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The Challenges and Opportunities for Family Businesses

Four Family Business that Value their Independence.

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With the economy tanking, family-owned businesses need to be more nimble than ever to survive and maintain their independence.

The fashion world has no shortage of family dynasties — the Versaces, Missonis, Pradas and Ferragamos just to name a few. Retailers can also hold their own in terms of family businesses — for example, Nordstrom, Mitchells/Richards, Dillard’s and Belks. Others have faltered, like Boscov’s, which on Monday filed for Chapter 11. There are believed to be 24 million family businesses in the U.S., and some 60 percent of the workforce is employed by family enterprises, according to the Family Business Review, published by the Family Firm Institute.

Executives at four such companies in the apparel and retail worlds — The Levy Group, Louis Boston, Giuliana Teso and Bogner — said they have no plans to hand over the reins of their respective firms to any potential buyers. Donald Levy, chief executive officer of The Levy Group, a business founded by his grandfather Lou nearly 60 years ago, was more blunt than most, “The Levy Group is not for sale. We don’t have an exit strategy. We like to give our children the opportunities that we received,” he said.

His 24-year-old son, who is also named Lou, is the fourth generation to get into the family business. And he is dealing with challenges his great grandfather most likely never envisioned, like learning to speak Mandarin Chinese to facilitate overseas production. While Donald Levy said family ties can be “a mixed bag” in the office, he said, “What is better than watching your son work and thrive in a job you have loved all your life?”

And he knows that is not always the case. “I have seen horrible stories with many other family businesses. I have seen too many times where money and power get in the way of the family relationships and pull families apart,” he said.

Still, a personal touch — something his grandfather mastered working in a coat factory picking orders for buyers — goes a long way in business, especially in these trying fiscal times, he said. Levy said he spends months overseas each year visiting factories in China, Vietnam and the Dominican Republic, which The Levy Group, a $200 million operation, set up through joint ventures. Worldwide, The Levy Group has 250 staffers, which does not include those joint ventures.

Having added ABS and Betsey Johnson outerwear licenses to its portfolio and acquired the Jacob Siegel men’s topcoat label in the past year, Levy has more to come. “Look for us to diversify our product base into other categories, maybe in dresses or sportswear, and leverage our talent and infrastructure.”

Prevalent as they have been in the industry over the last few years — even if they are slowing now because of the economy — mergers and acquisitions aren’t the most pivotal business factor, according to Louis Boston owner Debi Greenberg. “The biggest difference isn’t mergers and acquisitions, but everything is becoming so generic. It’s really not about the actual store anymore, but all the branding inside. The whole key to those stores is knowing the brand before you walk in the door and then you can serve yourself.”

Louis Boston aims to be “the complete opposite” of that, by finessing its sales floors with precisely-edited offerings, which include not overly saturated labels like Proenza Schouler and Marni. Founded in 1929, the store dates back to her great grandfather Louis, who started a pawn shop and later opened a men’s store. Women’s apparel was added in the Seventies, said Greenberg, who took over the business from her father, Murray Pearlstein, in 2003. By being more selective with its buy, Louis Boston can easily contract and expand inventories, Greenberg said. The company is shopping around Boston for a new location for its flagship and expects to unveil a new space later this year. And that could be more advantageous as time goes by, “I don’t particularly see this recession ending by the end of the year. It’s going to be a slow recovery,” she said.

At Giuliana Teso, Carlo Teso, president and ceo of GT USA, the company’s American arm, said of the current financial climate, “Where there is a problem, there is opportunity.” Russia and South Korea have great potential, he said. The $19 million company is also trying to be competitive by being conscientious about costs, investing in opportunities, and developing relationships with clients that are “friendships and understanding partnerships,” he said. Working with his wife Elena and a handful of relatives at a company founded by his father and named for his mother has its perks. “Thank God our family is very strong. We have the strength to confront each other on a regular basis, which is important, especially in this difficult period,” he said.

Selling the company is “probably not” going to happen, but securing strategic partnerships is “very important.” Willy Bogner Jr., who like his father skied in the Olympics, also succeeded him heading up the family business, Bogner. The $250 million Germany-based brand specializes in stylish skiwear and sportswear. His wife, Sonia, is also knee-deep in the family firm, designing a signature collection and overseeing the women’s division. That too seems to be a family practice, considering Bogner’s mother Maria wooed Marilyn Monroe, Ingrid Bergman and other fans to the brand with her racy stretch ski trousers.

Bogner has 50 freestanding stores worldwide and is sold in 35 countries. Willy Bogner Jr. said the company hasn’t strayed from its core values, and today’s uncertain economic environment only enhances its competitiveness “Especially in challenging environments, dependability, honesty and long-term thinking are competitive advantages. We are enjoying the best results ever for our company right now. We have not changed our strategy of ‘Quality first.’”

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