Alex crafts branded stores in South America

Lima locations lead effort to spread U.S. specialty brand throughout the region.

By Brent Felgner -- Playthings, 3/4/2008 9:30:00 AM

LIMA, Peru—An effort that began as outright retail rejection about three years ago, morphed into an exercise in brand building and now might well result in branded stores across an entire continent for Alex, the Northvale, N.J.-based maker of arts & crafts kits.

Two branded Alex stores are currently operating here and another is set to come on line later in 2008, along with additional openings planned this year or early next for Santiago, Chile, and Quito, Ecuador. More are in the early planning stages, according to the company.

The retail concept grew out of adversity and simple necessity.

When Paola Fassioli and Maricarmen Campos first brought Alex products to Lima’s top department stores, their experience wasn’t too far afield from what many salespeople face trying to break through to that first big, prestigious account: They were sent packing. Well known in the States, Alex had limited exposure in this South American capital and the department store buyers were not about to take a chance on an unknown and untested brand, the two told Playthings.

The rejection might have been enough to cause most marketers to walk away and focus solely on smaller, less prestigious retailers. But Fassioli and Campos had boundless belief in the Alex line—through their experience as parents seeing their own kids at play. They pooled their resources and the knowledge gained from their respective degrees in economics and business administration from the University of Lima and went to work.

If the department stores said the brand wasn’t well known enough, they would build it up, they reasoned—with their own stores showcasing the products the way they believed they should be sold. Through their company, Prime Traders, the women cut a deal with Alex for the rights to become direct retailers for the brand in Peru, Chile and Ecuador, and the master franchisor for all of Latin America.

“The department stores didn’t really know the brand and they wouldn’t take the products, so we decided to open our own stores and build the brand ourselves,” offered Fassioli. “We’ve worked the last two years to become the top store in Lima and now the department stores are knocking on our door to take the Alex brand.” Those negotiations were just about to get underway, she indicated.

The first store—a modest 430 sq. ft.—opened in an upscale shopping center in late 2005 in Lima’s tourist and historic district, Surco. It has quickly outgrown its space and Prime Traders is already looking for larger quarters. The second outlet, a 1,400 sq. ft. freestanding unit, opened last May on a premier shopping thoroughfare, Avenida de Los Conquistadores, in San Isidro—roughly likened, perhaps, to New York’s Fifth Avenue or Chicago’s Magnificent Mile. San Isidro is the region’s modern financial, office and arts district.

The stores are bright and colorful—very colorful—using the Alex logos and packaging palettes. More important, both stores are profitable, said Fassioli, since there is little need to cut retail pricing. (She quickly added that the Alex line is already “very affordable.”) It helps, too, that local economies have been not just stable, but growing considerably over the last few years, with inflation held in check.

The stores carry about 400 SKUs of the 650 items in Alex’s complete line. While determining that 1,400 sq. ft. is approximately the ideal size, new stores could operate successfully in as little as 860 sq. ft., Fassioli said.

Beyond the planned openings in Santiago and Quito, the women are making plans to move on Guayaquil, Ecuador, and are in the early stages of talks to open the first of perhaps 20 franchised stores in Brazil, which has become an economic powerhouse in recent years. And that may only be the beginning. The partners can visualize Alex stores throughout Latin America.

“We’ll go slowly,” said Fassioli. “But we’ll always think big.”

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