TARGET YOUR EXPORTS, POTENTIAL PLAYERS TOLD
Byline: Valerie Seckler
NEW YORK — While rapidly abandoning a view of the apparel market which limited their sales forays to the 50 states, small women’s apparel firms often fail to tailor their export efforts to the widely varying needs of customers around the world.
Members of WWD’s financial roundtable cautioned would-be apparel exporters to avoid focusing too broadly as marketing moves need to be modified for specific countries or even parts of countries.
With many American apparel firms looking to Europe as a new customer, the biggest mistake typically made, according to David Goldberg, partner in Marketing Management Group Inc., here, is treating the continent as one market.
One way to avoid this trap is developing a coherent business plan, a step larger companies take with regularity but which the small to medium-sized firms expected to fuel apparel export growth often overlook.
“Major companies will do consumer market research like holding focus groups ahead of market entry,” said Richard V. Romer, executive vice president, The CIT Group/Commercial Services, here. “Middle-market companies typically will try to apply U.S. market techniques to an [export target] and it won’t work.”
Instead, they need to listen to what retailers who know the market are looking for, Romer suggested, often a less expensive prospect for a smaller firm than conducting focus groups.
“Companies that just send people to trade shows and don’t commit to learning the local markets will find it hard to succeed,” stressed Kenneth V. McGraime, vice president, State Street Bank & Trust Co., Boston. “When you decide to go into export markets, you can’t do it haphazardly. You need senior management’s commitment to a strategic focus.”
Firms looking to export need to locate employees in the foreign markets they are trying to reach, seeking out everything from style preferences and sizing needs, to an understanding of how to process, sell and distribute goods there.
Critical to securing effective offshore distribution, said the roundtable group, is teaming up with a partner based in the local market, who can get product into the right outlets.
Tying up with the wrong partner can be a big problem, however, cautioned Anthony Brown, managing director, Trading Alliance Division, MTB Bank, here, who advised apparel exporters to avoid distributors who handle competing products. “They wouldn’t commit the time, energy and finances needed,” he warned.
While the roundtable members ticked off a host of other issues for exporters to examine prior to entering a market, such as currency needs, terms of payment and other legalities, and tariff and non-tariff barriers like product markings and care labels, they also said firms should limit upfront costs.
In Europe, for instance, there are rigorous severance-pay requirements, noted McGraime. “If you set up big infrastructures and the business doesn’t go, you’re not able to just lay off people as in the U.S. In France, Belgium and Italy they require a minimum of six months’ severance pay.”
Moreover, it would be a mistake for exporters to expect a profit in the first year or two of selling abroad, because it takes time to smooth out distribution networks, make product modifications and such.
A deadly error, said Romer, is using offshore markets as dumping grounds for failed product. “This is a major mistake firms have made since the late Seventies,” he said. “If you export junk, they’ll never want your merchandise again.”
The foreign-market-as-dumping-grounds approach is part of what Romer terms the “narrowminded view” of too many American apparel resources.
“They complain that their gross profits are getting squeezed because U.S. retailers are forcing them to do X,” he related. “They haven’t grasped that their market is the world. If they paid more attention to how things are done abroad they could apply some of those ideas in the U.S., as well as diversify their customer base.”
It is this limited world view that has, in large part, confined the growth of U.S. apparel exports. Apparel firms here have harbored a historical indifference to the international marketplace, the group said, due to the strength of the U.S. economy.
“Unfortunately, in the last 10 years a trade imbalance has developed,” observed Brown. “It has only just started to dawn on a lot of companies — that it’s strategically important to export.”
This “export last” philosophy in the past, said Romer, kept doors closed to many markets abroad, but now with burgeoning foreign interest in American apparel, more buyer-driven overtures are being made.
— Fairchild News Service