wet/rainy season).
Before joining Mango, I graduated in Law, and served as Legal Advisor in Cuatrecasas, a leading Spanish law firm. Law it’s a profession that you either love it, or hate it; in my case, I ended up hating it after 3.5 years. Despite, during the first 2 years I had the opportunity to live in 4 different cities (including Buenos Aires, and Madrid), and learn about the issues a company may face from 4 different areas (tax, M&A, capital markets & litigation).
The Fashion Retailer: Could you define what Mango is?
JGM: Punto Fa S.L., trading as MANGO, is a fashion retail company founded in Barcelona in 1984. Its brand portfolio includes Mango, Mango Man, Mango Kids and Violeta by Mango. Its goal is to dress a young, urban, and fashion-oriented customer at an affordable price.
At the date, MANGO has +2,200 mono-branded stores, spread around 112 countries, being one of the most international brand (if not the most). The company produces 142 million units per year, and has +16,000 employees. In 2000, it was one of the first fashion retailers to launch its online shop, and the online share stands currently for 12% of the total turnover.
According to the last data published, Punto Fa, S.L.’s turnover in 2015 was 2,3 billion euros.
TFR: What´s your role at Mango?
JGM: I’m part of Mango’s International Expansion team, in charge of the Americas region (specifically, South America, Canada, and -partially- the US) and Africa.
At Mango, the word “expansion” involves two main tasks:
- Business development, that includes either entering into new markets, or finding new partners in those where we already have presence. It mainly involves negotiating a set of commercial conditions, on which our business model is based on.
- Overlooking the relationship between Mango and its franchisees, taking care of all the areas of the business implied; and helping our partners to move around all Mango’s departments involved in the day-to-day of a franchise. I take care of helping our partners to meet the conditions agreed generated the business model/commercial terms previously negotiated.
All the above mentioned implies travelling a lot (almost every week), having full-visibility on the P&L of our partners, and working towards building long-standing business (and personal) relationships.
In my case, I overlook the operations of our franchisees in the Africa region (where our footprint is of +65 points of sale) and Americas (+140 POS).
TFR: Your role is focused in bricks in the era of digital. What do you think about the retail industry crisis (e.g. Macy´s closing stores)? Do you feel online (Amazon) is going to overtake offline?
JGM: At Mango we don’t conceive brick-and-mortar stores without on-lines stores, or on-line stores without brick-and-mortar stores. We truly believe (and have implemented) an onmichannel strategy.
“We need to be where our customers want us to be, and not where we want our customers to be”
We launched our online store in 2000, 7 years before the iPhone 1 was released. Mango was one the first fashion brands to launch its online store worldwide, and since then, we have been working off and on-line with only one purpose: to put always the customers first.
That’s why at Mango we don’t only expand our brand off-line, but also through the main online market-places (Amazon in the US, T-Mall in China, Global Fashion Group’s brands regionally, etc), because we need to be where our customers want us to be, and not where we want our customers to be.
Omnichannel means scrolling a website in the sofa, after dinner, looking at the new trends; continue the journey at a store, touching and feeling our products; and placing the order either at the store or maybe at home because the size or color needed was not available.
“We are in the era of the experiences. Millennials are not interested anymore in owning, but in experiencing”
Regarding the American brick crisis, obviously, Amazon is playing a disruptive role in the industry, delivering a shopping experience that nobody could had imagined 3 years ago. But on the other hand, the real estate developers have clearly overwhelmed the demand of retail surface (i.e. shopping malls), and now only “A malls” prove to be successful. In fact, the leasing prices of “A malls” will continue to increase, because customers still like hanging out and going shopping, dining, or to the cinema/gym; but they only like those places where experience becomes different. We are in the era of the experiences; millennials are not interested anymore in owning, but in experiencing.
TFR: USA is a difficult country for European retailers. Mango tried twice (recently thru JCP) to expand in the US with no success. What´s the strategy for the third attempt?
JGM: Obviously, the US is by far the largest market worldwide, where all brands have a close eye on it. However, European brands have always struggled in delivering their European fashion offering to a more “casual” or “sportive” customer. Other reasons making European brands failing in the US is sizing.
On the other hand, Pricing also plays a huge role. While in Europe, customer’s willingness to pay is maybe higher than in the US, and customers are not waiting so much to mark-downs; in the US -and increasingly during the recent past years- customers have become more price-sensitive and bargain-hunter: the off-priced/outlet market is a threat itself.
Finally, the US is a 325 million people market (vs. 510 million in EU), and 3 times the size of Europe in terms of surface: considering the US as a whole market, rather than a set of different regions under a common “umbrella”, will make any brand to fail. To expand a brand in the US, it is crucial to focus on developing the brand (and raising its awareness) thought phases or stages; and once accomplished, to continue in a different geography. But if a European brand decided to enter into all the regions at the same time, it will definitely fail: LA has nothing to do to NYC, nor Miami. Also, logistics play a huge role, since American distances are not the same as European.
