- Down to the Wire
- Westfield Gains Rights to Manhattan's Fulton Center
- Business Picks Up for Retailers as Holiday Draws Near
Having a multibranded portfolio, even if it's in the millions rather than billions, helps in dealing with retail partners, said Lou Breuning, president of HMS Productions, a $100 million firm that has the moderate Spencer Jeremy sportswear and dress lines, Cable & Gauge moderate knitwear and the newly launched contemporary resource Cupio.
"When you are talking to principals [at retail companies], you talk about total company, with the back-office support," said Breuning. "When talking to buyers, you talk about your brands and each stands on its own."
Creating that back-office support should be a priority for smaller firms, according to Jassin, who said a vendor should be doing at least $50 million in wholesale to compete.
"My advice is to marry your noncompeting neighbor and combine your entities to save money on the administrative and sourcing costs," Jassin said. "Or find an offshore company to become an investor. This is the only solution for the moderate zone."
For example, moderate knit brand Ralsey is backed by huge parent Li & Fung, and its competitor August Silk is owned by Chinese manufacturing giant High Fashion International Ltd. According to Jassin, moderate vendors should look to offshore manufacturers as buyers rather than their domestic counterparts, which are more interested in destination brands worth $100 million-plus.
"Small manufacturers don't have the economies of scale, bench strength and global resources, and they are being squeezed harder and harder in terms of quality and performance, as the retailer is becoming more demanding," said Catherine Sadler, president of New York marketing firm Catherine Sadler Group. "Acquisition is something that small and midtier brands look at as a solution to the consolidation."
But as analysts criticise manufacturing giants for being too big to respond agilely to fashion trends, some smaller competitors revel in their size.
"I feel it's an advantage that we aren't a big company, because we offer them flexibility and a more innovative product," said Steven Feinstein, president of the firm that produces the ECI better sportswear line. "We can work closer to the trends and seasonal needs. A lot of the bigger companies are such big machines that they can't move as flexibly."