LOS ANGELES — The purchasing powers that be in the California market — Arkin California, Directives West and the Barbara Fields Buying Office — are having to be aggressive to gain new business and keep current clients in the Nineties. Competition is fierce among these Big Three, and while none will admit to struggling, all concur this is no time to rest on one’s laurels.
“These are tough times, but our clients are the best,” says Sandy Richman, president of Directives West, which has its office in the California Mart. Her company represents approximately 70 retailers throughout the United States, Mexico, Canada and Europe, including Bloomingdale’s, Saks Fifth Avenue, Sears and Federated Department Stores.
Buyers at Arkin are on the alert as well. “Fifty percent of our business happens by word-of-mouth, recommendations from satisfied clients, but we have to actively pursue new clients more than ever now,” says Ruth Bregman, executive vice president of Arkin California.
The first buying office in Los Angeles, located at 208 Ninth St., Arkin is no stranger to poor economic climes, having started in business during the Depression in 1932. Today, the company’s 65 clients in the U.S., Canada, Mexico and Southern Hemisphere include Belk’s (for almost 50 years), the May Company department stores (with the office since the Thirties) and its very first account, the Popular chain in El Paso, Tex.
“Our account base is growing, and we’re comfortable with the rate of its growth,” adds Arkin president, Richard Arkin. “Between 1989 and 1991, there was an enormous amount of Chapter 11s in retailing, and that affected us. But that’s leveled off, and the last few years have been better for us. We’ve seen many vendors and so many stores go out of business as a result of being too self-satisfied, so we avoid feeling too comfortable about ourselves.”
Even with 300 clients throughout the world, the Barbara Fields Buying Office, located in the Mart, cannot take a breather. “Business is doing well, but that doesn’t mean it isn’t tougher than ever to do well,” says president Barbara Fields, who started her business nearly 11 years ago and currently counts Mervyn’s, Target, Spiegel, Nordstrom and Merry-Go-Round as clients. “This is a very competitive marketplace, and it has become more difficult because of the shrinking amount of retailers and the consolidation of stores. Every time I pick up the phone to talk to someone, they’ve been taken over by someone else.”
All of the L.A.-based buying offices have been earning frequent flier miles lately. “We call on people; we visit the stores,” says Fields. “You’re immediately able to see what departments they’re strongest in or where there might be deficiencies. And by merely calling management’s attention to certain areas, you’re able to help them.”
Fields spends some 90 percent of her time traveling. “We pursue people by going out to see them at their level,” she says. “If someone wants to become a member of my office, I have to see if they fit in with what I do. I go to the storefront, conduct a seminar to explain what my office does, do a complete analysis of their operation and write a critique. And the stores welcome it. Whether you want to get new business or keep clients, you have to go with them because they may not be able to come to you.”
Investing in technology has proven a smart move. “We’re fully computerized now,” says Arkin’s Bregman, “so we’re able to get information about new developments in the market to our clients instantly, and we’re able to react very quickly.”
Desktop publishing capabilities allow buying offices to handle the production of reports more efficiently. “We have a lot more visuals in our reports now, and a lot more color,” says Richman of Directives West. “We also keep a very close watch to make sure that what we’re doing is relevant. Certain reports we used to do we don’t do any longer, and there are others that we’ve started. We’re always looking to edit, to streamline, to focus.”
Arkin California recently started its own magazine, California Juniors Today, published once each season and sent to 2,000 retailers nationwide — some of them clients, others the office would like to have as clients. “We’ve done six issues so far,” says Bregman. “Not only is it good for us, it brings the importance of this market to the attention of retailers.”
Advanced telephone systems are also indispensable. “I conference call religiously, every 45 minutes to a different retailer,” says Fields. “Video satellites are really the future of this business — then they’ll be able to see what we’re talking about.”
Videotaping presentations and fashion shows has also become a popular strategy. In the spirit of healthy competition, the L.A. buying offices are always trying to outdo one another with their yearly fashion shows, staging lavish events on hotel rooftops or Beverly Hills nightclubs and inviting hundreds of retailers. Those that aren’t able to attend are sure to receive a videotape.
Yet state-of-the-art technology can’t do much if an office lacks that combination of experience and instinct, the ability to spot the right trend at the right time. The West Coast buying offices have learned that in this era of careful spending, not every trend is for every store. “We always recommend testing,” Richard Arkin says. “We are not cheerleaders, we are business people, and we try to be circumspect. There’s a fine line between being too liberal and too conservative.”
Richman agrees. “You have to select very carefully when directing trends,” she says. “Obviously, New York, California and Florida are very fashion-driven. These are places where you can sell trends. In the Midwest and the Northeast it can take them six months to a year to catch on to something, if at all. The whole inside-out trend, for instance; I wouldn’t suggest that to stores in the middle of the country. In our office, we try to merchandise to the individual stores, not just to the parent company.”
