The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
MEDELLÍN, Colombia — Some places have to work harder than others to shake off a bad reputation. Despite reports that $308 million worth of deals were made last month at Colombia's 25th annual fashion fair, headlines like "Hip And Knife-Proof? The Latest Threads At Colombia Fashion Show" appeared in foreign news outlets. The sensationalist claim was just the latest in a long line of innuendo that has squeezed this tropical country into a gloomy old stereotype.
Had readers bothered to look beyond the headline, they might have been surprised to learn that the gangsta-inspired clothes on offer were from just one of several hundred brands exhibiting at the Colombiamoda event. What's more, the designer who was actually flaunting this unusual "armoured" line of protective urban fashion gear was in fact an American who had brought his combatant wares all the way from New York to Medellín, a point that seemed to get lost in the fine print.
For years, Colombia has found itself reduced to a crude image. In fact, this stunning, complex and multifaceted nation often conjures up little more than vintage news reels of guerrilla warfare, drug barons and hostages in the jungle. Yet these associations haven't developed without reason. The spectre of FARC rebels battling paramilitaries, violent street crime and the narcotics trade has certainly taken its toll.
Haider Ackermann's special runway show at Colombiamoda 2013 | Source: Colombiamoda
A New Chapter
Although each of these issues is still a live one, over the past ten years or so, Colombia has made enormous strides to increase both security and political stability which, in turn, has helped boost purchasing power and prosperity. So much so that foreign investors operating in just about every sector of the economy now seem to be flocking to this remarkably diverse country of almost 50 million people — the second biggest on the continent.
"Roughly around 2009 or 2010, there was a change of mind regarding Colombia in general — a more hopeful outlook on its potential. Around this time, the country became safer and there was this Wild West effect because, aside from a few pioneers like Louis Vuitton, MaxMara and Hugo Boss, it was an unexploited market both for investors and for international brands," says Kelly Talamas, editor-in-chief of Vogue México & Latin América.
More recent fashion arrivals include Dolce & Gabbana, Burberry and Tiffany, which began opening up shop in Bogotá last year thanks to a new mood sweeping the country.
"People here seem less afraid now; they seem to want to have more fun and want to play with their own iconography and stereotypes. We're not afraid of being hurt by bombs any more — well, we're not that afraid anyway — or of being kidnapped in the city or all the other terrible things that happened so often when I was a teenager," says Laura Laurens, a Bogotá-based designer who owns a handful of multibrand boutiques selling Colombian labels and an eponymous brand sold internationally at Opening Ceremony and Linda Dresner.
One better situated than most to chronicle the country's changing fortunes is Alex Zielcke, CEO and founder of Executive S.A.S., the company behind the landmark Colombian multibrand shop Le Collezioni. Today his group operates franchised monobrand stores, shop-in-shops and concessions for many global luxury brands, including Ermenegildo Zegna, Salvatore Ferragamo, Hackett and Michael Kors.
"When I started my first luxury retail company 20 years ago... back then, business was very difficult to set-up and to operate and, frankly, the customer wasn't used to buying these kinds of goods. But now look where we are," he says.
Zielcke has just opened luxury boutiques in two of Colombia's smaller cities on the Caribbean coast. Market observers see this as a milestone of sorts because it is the first major push by foreign luxury brands beyond the country's top three urban markets of Bogotá, Colombia's capital high in the Andes; Medellín, its second city deep in the interior; and Calí in the west.
"The fact that we now have retail spaces in iconic buildings in cities like Barranquilla and Cartagena says something about the maturity of the company. And something about the maturing of the market itself. For brands like Zegna and Santoni, the made-to-measure segment is now common and our personalisation events have spread nationwide. Just a few years ago, these kinds of developments would have been inconceivable," Zielcke adds.
Old and New Guard
The wealthy in this country have long flown under the retail radar, preferring to shop for luxury goods discreetly or abroad out of fear for their own safety. But now, many of the 47,000 or so Colombian millionaires (in US dollars) appear to feel comfortable flashing some of their cash at home. More than a few luxury executives have been taken aback when they find out that the number of millionaires in oil-rich Colombia already outnumbers those in either Saudi Arabia or the United Arab Emirates (according to Credit Suisse's 2013 Global Wealth Databook).
Most of Colombia's big spenders do their shopping around the Zona Rosa, Zona T and Calle 82 neighbourhoods of Bogotá, where malls like the Centro Andino and El Retiro are found. Further out, mid-market malls like Titan, Gran Estación and Unicentro are often anchored by department stores such as Exito or Falabella. Medellín's market too revolves around a few key shopping centres not far from the El Poblado district like Santa Fe, Tesoro and Oviedo.
Although expansion by luxury brands can only really be sustained as far as the top five cities with a million or more inhabitants, it is a very different picture for the more affordable brands now putting down roots here.
"I believe Colombia really opened up as a 'serious' fashion market with the arrival of Zara. The good results this venture brought Inditex led to other brands wanting to invest in Colombia. It's been seven years since and now other major middle market and luxury brands are coming in," says Natalia Uribe, fashion editor of Esquire Colombia.
According to several locals, the reason that Zara, Mango and Forever 21 can dig so deep and so quickly in Colombia is because many of the country's powerful domestic fashion brands did much of the early work creating distribution networks.
"Colombia has 30 intermediate cities that have a population of over 200,000 people. These cities have also shown accelerated growth that has prompted big companies to invest. The fashion market is no exception," says Clara Ferro Vela, general manager of Bogotá's Centro Andino mall, where boutiques for Louis Vuitton and Bulgari rub shoulders with upmarket Colombian designers such as Bettina Spitz, Ricardo Piñeres and Mercedes Salazar.
