Abbey Doneger, the president of The Doneger Group, is talking about the sale of his company like it just happened yesterday.
And he’s most excited about whom he sold the company to — his employees. Always effusive about The Doneger Group, on this particular aspect of the firm he’s been relatively quiet. Yet on the eve of the group’s 70th birthday, he’s eager to discuss the state of the company, the secret sauce behind its longevity and how it’s prepared for the years ahead.
“Everything we do, everything I do, is about long-term planning, long-term thinking — how do we position the company for the future? And in 2010 I completed the sale of our company. We are an employee stock ownership plan company.” ESOP, he said, “provided for my family an opportunity to diversify assets while simultaneously providing a potentially significant benefit for our employees.”
“I don’t have to worry or think about what lots of other business owners, entrepreneurs, independent companies may be thinking about in terms of monetization strategies. We are all set. I don’t have to sell the company. It’s sold. It’s a good thing.” The employee share distribution is based on a complex actuarial formula including salaries, length of service and 401K contributions.
The 65-year-old Doneger does have another issue to think about — determining a successor. “Specifically, my role over the next coming years is to develop a succession plan.”
It’s not like he’s leaving anytime soon. “All my friends are out golfing; I love going to work.” He started at the firm as an assistant dress buyer in 1973, became president in 1980 and worked closely for two decades with the founder of the firm, his father, the late Henry Doneger.
Tonight, The Doneger Group will celebrate its 70th anniversary at its 45,000-square-foot, recently remodeled offices at 463 Seventh Avenue. In light of the firm’s longevity and relevance in a fast-changing industry, scores of fashion executives, clients, as well as friends and family are expected.
“We are fortunate in that some of the best retailers in the world are our clients,” Doneger said during an interview at his office. “They view us as an extension of their own operations. We look at ourselves as a trusted adviser to our clients. I feel like we’ve earned that.”
The Doneger Group evolved from a traditional buying office, a format that’s virtually extinct now, into developing creative merchandise and business strategies for retail, fashion and related industries on a global level.
The core division is fashion merchandising, providing research, advice and strategies for women’s, men’s and children’s apparel as well as accessories and footwear. The division serves better independent specialty stores, national specialty store chains, department stores, off-price chains, mass merchants and e-tailers, about 300 in all. In addition to New York, the company operates the Doneger-owned Directives West office in the California Market Center in Los Angeles, as its West Coast merchandising arm.
The Doneger Creative Services division specializes in color, fabric and trend forecasting and recently added some new services, including branding and marketing.
The Tobe unit has evolved from a market report into a “think tank” reporting on consumer and cultural shifts, what’s driving spending behavior and creative strategies in business development, marketing and consumer engagement. Tobe’s client base has extended beyond retailers to include consumer product firms, financial services, entertainment firms and shopping center developers.
The Price Point Buying division has expanded from only identifying off-price products to linking retailers with suppliers and assisting with direct-to-consumer drop ship programs, and taking on a greater number of international off-price retailers.
“Everything we do is customized,” Doneger said, so his team can meet different client’s needs, whether it’s to tap into the rebounding denim business or buy-now wear-now trends, or update holiday sweaters, or pump up some other category or classification. “They are looking to us for direction, for us to evaluate. They bounce ideas off us. We are part of their team as it relates to their strategic thinking. Our edit, our curation of what’s happening in our industry, from a product point of view, from an idea point of view, from a strategy point of view, is very, very important. Retailers are looking to us more and more. It’s not enough to provide a top ten list of best-selling items or brands. We dig deeper into the why and how of it.”
In the past year, the company rebranded itself, with a new logo (which is actually Doneger’s father’s signature) and renovated offices to project a more modern image. Two years ago, Doneger set up a leadership program to support career development for his team. There are 130 employees in all.
“We have a unique position in the industry,” Doneger emphasized. “We are the only company that does what we do. We work at our business to become better every single day.”
In accounting for his firm’s longevity, he points to several factors — staying relevant to a wider universe of clients; becoming consumer-centric; retaining clients at a high rate, and retaining employees at a high rate and encouraging them to build a career at Doneger. He said that over 50 percent of his employees have been with the group for more than 10 years, and that his client retention rate is 95 percent-plus annually. More than 50 percent of the clients have been with Doneger for at least 15 years.
There was also a spree of acquisitions of buying offices, mostly in the Eighties and Nineties, which eliminated competitors and allowed Doneger to acquire talent and competencies. “We have direct competitors only in one segment, in the color and trend business,” Doneger said. Instead, “We compete with our self everyday. Our job is to be better at being Doneger — everyday.
“We rebranded. Tobe repositioned. Doneger Creative Services expanded and repositioned. Price Point Buying has evolved. Our merchandising team is more and more focused on customization and the level of talent within the organization is significantly greater than ever before,” Doneger said.
Sources said the company generates about $25 million in volume, which hasn’t changed much in the last ten years. About 20 percent of the business is international.
Doneger acknowledged the impact of the recession and addressed the revenue stagnation by saying, “The number-one metric that I use to measure where we are is client retention. Without client retention, we have nothing. Because of our client retention, I feel we have everything. We don’t grow the topline for growth’s sake. Everything we do is strategic in nature. Over the years we have added services and enhanced divisions while fine-tuning other areas. We have successfully and profitably navigated through the significant consolidation in the industry, while positioning our company uniquely.
“My father said to me early on, ‘If you have good people, if you provide a good service, you’ll have a great company.’ We never had a year where we lost money.”
Here, the Doneger Group through the decades:
1946 — Henry Doneger and partner Jack Lasersohn form a resident buying office named Lasersohn-Doneger.
1964 — Henry Doneger buys out Jack Lasersohn and forms Henry Doneger Associates.
1973 — Abbey Doneger, son of Henry Doneger, joins the company as an assistant dress buyer.
1980 — Abbey Doneger named president; Henry Doneger continues as ceo and chairman. The acquisition spree begins with the purchase of the Gordon/Horowitz buying office.
1985 — The company’s most direct competitor, Steinberg-Kass, is acquired, creating the largest independent women’s specialty store buying office in the nation.
1988 — Price Point Buying is formed; Independent Retailers Syndicate department store buying office acquired, leading to the creation of children’s and men’s wear divisions.
1989 — The company reorganizes into The Doneger Group, comprising all divisions and entities.
1995 — Henry Doneger, founder and chairman, dies.
1997 — Color Projections acquired, expanding the previously formed D3 fashion trend and color forecast division.
2003 — Doneger Creative Services is established to incorporate color and trend forecasting units.
2005 — Tobe, publisher of The Tobe Report, acquired; Here & There, a trend and color forecasting business, acquired and integrated in DCS.
2006 — Fashion Institute of Technology establishes scholarships and a computer lab in memory of Henry Doneger.
2008 — Directives West merchandising consulting firm acquired.
2012 — Abbey Doneger receives Accessories Council Hall of Fame Award.
2014 — Huepoint, a provider of color trends and color marketing strategies, acquired.
2015 —Company rebrands; Abbey Doneger honored by UJA with the Fashion Division Service Award.