Despite functioning in a recession, retailers seem to rely on their buying offices more for direction than aggressive deal making. “Pricing is certainly an issue, but we don’t look to our buying office to be responsible for those negotiations,” says Karen Hubchik, vice president of merchandising sportswear for Cache, a New York-based company with 110 specialty stores across the country. They have worked with Directives West for six years. “Directives West is our eyes and ears in the California market,” she adds.
“Sure, my clients want better prices, but the fact is the resources are giving them better prices,” Richman says.
Added Richard Arkin, “Every retailer buys sharply, but the vendors have gotten better at what they do. They’ve become more technologically proficient, a lot of them are doing things to save money so they’ve been able to hold prices down.”
That doesn’t mean that retailers don’t appreciate when a buying office can negotiate the best deal. “It’s fashion first — focusing in on who has the best in the market,” says Fields, “but price is more of an issue now. One of the reasons I just opened an office in Hong Kong is so we can have sourcing and private label programs there and so be able to help our clients more on price. We also do group-buy incentive programs. Most of the time, if commodities become hot, there’s oversaturation, so it’s up to my buyers to pre-negotiate who we can trust to make a good quality product at the right price point.”
Beyond issues of market perceptiveness and price, a number of established good-business concepts lay at the foundation of the West Coast buying offices. “One of the things that makes an office good is the longevity of its people,” explains Arkin, who employs 10 market analysts. “If you are a store considering a buying office, and you find out that the average turnover in that office is about six months, how is that office going to serve your needs? How are they going to understand what your store is about if there’s always a new person on the line? We have people who’ve been with us for 11 years, and I’d say the average is about five years. It’s crucial to establish long-term relationships.”
Arkin California’s first and still-dedicated client will bear that out. “We have evaluated other buying offices, but Arkin California really understands our stores and has consistently given us the best direction,” says Bob Brannon, vice president and General Manager of the Popular’s four department stores. “Being based in El Paso, we have a very West Coast attitude, and we feel that Arkin California has the strongest coverage of the California market.”
Both Arkin California and Directives West believe in hiring market analysts with retail experience. “I started this business because I felt there was a need for an office that was much more focused on a retailer’s point of view,” says Richman, who worked in senior executive positions at Federated Department Stores for many years before launching Directives West.
Added Arkin’s Bregman: “All our market analysts have retail experience. That’s a prerequisite to working here. Our people really understand the retail business, they have excellent communication with our clients, and our clients are inclined to listen to their advice.”
Each of the L.A. buying offices has a different style that is somewhat revealed by looking at the women at the helm. Warm, diminutive and mature, Ruth Bregman conveys wisdom and spirit — the Dr. Ruth of the California marketplace. Sandy Richman, with her model-slim figure draped in subtle, elegant knits, does not dispute that her niche is in the better and moderate end.
And Barbara Fields is a robust blonde bundle of energy who claims to have the largest staff, covering the European market as well as the West Coast with offices in London, Paris and Hong Kong. She is always looking for ways to expand her scope. “I have seven buyers in juniors,” she lists. “I’ve just expanded my menswear division. I’ve also gotten into the off-price market and have major buying power there right now with three people in that growing division.”
All the L.A.-based buying offices are optimistic about the future. “Retailing remains a fashion business, in good times and in bad times, and I believe that the world looks to L.A. for fashion direction,” Richman insists. “New and emerging sources are essential to keeping this business alive and dynamic. Today, I think California is already perceived as a stage — we’re the first to begin and the first to end any trend — but we must make people aware that California is also a great market for sourcing. There’s a tremendous amount of private label opportunities out here.”
The recently passed North American Free Trade Agreement (NAFTA) is also seen as a positive development by the buying offices. “I see the California market growing, maybe not by leaps and bounds domestically, but NAFTA is going to be very good for our vendors here,” says Arkin. “As the United States gets more into a trade mode, that is going to make us move forward.”
According to Barbara Fields, “NAFTA is going to affect my business in a positive way. It will allow me to bring in a lot more clients who’ll be able to use California extensively.”
Today, the California buying offices see themselves as consultants, not just middlemen. And while in a recession, one might think that retailers would try to sally forth without a buying office — it is possible to exist without one — most would rather work with one, and some work with more than one. “Yes, a store can function without a buying office,” Arkin admits, “and a person can travel in the Amazon without a guide. Retailers recognize this: They know what they’re doing, but there’s no way they can know what’s going on in this market on a day-to-day basis without sharp people to show them the way.”