Bogota's Centro Andino mall | Source: Jimmy Baikovicius via Flickr
Today, Colombian megabrands like Arturo Calle, Studio F and Silvia Tcherassi are household names not just at home but across much of Latin American thanks to the country's vast, integrated garment and textile industry, which is centred around Medellín — one so big that it stimulated the growth of a collateral fashion industry around it in Bogotá.
Brenda Diaz de la Vega, editor-in-chief of Harper's Bazaar México & Latin América, says that although the instability and violence plaguing Colombia for so long certainly did delay the arrival of international fashion, it was actually a boon for many domestic brands.
"To a certain extent, it was an advantage because the local fashion industry was able to develop during these years. I think that if international brands would have arrived in Colombia ten years ago, the local talent would not have had the chance to show their work," she says.
In this respect, Colombia finds itself where Brazil was ten years ago, when Europe's luxury brands ploughed through that market, often colliding with veteran designers who had hitherto operated virtually free from international competition.
"Here in Colombia, it has been really exciting to see how these players arrive each month and alter the market so quickly. But behind this ongoing 'battle of the brands', there is also a dynamic, positive feeling about the future because you have this intersection where the new foreign brands, the old guard and new Colombian talent meet," says Nicolas Rico, one of the co-founders of Colombian fashion event production company 3cero2.
Another reason the market is so dynamic is that there are several national and regional players vying to partner with global brands in Colombia. In addition to domestic firms like Executive S.A.S, Grupo Sterling, Grupo Uribe Medellin and Marcas Europeas, which is part of SLG Holding, many other companies franchise, distribute or operate subsidiaries from one of Colombia's neighbours. The Harari Group and Grupo Wisa hail from Panama, while the Casablanca Fashion Group operates across the Caribbean region from its headquarters in Miami.
Colombia's overall economic picture has been quite strong, with an average annual GDP growth of 4.8 percent between 2010 and 2013 and economists predicting an even better figure this year. Thanks to the current construction boom, as well as $25 billion worth of road and rail infrastructure projects in the works, productivity is expected to pick up too.
The overall apparel trade experienced a minor blip last year that most analysts blame on the uncertainty consumers faced in the run-up to the 2014 presidential election. But the apparel retailing market in Colombia will still be one of the key economic contributors to the region, according to Euromonitor International, which forecasts that it will generate $870 million over the 2013-2018 period.
"In per capita terms, Chile and Uruguay are always in the top places; nevertheless their population is very small so companies choose Mexico and Brazil as the gateways to Latin America, north and south respectively. After that, Colombia is considered to have a great potential," says Georgette Fernandez, research analyst at Euromonitor International.
That doesn't mean Colombia isn't facing its share of obstacles. Fluctuating currency exchange rates, heavy taxes and disproportionally expensive real estate combine to pile on the financial pressure while the country's cumbersome logistics and legal systems can be as costly as they are frustrating. And on top of this, there are some lingering questions surrounding the consumer.
"The Colombian fashion consumer has been very conservative for decades. The opening up of the market has been a revolution so the consumer is adapting – even if sometimes they are reluctant. I must admit that the market is still not that mature for the very high-end brands. There, the best luxury sales still come from accessories," says Gabriel Ferneini, general manager of SLG Holding, which holds the Colombian franchise for Versace Collection, BCBG and Hugo Boss.
Colombia, like much of Latin America, has also lagged behind Europe in terms of fashion e-commerce. Having launched the e-tailer Dafiti in Brazil in 2011, parent company Rocket Internet soon rolled out the site to four more countries in the region, including Colombia in 2012.
"When Dafiti was launched in Latin America, the online fashion market was virtually nonexistent [so] in our early days we had to win their confidence and show the benefits of having a different online shopping experience," explains Malte Huffmann, managing director of Dafiti.
According to Huffman, customers in Colombia don't use credit cards online as much as Brazilians do, so Dafiti had to develop a special ‘cash on delivery’ system where they can pay the courier. Two years after its launch, Dafiti reports an average of 5 million monthly visitors from Colombia.
But whatever uncertainties there are around the intricacies of consumer behaviour, the real wild card in Colombia is politics, suggests SLG Holding's Ferneini. Having been active in the country for 14 years, and in neighbouring Latin American markets even longer, he has seen how political realities can transform a business environment overnight.
"Colombia's international fashion market goes back to 1990, when President César Gaviria came to power and began lifting decades-long restrictions on imports and currency transfers," Ferneini explains, noting that FDI restrictions were also lifted, meaning that brands could enter the market directly.
"Then the whole panorama changed even more drastically with President Álvaro Uribe in 2002. He opened up the economy completely and began negotiations with the United States and the European Union to sign free trade agreements, which are now both finally in place."
Today, it is once again the political climate which can take some of the credit for the current optimistic outlook, suggests Liliana Sanguino, a course leader at London College of Fashion who was born in Colombia. "The new president seems confident that this is the final phase of the peace talks [with the FARC rebels] which gives confidence to anyone investing in Colombia – or visiting for that matter," she says.
However, others like the Colombian designer Laura Laurens are less certain. "I don't think I'll ever be able to talk about total political stability. Countries like ours still have huge social gaps and tremendous social injustices. We're still governed by the same few, powerful families who've ruled since independence so, you know, it’s a tightrope," she admits.
"But the political stability [we've achieved so far] might help with the way we perceive the world as we try to understand all those years of brutality. And certainly, it will help the world to perceive us in a different manner. That definitely represents a meaningful change."
Editor's Note: This article was revised on 30 August, 2014. An earlier version of this article misstated Kelly Talamas' title. She is editor-in-chief of Vogue México & Latin América.