American Rag CEO Mark Werts: Chinese Consumers are 'Tired of All the Usual Brands'

American Rag's display of Chinese fashion designers at its LA store. (Courtesy Photo) A California mainstay for hipster essentials, iconic American lifestyle multi-brand retailer American Rag Cie will be entering China this fall with the launch of its first flagship store, opening in the heart of Shanghai in the Jing’an Crystal Galleria. With a more-than-21,000 square-foot store in Los Angeles and a 13,000-square-foot location in Newport Beach, the retailer’s collection of vintage items, denim, and hip designers has made it a lifestyle destination since its founding in 1984. Now, the company has its sights set squarely on Asia with significant international expansion plans and a special “shop-in-shop” project featuring items by nine Chinese designers at its LA store. The brand has signed a licensed deal with a group of seasoned professionals based in Hong Kong and Shanghai, where it also forecasts it will open between 30 and 40 retail spaces over the next four years. The new Shanghai flagship store will offer a rich selection of highly curated established and emerging fashion labels ranging from brands and designers in the United States, Europe, Japan, and China. To cater to the Asian market, the brand mixes the Californian lifestyle with an international feel, incorporating denim and vintage essentials while showcasing the core values and DNA of American Rag. In order to learn more about the developments of American Rag Cie in China, we spoke with the company’s owner and founder Mark Werts after his recent collaboration with designer Chi Zhang in Beijing and Shanghai. In the interview below, he shares why he decided to showcase emerging Chinese talent in LA and what it takes to bring an American vintage concept store to the China market. American Rag Cie Founder and CEO Mark Werts. (Courtesy Photo) Can you explain how American Rag Cie started out and why it’s been able to reach the point where it is today? The root of the story—or a big part of it—is that I never work. If you’re working, you’ll never be successful. I do what I enjoy and what I love. I'm from Hollywood, but my first vintage store was in Amsterdam, the Salty Dog. Things have changed quite a bit since then, but vintage is still part of our DNA. I started American Rag in 1984 in San Francisco and then opened the first LA store in 1985. We sold vintage back then—and still do—but quickly moved into being top sellers of the coolest denim brands. Denim is still a huge part of what we do and we are often regarded as denim experts, but it's just 30 percent of our inventory. We are all about lifestyle and are part vintage clothing outlet, part upscale fashion boutique, have housewares, upholstered furniture, books, shoes, and a denim bar. We have over 1,000 different suppliers. Our customers are 50 percent men and 50 percent women. The only thing that is constant in what we do is change. I think we can claim to have played a huge part in remaking the La Brea area in LA, but our focus is not the Western world, which has already peaked. We have 11 stores in Japan, a beautiful new space in Bangkok, and we are active in Turkey, India, Indonesia, and other markets. Of course, China is where we will be doing the most. The next 200 years belong to Asia, and I want American Rag to be where the action is. Where does your passion for jeans and “jeans culture” come from? Denim is a blank canvas. It's material that you can really do just about anything with, and, believe me, I've seen quite a bit on the shelves of American Rag. Denim can be treated in an infinite number of ways and it shows the tale of the wearer in the way that it ages. A piece of great denim has a story to tell. Denim on display at American Rag Cie.'s LA store. (Courtesy Photo) Can you provide more information on your “shop-in-shop” project that brings Chinese designers and emerging talent to LA? How do you think this could potentially influence the Chinese market? I came up with the idea while I was staying at the Opposite House in Beijing. We're now opening a large shop in the Jing’an area in Shanghai and, not long after, we will open new stores in Shanghai as well as Beijing. We are very passionate about China and believe it is really entering its best years for retail. We don't really have any particular objectives to influence the market with this, though I would hope that being seen in American Rag's store in La Brea would give these designers a great chance to develop in the U.S. and other markets. In my visits to Beijing and Shanghai, I found that there was a great deal of new talent and I wanted to bring some of it back to my customers in the U.S. I don't think that any other American retailer has done such an ambitious project involving Chinese designers. How did American Rag develop its collaboration with Beijing fashion designer Chi Zhang? Chi Zhang and I clicked immediately. There was a real sparkle in his eyes and I appreciated that special energy that he has. That's why I wanted to work with him. Many of the details of the project will be left to my partners in China. For Chi Zhang, I think this provides an excellent opportunity to explore the world of denim, which is not an area in which he has explored deeply before. I think that the American Rag Cie x Chi Zhang collaboration will introduce Chinese and other customers to denim products that have a very specific Beijing sensibility. I don't think anything like this has been available before. Peter Caplowe, CEO of American Rag China and co-founder of The HUB (L), fashion designer Chi Zhang (L-C), American Rag Founder and CEO Mark Werts (R-C), consultant and editor of Beijing fashion blog Stylites Nels Frye (R). (Courtesy Photo) Given that American Rag Cie will enter the Chinese market this fall, can you give us more details on your expansion strategy for the next several years? Will your business model be the same as it is the West? Our strategy will be quite similar, though of course, we are always ready to adapt to the local market. The point will be great products at a large range of price points, so that everyone who comes into the store can walk out with something. Our own vertical line is probably going to play a bigger part in the mix in China and the specific buy is going to be left up to our very talented buyers that understand the local market. The design and spirit of the store will be very much in keeping with our values and Rudolph Falcon, my partner who designs all of our stores, will be behind this one as well. American Rag Cie's LA store. (Courtesy Photo) What are the opportunities and challenges you see in bringing American Rag to China? The opportunities are clear. The Chinese consumer wants good retail. They're tired of all the usual brands presenting the same drab experience. We believe retail is theater and we will bring that to our Chinese customers. The size of the market speaks for itself. Right now, there is a space for every kind of good concept in China. The Chinese want the best and are now sophisticated enough to know what it is. There are challenges like the high import tax and other bureaucratic hoops through which one has to jump. Keeping pricing at a point that is attractive while still making profit is a challenge. It's not the easiest market in which to do business, but I believe the rewards are worth it. How do you think the Chinese market will respond to the affordable luxury and premium brands sold by American Rag? The Chinese market is tired of products with padded pricing and the signs are everywhere that they are no longer accepting prices that don't match with the quality of the offering. The middle class is rising and now knows to ask for something better. We believe that for our brand and many others, the premium and affordable luxury categories are the place to be. People want quality and true brands with a story, but they also don't want to have the same bag or dress as everyone else. This is where we can do well. Yanie Durocher is a lifestyle and fashion blogger at The Marginalist.

American Rag CEO Mark Werts: Chinese Consumers are 'Tired of All the Usual Brands'

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Published May 17, 2015

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American Rag CEO Mark Werts: Chinese Consumers are 'Tired of All the Usual Brands'