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WHEN THE GOING GETS TOUGH...

MODERATE VENDORS ARE MAKING THE MOST OF IT BY TEMPTING CUSTOMERS WITH LOWER PRICES AND MOVING INTO UNEXPLORED MARKETS.

Byline: Shirliey Fung

Manufacturers in the lower tier are finding that the strong only get stronger during times of downturn.

Using a range of tactics from focusing on new segments of the market, to emphasizing volume over price, to launching new lines, companies are finding that they may be able to increase and not just maintain their volume this year.

Chuck Goldstein, president of Confetti, views the economic downturn as an opportunity in disguise. His plans for the seven-year-old vendor include reaching out to a new customer base.

"The economy is rough; people are looking for clothing in our price range," said Goldstein. "We're selling people that we've never sold before. We've probably opened 1,000 accounts in the last six months."

Goldstein said that the nearly $3 million company typically grows about 10 percent each year, but that this year, with the advent of all the new accounts, the vendor is looking for a 33 percent increase -- though something in the 25 percent range is more likely.

Confetti would also like to break into department stores and add 200 of the bigger doors to its current 4,000 specialty-store base. "It's our biggest challenge this year," said Goldstein. "We're going to go after them personally and see what we can do."

Marty Klein, executive vice president in charge of sales and marketing for Kaktus, is blunt about his strategy for drumming up business in the upcoming year: "We don't wait until other people mark us down; we knock down our own prices," he said. "We're taking high moderate looks and bringing them down to low moderate pricing."

For example, blouses that sold last year for $12-$14 wholesale will go for $8-$10, while related separates will drop from $12-$14 to $8-$10.

"We're taking a bigger risk, but the risk-reward ratio is great in terms of saving for the customer, and we'll make it up in volume," Klein said.

Kaktus, which was established in 1990, currently resources 600 doors, with 40 percent of that business going to department stores and 60 percent to specialty stores. The company's price-slashing tactic will bring in five to 10 percent more volume in 2001, Klein estimated.

But he was quick to add that better deals would not lead to a drop in service. "We're trying to work on keeping the accounts we have and servicing them. We're calling up and seeing our clients and sending them catalogs," he said.

Although Sportswear Group LLC is already mainly known for its contemporary line, which is sold under the On Fire label and geared toward a youthful clientele, Isaac Toussie, president of the $40 million vendor, said that he plans to focus even more aggressively on the still-untapped younger segment of the market.

"There's been a [steering] away from a younger clientele today," he said. "There's a lack of exposure in that area that could be very much improved."

In order to bring in that younger buyer, Sportswear Group, which also produces a career line under the Sherry Taylor name, will launch a new knitwear line called 2 B U. The line will wholesale from $8 to $15 and will offer trendy, novelty items aimed at customers who are "super-conscious about fashion trends."

Toussie hopes to boost the company's volume by 18 percent this year with $2 million to $3 million worth of business coming from the 2 B U launch.

Allure Inc. hopes to double its $12 million business this year by expanding into two new areas: suits and eveningwear, both slated to bow in the fall.

Julia Klyashtorny, president of the five-year-old resource, said that she is aiming for a modest 200-door debut to test out the new lines, with business drawn from the same customer base that she currently resources.

The new lines will be similar in style to the novelty decorated jackets that make up the bulk of her current sales. Suits will wholesale for $39 to $59, and eveningwear, from $29 to $59.

Besides launching two new collections, Klyashtorny said that the biggest challenge for the year will be to maintain margins.

"With the retail business being as tough as it is, we might need to compromise on margins as we grow volume," she said. "We cannot control markdowns and the retail climate."

Instead, the company will do its best to offer innovative products. "If there is no competitive product, then we have more control," said Klyashtorny, who added that because Allure owns factories in India, it can add embellishments at a fraction of what they typically cost.

It's been a tough few months for vendor Christine Alexander. The $3.5 million moderate vendor, who mainly sources small specialty stores in the Midwest and on the West Coast, survived a rough December, during which it was plagued by falling customer demand and bad weather.

As a result, Alex DeHann, the vendor's president, said that the year ahead will be "a 'hang tough' year; we're going to try and stay flat." DeHann does aim to grow his doors from 2,700 to nearly 2,900 and plans to add another sales representative to Florida and possibly Missouri, Arkansas and Louisiana. DeHann said that any growth within the company will come from new accounts in those areas.

Mother Nature wasn't the only reason last season was so difficult. Many of his retail customers defaulted. "The small mom-and-pops were hit hard, and credit issues were a problem," he said. "It was a tough fourth and first quarter because retailers just couldn't pay the bills."

To protect his interests, DeHann said that he will be more stringent with giving credit. "The stores are going to have to pay within the terms or we will stop shipments," he said. DeHann said that he suspects that he won't be the only manufacturer taking a harder line with vendors this year. "We've got to go through a period of repair," he said. "A lot of small retailers have lost credibility. Manufacturers are going to have to be tougher with [their customers.]"