KNITWEAR VENDORS CALL MASS MARKET TOUGH, BUT WORTH THE EFFORT
NEW YORK — When it comes to knitwear, mass merchandisers are a demanding bunch. But the results are often rewarding.
In the last couple of years, as mass retailers began aggressively stocking more fashionable knitwear in an attempt to lure department store customers, their buying dictates have become hot topics.
According to sweater manufacturers who service this sector of the business, mass retailers not only have stringent requirements concerning pricing, quality control,
fashion and shipping, but they also demand that a manufacturer be financially healthy and do a minimum overall volume before the stores will even consider doing business with them.
“Price is number one, and they really take quality for granted. It’s expected now,” said Yvette Sutton, executive vice president of One Step Up, a junior knit and sweater import company here.
Despite the tough requirements, the consensus among these manufacturers is that doing business at the mass level can be preferable to working with department stores. The advantages include high volume, strong commitment to the products, development of long-term relationships and fewer chargebacks and returns.
The rewards can be substantial, vendors say. Mass merchandisers don’t even talk about units, they order in dozens, said one maker, who pointed out he sold 20,000 dozen of a handknit sweater.
“Mass is easier than department store business,” said Bradley Barnett, president of Spunky and Brand New Knits, a junior and misses’ knitwear company based here, “because in general, the requirements are the same, but the quantities are so much bigger.”
In addition, he said, mass doesn’t have “all the chargebacks and returns.”
“Doing mass business is easier and cleaner than department stores,” said Roger Webster, designer and merchandiser for Big City Knits. “They commit to goods and take responsibility for their buys.”
Andrew Segerman, partner and president of Segerman Knits, producer of the Spice of Life sweater and knit line here, also appreciates the mass market.
“The buyers are more knowledgeable than most,” he said, “and they tend to build strong relationships with their vendors because there is a lot more at stake for both of you. Your problems are bigger, but your successes are bigger.”
Knit firms are hesitant about discussing stores’ demands and practices. Some have signed confidentiality agreements and others are reluctant to say anything that might jeopardize a major account.
But most manufacturers agree with Big City Knits’ Webster, who said, “The hardest part about doing business with mass is getting started, getting on the matrix.”
Under the matrix system, the retailer does certain programs with certain vendors. Knit and sweater programs may be limited to three vendors.
“The best way to break in is to have the hottest garment on the market,” said Webster. “Otherwise, someone has to fall out of the matrix so you can move in. There is definitely a shrinking vendor structure.”
For their part, retailers say there are specific considerations when choosing a vendor.
“We look for companies with fashion savvy that can really spot trends in the market,” said Bob Yorkus, operating vice president and divisional merchandise manager of women’s ready-to-wear at Caldor.
Gil DeMarrais, divisional merchandise manager of women’s apparel at Kmart, said, “Anyone can come out and sell to us, especially if they have a new idea or have done research and determined that we aren’t carrying an exciting item [that they can offer]. It’s a lot of work. Usually a new vendor has to show us a market testing or that they have had success with another retailer.”
“The best way to get into mass is to carve out a niche, whether it’s garment-dyed knits, bodysuits — whatever — and then have a good price and fast turn,” said Alan Seskin, president of the New York-based Jordache Knitwear, a division of Stallion Knits Ltd.
Most mass retailers — especially the larger companies such as Wal-Mart and Minneapolis-based Target — require extensive financial and operating information from manufacturers before even discussing business, according to knitwear executives.
“They want to know about your factories, their addresses, who else you do business with, before they even begin to shop the line,” said Seskin. It’s not easy to get a test order and become a new vendor.”
Howard Hall, merchandise manager of women’s sportswear at J.C. Penney in Dallas, said the chain has “a very sophisticated system” for evaluating factories here and abroad.
“We look at all aspects of production to insure all quality control standards are being met,” he said.
Once orders are placed by a mass retailer, a manufacturer’s pre-production samples are subject to tough quality testing before actual production gets under way. This type of testing is not traditional at department stores.
“The samples are tested for everything — shrinkage, color fastness, accurate care instruction labels and viability of beads and other embellishments,” noted Segerman Knits’ Andrew Segerman.
“It keeps us on our toes, and we welcome the quality testing,” he added.
“Quality testing with sweaters is a problem sometimes, because given the nature of woven yarn, sweaters are not exactly the same,” said Barnett of Spunky Knits. “Some retailers don’t understand that, and they send the sweaters to these big testing labs where no distinction is made for sweaters over wovens.”
Testing also involves matching colors.
“They are very specific about color and may want a knit to match their wovens exactly,” Segerman said. “You even have to know what type of lighting a store has — fluorescent, et cetera — when you’re determining whether a yarn matches. It’s really very sophisticated.”
After testing, manufacturers must then meet shipping requirements. Some retailers, they say, are extremely demanding.
“Sears has very special hanger, ticketing and polybag qualifications, and they don’t give you any leeway,” said one vendor. “If you are one day late, they cancel you.”
“You really have to know all the retailer’s qualifications before giving a price because every nickel counts when you’re doing a large volume; hangers, labels, etc., it all adds up,” said Vera Campbell, president of Design Zone Inc., a Los Angeles knitwear company.
