01/12/2016

Neck & Neck, the Spanish kidswear brand that’s studied at Harvard

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Borja Zamácola, Director of New Technologies and Innovation

Neck & Neck

Borja Zamácola, Director of New Technologies and Innovation

Neck & Neck was founded in Marbella in 1993 and it relocated to Madrid in 1998 under the corporate name Neck Child.  This was a strategic move for the family-owned company that has since managed to establish a presence in 17 countries with 200 stores.  “Quality products that can be easily mixed and matched” are the values that distinguish their kidswear, according to Borja Zamácola, Director of New Technologies and Innovation.  However, there’s more than that behind their rapid growth.  At the heart of their marketing strategy lies a loyalty program that’s studied at Harvard and is an invaluable tool for anticipating the needs of the new omnichannel customer.  
 
-What makes Neck & Neck’s children’s wear so unique?
-We offer a complete look for kids, from newborns to age 12, using classic designs that flirt with current trends, because children are making their own fashion choices earlier and earlier. Dresses are our best-selling product, although our Baby line is quickly becoming a flagship product.  Furthermore, our customers can be loyal throughout their entire lifetime value.
 
-When did you start expanding abroad? And what retail channels do you use?
-We started in 1998, when we bought 100% of the brand. Portugal was our first endeavor, followed by Mexico and Middle Eastern countries. 
The fastest way to expand is through franchises, but we like to have a bit of a mix because that way you can figure out what you’re doing right or wrong sooner, rather than later.  We own 70% of the network and about 30% is made up of franchises. In Europe, we own many of our own stores and subsidiaries in Portugal, England and Italy. In Asia, where we’ve undergone major growth in recent years, we use a master franchise.  We operate using a corner model in the Philippines, Singapore and Malaysia; and we have stand-alone stores in Dubai, Kuwait and China…. We don’t seek out large corporate groups.  For instance, in Dubai we partner with a businessman that had optical stores throughout the Middle East and we’ve become an important brand for him.  In fact, this same group manages our top-earning store.
Mexico is our main international market, where we currently have 15 stores and a specific online platform through a joint venture with a franchisee, followed by the Middle East, specifically, the United Arab Emirates.
 
-Where are you looking to grow?
-In the US, where we have an online store through a distributor in New York.  We’ve been operating with them for a year and a half, testing the market and the trade policy.  Now we’re looking for premises to open our first physical store.
In the Latin American market we’re very interested in Colombia and Chile.
In 2016 we’d also like to consolidate our presence in countries like Saudi Arabia, China, Singapore, England, Mexico or Guatemala…. 
Our efforts will be focused on international and online sales.  Right now we export 35% of our product and the goal is to reach 50% in a year and a half.
 
-How does Club Neck work?
-We currently have 500,000 members worldwide and 70% of our revenue comes from Club Neck customers.  It’s free to join and we offer a variety of benefits.  In exchange, we obtain loads of customer data that then allows us to further refine our customer segmentation.  It’s clear that the notion of “one size fits all” is outdated, and this is changing the world of retail.
 
-As a matter of fact, your business model is studied at Harvard …
-Harvard has developed a business case on our Loyalty Club.  They came across us because we’ve grown as a company in a short amount of time and we worked with them over the course of a year to prepare it.
 
-In addition to Club Neck, you use other channels to communicate with your customers.
-We have an email and SMS-based direct marketing system and we’re very active on social media. Our Mexican partner does an excellent job with Facebook.  We have approximately 65,000 followers, while they have 100,000.  We have about 6,000 followers on Instagram, while on Twitter we have over 3,000, and roughly 4,000 on YouTube.
 
-And you just launched an app.
-It integrates the Loyalty Club and recognizes all of your kids’ information that’s recorded in the system, so it shows you products specifically for them.  This makes it easier to buy items for each child, although it also takes into account traditional browsing.  You can also buy complete outfits, so you don’t have to go crazy figuring out how to match individual pieces.
Our integrated omnichannel retail approach is also worth highlighting.  You can pick up your online order at any of our stores, an option currently selected in 40% of our orders.  You can also find sizes that are unavailable online at the closest brick-and-mortar store by using our geolocation option. 
Also, if you scan the bar or QR code, it will take you straight to the product, so you can either locate it in a store or see what products you can match it with.
 
-How have your online sales evolved? 
-We launched the online store in early 2009.  Having an absolutely responsive website is a key strategy for us at this point. It accounts for 10% of our sales, when the sector average is between 3 and 5%. It’s international, except for the specific sites we’ve designed for Mexico and the United States, and it works best in England. 
We have a robust growth target in e-commerce. We went from 2 to 10% in the last 3 years. We expected 30% growth over last year’s results for 2015 and in the end it exceeded 100%.
 
-And this 2.0 revolution not only affects the relationship with your final customers …
-We make just under 2 million articles of clothing a year.  On average, per season there are about 550 models for garments and 15 for shoes, although this is changing as well. Zara revolutionized the industry and we no longer refer to seasons, but to collections that are delivered at different points throughout the year.  We’re not going to force our international customers to come to our stores 6 times a year, which is why we offer them digital standards through an e-commerce site with high-quality photos and very detailed specifications.
 
About Neck & Neck:
Headquarters: Avda. de Castilla, 33. 28830 Madrid
Staff: 250 employees
Main markets: Mexico, the Middle East and the United Kingdom
Export rate: 35%

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