ACCESSORIES MAKERS: MASS DOORS GETTING TOUGHER TO UNLOCK

NEW YORK--Accessories has traditionally been a category where small companies have been able to work with even the largest and most prestigious of department and specialty stores, but the mass chains are a different, tougher proposition--one that appears to be getting tougher all the time.
Like other retail formats, the mass market continues to rely on a narrow-and-deep buying philosophy that can be more efficient, executives say. The big chains are
relying more and more on a tightening pool of resources that can guarantee the quantities and services needed to keep their widespread networks of stores well-stocked. And, say the vendors, the requirements keep mounting.
Even when a big operation like Kmart regularly opens its doors to see new vendors, the qualifications to do business with the chain--from multi-store shipments and fast response systems--can be overwhelming to a small vendor.
Moreover, those who have managed to gain a toehold in this potentially lucrative segment of business, admit they are being asked to do more and more in the way of product development, merchandising and display for the chains in order to preserve their share of shelf space.
Vendors further noted that there's very little difference between the two giants of the industry, Wal-Mart and Kmart, when it comes to making demands. Meanwhile, the inexorable spread of Wal-Mart from coast to coast is forcing the big regional chains, such as Target, Venture, Bradlees and Caldor, to adopt similar techniques in dealing with vendors.
Selling the big mass marketers is "not for the novice," said Henry D'Alessio, president and chief executive officer of Robert Enterprises, an 11-year-old, Providence-based jewelry firm that survived the neophyte stage and now routinely navigates the complexities of the mass market.
D'Alessio noted that, at least initially, the process can take "a couple of years of working out details followed by more details before one item actually sees the selling floor."
Roadblocks include everything from labeling, billing, shipping and freight-routing instructions to packing slip, invoicing and product-packaging guidelines, all of which must be ironed out before a buyer commits to a purchase, according to D'Alessio.
"These chains have a vested interest in cutting their costs, and over the years they have demanded more and more from vendors," he said. The result of not adequately understanding or following these procedures to the letter can be staggering to a company.
After paying "a $12,000 fine" to one retailer for a single shipping mix-up, D'Alessio noted, he got serious and recruited personnel experienced in dealing with the contract stipulations and high tech distribution centers used by the mass chains, and "powered-up" with computerized programs that made the process tolerable. He also engaged a large jewelry sales firm, Danecraft, taking advantage of their experience with the chains, to represent his line with some of the them.
Once established, the process of getting new offerings on the floor can be cut to about six months, which is about how long it took the firm to sell its latest product line of semiprecious stone jewelry to the mass chains, D'Alessio noted.
The line of necklaces, earrings and rings will be in some stores for holiday, merchandised on tables in jewelry departments, then rolled out to more stores in time for spring sales when a specially designed fixture will hold the collection on countertops.
Tony Klein, sales manager for Bijoux International/Eastport, began selling backpacks to mass merchants about 10 years ago and now also sells small leather goods to both mass and department stores.
"There is a lot more competition than there was a decade ago, and I also think it's more difficult to break into a mass merchant's vendor matrix at this point," Klein said. "I wouldn't want to be the new kid on the block now."
But by the same token, he did say, "If you have a hot item that they want, they will seek you out."
Klein noted that setting up relationships with mass retailers, and really with any retailer, can take some time. It took them several years, for instance, to establish trust with J.C. Penney.
Abe Chehebar, chief executive officer at Accessory Network, a company that has made major inroads in the mass market, said the business requires investment in "a hefty service organization" in order to just work with these stores, let alone build a growing business.
"Today the large retailers have so many guidelines and unique ways of working, unless a vendor has all the departments needed--EDI, allocations, quality control--it's almost impossible to deal with them," Chehebar said.
He added that his firm has grown along with many of the chains, and the volume the company generates subsidizes all these services. Nevertheless, he pointed out that unless a vendor can consistently perform and come up with new ideas and items, it runs the risk of losing its place in the mass chain's ever-shrinking vendor pool.
"These retailers are looking to accomplish their needs with as few vendors as possible," Chehebar said, "It's ridiculous to spend time with 30 or 40 vendors in handbags--a small area compared to the company's total volume--to get a 5 percent increase."
Chehebar also pointed out that since accessories is so item-driven now, opportunities do arise for new manufacturers on occasion, but "real newness being offered to the retail community is rare." Many of the stores simply look more and more to their established vendors for help in developing new items.
Paul Sachs, sales manager for Giovanni Jewelry, a Providence firm, noted that since many major chains utilize service organizations that bring in, merchandise and restock jewelry, smaller manufacturers have a tough time cracking the barrier.
On occasion, however, his firm has been successful with items. The firm's signature Giovanni Rose collection has attracted business from the mass chains from time to time, Sachs said.
One mass retailer has created a specific way to see newcomers in addition to its buyers searching the market.
Kmart launched a program this year, dubbed New Vendor Day, which facilitates the entry process at the chain.
Dave Penrod, divisional vice president for fashion accessories and hosiery, said these events, which are held quarterly, "give new people the opportunity to show their wares in sort of a mini-trade-show format."
New Vendor Day is advertised in trade journals, with different product segments focused on each time. Prerequisites dictate that a company cannot be a current Kmart resource or have had an appointment with the store in the last 12 months; the vendor must also be capable of supplying the mass market in terms of volume and quality standards, Penrod said.
During the event, prospective vendors and the store negotiate specifications requirements and plan for any quality testing that may need to be done, although Penrod noted that such testing is not always necessary, but is dependent on the item or collection's history and novelty.
Each division of Kmart has its own test group of stores that are spread across the country and vary in demographic makeup and sales volume. If a test program is indicated, Penrod said, the length averages 90 to 120 days.
He added that since basics require stock-replenishment programs, a company must be able to prove that it is financially able to get goods, have EDI capability and be able to ship store-specific merchandise. At Kmart, vendors must ship inventory store-by-store rather than Kmart doing the picking and packing.
As far as display and packaging are concerned, Penrod said the chain is always willing to hear any ideas a vendor may have, but the chain does have certain requirements.
Among them, packaging must be sturdy enough to withstand being tossed into a shopping cart and displays must also be strong enough not to topple over if bumped by "carts or kids," Penrod noted.
Kmart's next Vendor Day is scheduled for November, and Penrod's area will be focusing on hair goods, where he indicated he would be on the lookout for "unique and different items, that can generate the level of excitement that's been missing from the category in the last six months or so."

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