The cost of entering into a market, and suddenly abandoning it, is huge. And not only in terms of the capex invested to open and operate the stores, but also from the eyes of a customer: it’s more expensive to recover a frustrated customer, than earning a new one.
Thus, for Mango entering into the US for the third time, we need to make sure that we have worked on the take-aways of our two previous failures; and that we have the right product, at the appropriate geographies, and at an appropriate price point.
TFR: Mango is one of the fashion retailers with the biggest global presence. Did the crisis changed the expansion strategy?
JGM: Not at all. In fact, the crisis helped us to think out of the box, and to bring to the table new ways of expansion and development. And this translates into putting an eye into markets that were previously unnoticed, and to come with new ideas to enter those where we weren’t.
Obviously, any crisis affects the disposal of our customers, and when the times of cutting household costs come, clothing is among the first measures. This, at some point, did impacted the sales of our stores; and when the turnover decreases, talking about expanding the business is not on the top of anyone’s list. Instead, we tend to focus into efficiency (including, in the framework of the fashion industry, reducing the leftovers).
“The global economic crisis helped us to think out of the box, and to bring to the table new ways of expansion and development”
Expansion is a business that follows the trends at a lower pace: good sales results tend to translate into new store openings after a long-sustained set of good periods of time (i.e. more time needed); and bad results tend to dissipate the idea of expanding.
However, in some cases crisis have turned into huge opportunities while negotiating with landlords, and getting better leasing rates. And, thus, crisis have transformed into expansion opportunities.
TFR: What is the strategy behind Mango opening megastores, gathering many brands of the group in the same place? We see many fashion retailers like H&M doing it too.
JGM: The strategy behind Megastores is simple: pooling, and leveraging in the shopping experience.
Pooling, in the sense of diluting the fixed cost structure under a larger base: when opening a megastore (instead of 4 smaller stores, for example), we take profit also of economies of scale by, for example, sharing the same store manager taking care of a larger surface; a more efficient deliveries of stock. But especially we also get better leasing deals: in retail, location is key. And when negotiating for a mega- store, tenants get better rents than when dealing with smaller units.
On the other hand, and as already pointed out, in the era of millennials, experiences are on the top of the list. And to deliver unique experiences, our customers need to feel that our stores deliver something special, something that cannot be found elsewhere. And by experience, we have realized that, in order to do so, we need larger stores, enabling us to have wide spaces, luminosity, and space enough to present our collection. To present the right product selection, with the appropriate lighting and atmosphere is key.
TFR: What is a “day in the life of” of your role in the company?
JGM: The alarm could sound at 05:00 am in a room of a hotel in Lima, after a full an intense previous day visiting 4 different shopping malls.
After having a 2 minutes shower, I check-out the hotel in 5 minutes, and a taxi drives me to the airport. Suddenly, an email enters my mailbox saying the flight has been delayed for 1 hour. Thus, I arrive to the airport, look for a nice cafeteria to catch-up with the emails, and wait until being called for the boarding.
Once arrived to Santiago, I request an Uber to attend a very important meeting to discuss about the enlargement of our flagship-store in Chile with the landlord; and immediately after entering the car, I call to let them know that I’m late.
After the meeting, I review the output with our local partner while we have lunch at a restaurant within the shopping mall. And after lunch, I visit a couple of malls to see what our competitors are doing.
At night, I check-in to get the room of the hotel (Santiago de Chile), and if I’m lucky, I have some rest. However, having a dinner with our partner’s team, and building on the relationship is crucial… so probably, I will go to have dinner with them.
The day after, most probably, I will have to take a plane to go elsewhere…but, of course, I will find the time to go for a running sometime during the day, or night.
TFR: What do you feel is the most important thing in your role, creativity (taste for fashion, vision, trends understanding) or science (excel pro: forecasting, planning, finances)?
JGM: Two words: common sense. Many times, we want to deliver the most successful outcome of each of our decisions, but the answers are just in front of us. Retail is not rocket-science; is just a matter of understanding your customer, by simply putting in his own shoes. Then the rest flows.
Also, multinationals tend to have slow and outdated processes that need to be overcame. To do so, we need to change the way people have proceed for years, and many times, fences arise. Having the appropriate drive and influence is key.
Also, hard-work is crucial. I don’t believe in luck, but in outcomes after a set of interactions, discussions, thoughts, and decisions. In this sense, being persistent and making things happen by knocking on the door, day after day, also pays-off. That’s why sport is so important to me. It helps me to stand up again when something goes wrong, and to find the way to tackle the challenge until succeeding.
TFR: What do you think are the most important skills to succeed in your role?
JGM: Working on building relationship. Being persistent. Knowing to do your math. Finding always a way to avoid saying “no”, and convincing your partner/client that your recommendations are always based on a win-win business relationship.