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GUESS TARGETS OLDER, WELL-HEELED WOMEN WITH MARCIANO

By Molly Knight

Its founders are retail superstars, but to the average consumer, Marciano’s parent company is still anybody’s guess — or, more accurately, Guess.

That’s because the five-year-old brand has done a bang-up job differentiating itself from its wellspring, Guess — and such competitors as Anthropologie and Abercrombie & Fitch — with a focus on brightly colored, higher-end offerings, says Steven Soutendijk, an associate in the retail services group at retail consulting firm Cushman & Wakefield in New York City.

“Sometimes brands when they spin off, they try and tie in to the mother brand to be successful. This is the absolute wrong thing to do,” said Soutendijk. “There can be sort of a down-sale if you attach the same name to something. But with Marciano, only people who have googled it and done their research know they’re connected with Guess. This is a good thing, because they’re targeting a totally different customer.”

The name Marciano was taken from Guess founders, French brothers Maurice and Paul Marciano. Since 1981, Guess has been at the forefront of denim, and is credited with helping launch the careers of supermodels Naomi Campbell, Eva Herzigova, and Claudia Schiffer, among others.

Stepping away from Guess’s traditional collection of denim and sweaters but maintaining the same sex appeal, Marciano offers decadent silk chiffons, soft cashmere sweaters and bejeweled lingerie that would make the average jeans-and-T-shirt clad girl blush.

“They’re different, because on one hand they’ve got a lot of things similar to what’s offered at Victoria’s Secret, but then they’ve also got gorgeous day dresses, outerwear and jewelry,” said Soutendijk. “It’s a one-stop shop for people with high-style shopping needs.”

Also blushing are consumers’ wallets. Among Marciano’s best sellers is a sleeveless “Psychedelic Flower” dress that retails for $198, a form-hugging “Copa One” shoulder top ($78), an aquamarine suede trench coat ($178) and a pair of leather trim Bermuda shorts ($158).

“Marciano has a higher ticket average than Guess,” said Soutendijk. “Guess targets a younger customer. It’s more affordable. Like Gap did with Forth & Towne, Guess is targeting an older customer with Marciano, and so far they’ve been very successful.”

Although Marciano declined to disclose its sales per square foot, Guess reported a 28.4 percent increase in net revenues to $936.1 million in 2005 from $729.3 million in 2004. Total retail sales for February showed an increase of 17 percent from February 2005, to $43.6 million, up from $37.3 million. The company’s shares more than doubled over the past year.

“We have been testing our two new stand-alone store concepts, Marciano and Guess Accessories, and we believe that over time these concepts can grow to become significant chains in North America,” says the Guess annual report, filed in March. The company opened nine Marciano stores and six Accessories stores and closed one Accessories store last year. “In 2006, as we did in 2005, we will increase the number of stores in these concepts in key locations in the U.S. and Canada, and around the world, while we continue to refine their product assortment and streamline store execution to maximize their potential.”

As the saying goes, you never get a second chance to make a first impression. And Marciano made sure to set the mark for style from its inception, says Dr. Robert Passikoff, president of New York City-based retail consulting firm Brand Keys.

“They get a lot of play in terms of magazine exposure, and they’ve got a whole lot of word-of-mouth,” said Passikoff. “They seem to be building a reputation in the industry in terms of being design leaders. They’re not as prevalent as say, the Gap. They’re not all over the place, so you really have to look for them.”

This scarcity has been part of Marciano’s allure, observers say. Currently, only eight stores exist in the U.S. — in California, Florida, New Jersey, Nevada, Texas and Virginia. The remaining five can be found in Toronto, Montréal and Burnaby, British Columbia.

After poring over potential flagship sites, the company opened its first three Marciano units in October of 2000 in Toronto, The Grove in Los Angeles and at Simon Property Group’s La Plaza Mall, in McAllen, Texas.

La Plaza Mall lies in Hidalgo County in an area known as the Rio Grande Valley. It is just four miles north of the Mexican border. According to the U.S. Census Bureau’s 2004 American Community Survey, Hidalgo is the poorest county of 250,000 or more people in the U.S., with a median household income of just $24,778 a year. Though an unlikely candidate city to host such a rare, high-end store as Marciano, insiders call it a brilliant move. With sales over $450 per square foot, La Plaza is one of the highest-grossing malls in the country.

The explanation behind that economic paradox is simple, says Isabel Rodriguez, director of mall marketing at La Plaza.

“Thirty percent of our shoppers are Mexican nationals. Their buying power is bigger because they don’t come that often,” said Rodriguez. “Those customers love Marciano because they like to buy unique clothes. It has a boutique feel. They don’t have a lot of a specific top, so the chances that someone else will be wearing the same outfit you’ve got on are very small.”

Rodriguez says La Plaza has become known as the Madison Avenue for northern Mexico, and the store has been a boon for the center because of its air of exclusivity. “Not everyone has this store,” said Rodriguez. “When people come here, they always go to Marciano. It’s one of our main attractions.”

Other mall landlords are similarly impressed. Katy Dickey, executive vice president of communications at Westfield Corp., calls Marciano “a fine new retailer filling a niche and meeting changing demographics ... an excellent example of a retailer developing another vehicle with which to expand their business and customer base.” Westfield currently has one Marciano in its U.S. portfolio, at Garden State Plaza, in Paramus, N.J., Dickey says. “We are working with Marciano to expand their presence in the portfolio.”

Guess continues to thrive, insiders say Marciano’s expansion is imminent. Soutendijk believes the brand has a bright future ahead if it continues to remain autonomous.

“To be successful, they need to continue to move farther and farther away from Guess,” said Soutendijk. “They don’t want to get into a situation where there is no real quality difference between the two but one is cheaper. At that point, why bother?”