FIRM IN VERNON MAKES DEAL WITH KMART FOR TRENDY APPAREL
A couple of years ago, Howard M. Klein, the president of Vernon-based Rich & Me Inc., began mulling the idea of launching a line of budget clothing aimed directly at young Latinas. His epiphany came after a series of business meetings in Mexico with U.S. and Mexican officials and local businessmen.
"I realized that the Latino market was a force to reckon with, but it was being ignored," Klein said.
Klein, 55, registered the name Estilo (Spanish for "style"), and developed a concept that included using Spanish language on all clothing labels and marketing materials. Colors and styles would be created by Latina designers. But then he put the project on the back burner, and that might have been the end of it. Until Kmart came knocking.
Last May, Kmart decided to test market the Estilo line in 30 of its stores in Puerto Rico. It clicked, so the line is now being rolled out to 300 Kmart outlets in California, Florida, Puerto Rico and Texas. Although Kmart and Klein declined to reveal sales of the new line, the chain's spokeswoman said they are brisk. Clothing lines are replenished every six to eight weeks after an initial run, and Estilo has been replenished five times since it was introduced.
Estilo is one of only a tiny handful of clothing lines specifically designed for Latinas, a market niche that has only recently been exploited.
Professor David Hayes-Bautista, director of the Center for Latino Health and Culture at UCLA, said Kmart and Klein could strike the mother lode. Latino buying power in the United States is $450 billion a year and growing, according to his research. The middle class spends $1 billion a week.
Moreover, Latino parents spend 20-30 percent more on their children's clothing than do parents in other ethnic groups, and they are especially generous when it comes to clothing for girls.
"The Latino market has been way overlooked," Hayes-Bautista said.
Klein said he is aware of this, but is nonetheless surprised at the speed at which Latinos have responded to the new line. He said young Latinas and their families have specific tastes in clothing that are different from other ethnic groups.
"This is not a jeans and T-shirt group," he said. "The clothes tend to be sexier and a little more revealing and trendier, and more colorful."
Kmart comes calling
Klein, whose company also manufacturers clothes for Mossimo and house brands for Sears, Wal-Mart and Coles, launched Estilo after meeting with Kmart officials early last year. Executives disclosed to Klein that they were thinking about developing a budget line for young Latinas up to the age of 17, and asked if he would be interested. Having already spent $100,000 in initial work on the line, he was very interested.
And the chain has not wasted any time in aggressively rolling out the line.
"Kmart is very sophisticated and they have the wherewithal to make this work," said Richard Giss, a partner in Deloitte & Touche's retail services group. "They know how to do this. The Latino market is huge, and if it (Estilo) resonates and is properly marketed, it will do well."
Kmart doesn't consider the new line to be a risky venture. "It wasn't a gamble," said Kmart spokeswoman Michele Janukaitis. "We liked the name Estilo and we know there are customers in Miami, Puerto Rico and the Los Angeles area. We felt this addressed a niche for the fashionable customer."
Estilo aims at the budget-conscious crowd. A top sells for $10.99 and a skirt for $18.99.
Making the clothes
The process of creating each article of Estilo clothing begins at the 75,000-square-foot Rich & Me factory in Vernon. One of Klein's designers comes up with an idea for a blouse or skirt or pair of slacks. The concept usually comes from some element of pop culture: magazines, music, food, films and television. Whatever actress Jennifer Lopez wears, for example, helps inspire Estilo fashions. So do more-expensive lines of clothing.
"But ours are much, much cheaper," Klein said.
After a design is created, it is handed to a cutter who reproduces it on the fabric selected for the piece. The cut pieces are then sent to Klein's 100,000-square-foot factory outside Mexico City, where each item is assembled and then shipped back to Vernon and then on to Kmart stores around the country.
While Kmart and Klein have discovered the enormous potential of creating a niche product for Latinas, there are still a number of challenges. One is to make sure that the marketing campaign for the line is carefully crafted for the Spanish-speaking buyer.
Another key is to keep the line open to a diverse range of tastes, because the Latino market consists of Mexicans, Puerto Ricans, Cubans and South Americans all of whom have different ideas of style.
"The pitfall is to put all Latinos in a box," Hayes-Bautista cautioned. "It has its own segments. You have to tailor yourself to the local market and a region, and there are different segments in each region."
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