Almost all mass retailers expect the manufacturer to pretag, buy and put in the store’s private label, and purchase and provide a special hanger and polybag. Hangers and preticketing are not usually required at department stores.
Timing of deliveries is a big issue with mass retailers, and it’s one area where domestic producers have an advantage over importers.
“Turnaround time is equal to quality,” said Caldor’s Yorkus. “We expect our domestic production at six weeks and import at 60 to 90 days.”
According to Seskin of Jordache Knitwear, vendors are buying closer to season than ever.
“They want to be more liquid and flexible so they can buy into the latest trends,” he said.
Mass retailers still buy certain big programs six months or more in advance. But, as Seskin said, “The more novel or fashion-forward something is, the shorter the lead time is — six weeks is normal.”
“One reason we stopped doing imports was because of the advantages in turnaround time and flexibility we get in domestic production,” said Design Zone’s Campbell.
Importers, though, have an ability to do certain styles and use some yarns that might be cost-prohibitive for a domestic company. Handknits, for example, are a cottage industry overseas.
Despite a growing emphasis on fashion at mass retailers, price is still paramount. “Price is the biggest challenge,” Campbell said. “We will turn down orders if the margin is too small or the obstacles to meeting their price are too great.”
Mass buyers often buy only what they feel they can sell at a certain price. The manufacturer is faced with the challenge of trying to meet that price. In contrast, department store buyers are more willing to take risks in price if they feel strongly about an item.
“Mass buyers concentrate on price so much that sometimes they sacrifice the product to get the price they have predetermined they want,” said Barnett of Spunky Knits.
While acknowledging that mass retailers are “very sophisticated” about price, Segerman was critical of policies that are too rigid.
“In being so price-conscious,” he said, “retailers don’t give the consumers as much credit as they deserve. Consumers will pay more for special pieces. Retailers test more expensive items. They sell out of them and then have to scramble to get more.”
Big volume isn’t the only advantage to doing business with mass merchants.
“The relationships with mass merchandisers are strong partnerships,” pointed out Marc Setton, chief executive officer of Tropic-Tex International, a New York-based knit and sweater house. “You have sharing of information that pushes you to the next level in technology and global expansion.”
That idea was confirmed by Penney’s Hall: “We establish partnerships with our vendors. It’s not just working with a salesman. We work directly with the factory.”
“Mass merchandisers are often able to project far in advance what their needs are and commit to it,” said Sutton of One Step Up. “They are willing to work up front and early.” Staying on the vendor matrix is also a challenge. As mass stores put more emphasis on fashion, their resources have to keep up. Many manufacturers regularly shop The Gap and The Limited to catch the latest styles for “inspiration.”
Manufacturers attempt to keep retailers interested in their merchandise by having new items every month, and a majority of vendors offer monthly deliveries.
“You have to work really hard to sell to mass,” said Jordache Knitwear’s Seskin. “Our approach is to concentrate on newness. We have new items every month, not just the same body in new colors, but whole new shapes.”
Other knitwear companies offer more direct benefits to mass stores. Segerman Knits gives discounts during slow times at its factories.
One risk firms face is that some department stores won’t buy lines that are carried by certain mass retailers.
“Dillard’s is notorious for dropping you if they find your label in Wal-Mart,” said one manufacturer. Dillard’s could not be reached for comment for this story.
All the knit manufacturers surveyed do a strong business in private label, ranging from a minimum of 25 percent to as much as 70 percent.
“Private label is so strong because stores perceive that a customer is hooked on their label, and they want to promote this loyalty among their customers,” Segerman said.
“We call our lines ‘private brand,’ rather then ‘private label,”‘ said Hall of Penney’s, “because we really develop the brand ourselves. We don’t just stick in somebody’s label.”
In addition to promoting customer loyalty, private label is often used for more practical reasons.
“A retailer may have bought an item from several resources, but they want it to look like one label,” explained one executive.
Key price points vary with the stores, but $4 to $9 wholesale for T-shirts and other cut-and-sewn garments and $10 to $19 for sweaters is fairly standard.
Manufacturers and retailers agree that today’s customer is more knowledgeable and expects quality. “The mass customer wants the same looks they see in The Limited and Express. They expect fashion pieces,” said Caldor’s Yorkus.
The same silhouettes and yarns that are selling in department stores are also big at mass. Manufacturers agree that novelty is important in yarns and smaller silhouettes, including cropped styles. Vests are very strong, in jacquards and chenille. Space-dyed and screen-printed sweaters have also retailed well.
At Caldor, Yorkus said, “the major factor is texture, thermals, ribs, waffle stitches and closer-to-body styles.”
“Cropped styles are checking well, and we expect them to be strong into the spring,” he added.
“The tunic is still our number one silhouette, but there is a big trend in sweater vests and cardigans. We’ve seen a lot of growth in our career sweaters as the distinction between career and weekend wear has blurred,” said Penney’s Hall. “We have also seen a shift away from more tailored styles to softer, more relaxed knits,” he added.