THE DOWNTURN NOTWITHSTANDING, CONTEMPORARY MAKERS ARE SETTING THEIR SIGHTS ON DOUBLE-DIGIT INCREASES.
Byline: Kristi Ellis
Doom and gloom? If anything, contemporary manufacturers are projecting a rosy year with expectations of double-digit sales increases and promotional strategies designed to expand their reach.
Licensing and private label programs are supporting many of those anticipated figures. Certainly, in potentially stormy economic times, a company that gets an early start on diversifying its output and reevaluating its distribution channels will weather most changes.
Companies are also putting their faith in advertising, public relations and product placement as a way of finding their niche in an ever-competitive marketplace.
While many contemporary manufacturers interviewed reported they are “cautiously optimistic,” for the most part, the outlook among the otherwise disparate lines is markedly more positive than that of most categories.
Gary Bub, president of Tessuto Inc. in Los Angeles, is projecting a 10 to 15 percent volume increase of $20 million this year.
To support and streamline his three divisions — contemporary sportswear and dresses, petites and children’s wear — Bub plans to launch a B2B Web site in the next few months. But he is not among the converts to e-commerce.
“We have too many stockkeeping units to make it a viable project. It would be more of a distraction from our business plan than an advantage,” said Bub. “I don’t believe that pinching a few pennies will affect retail, but it could hurt quality.”
Instead, he built a network of foreign fabric mills and has cut his lead time down from seven to six weeks.
With over 1,000 domestic retail accounts in place, Tessuto has set its sights on international distribution. The company currently exports to Japan, which accounts for under 10 percent of overall sales volume. Europe is next, particularly England, France and Spain.
At Charlotte Tarantola, sweaters will play a bigger role this year.
The $5 million novelty T-shirt business will expand to a full division of contemporary sweaters this year, reported Charlotte Tarantola, the principal and head designer.
To that end, she hired an assistant designer to facilitate a full line, launching at WWDMAGIC. A black label will be attached to sweaters, white for T-shirts.
Tarantola is also set to take the brands to the next level. Instead of advertising, she is planning to hire a public relations agency to place product on TV and in films.
“Advertising is meaningless unless you are doing it on a Gucci budget and promoting a lifestyle,” she noted. “Consumers are getting too hip. It’s all celebrities and product placement now.”
“We are going into 2001 super-cautiously, but we are still optimistic,” said Randy Hild, an executive vice president at Quiksilver, which launched the contemporary Alex Goes last August.
Predicting first-year sales of $2 million to $3 million, Hild said the Huntington Beach, Calif., company plans to place a higher priority on contemporary boutiques this year.
Although he doesn’t want to move out of the core surf shops in which Quiksilver’s junior counterpart, Roxy, hangs, Hild believes growth lies in expanding distribution to more fashion-oriented boutiques.
Hild has pulled Alex Goes out of the ASR Expo — a surf-oriented trade show — and placed the line in Intermezzo and Coterie in New York and Designers & Agents in Los Angeles. Hild is also looking for a New York independent rep who specializes in better/contemporary.
“We finally have a foot in the right world of distribution. We are not walking away from surf. But we realize that this product should not be in a huge number of hard-core surf accounts,” he said. adding the line may undergo an upward price adjustment this year toward improving quality.
Rem Garson is rolling out an aggressive expansion plan this year.
Shooting for a 50 percent increase in volume (from $20 million to $30 million, according to industry sources) this year, the New York leather sportswear company, wants to build a status brand, said owner and president Marc Garson.
Garson hired Della Olsher to head up public relations last month. An ad campaign, budgeted from $300,000 to $500,000 is in the works. The rollout begins with trades in April, followed by consumer titles such as In Style and Marie Claire.
“We are not just doing leather,” he said, adding the company has a full knitwear line and recently launched a moderate knitwear and leather line.
Rem Garson price points will rise to reflect the leather and shearling quality.
Other growth areas include private label, accounting for 50 percent of the business, and licensing. Garson said he is negotiating to become a licensee for an undisclosed company to manufacture leather and suede.
Mambo Five Inc., based in Miami, is banking on a private label program, department store distribution and a new advertising campaign for its own brand, Gabiz.
The 18-month-old brand posted a first-year volume of $1 million, expected to increase by 50 percent at the second year’s end, reported president David Gabison.
“The market is quite slow now, but we will increase because we are opening new accounts every day,” said Gabison. “If I had been in business for five or six years, I wouldn’t predict such an increase.”
A key part of his cautious growth strategy is private label. “It’s risky for us. When you do private label for chain stores, they return product if it doesn’t sell. That can be harmful for a company.”
A print ad campaign launches in the second quarter, although details had not been finalized at press time. There are also plans to open two stores in the next two years in California, New York or Florida.
Beyond Inc., the maker of Cyrus, is also investing in private label.
With 1,000 specialty store accounts under its belt, the company plans to increase private label business from 15 to 25 percent this year, said Stephen Hakakian, president of the New York contemporary knitwear firm.
Hakakian has expanded distribution to Canada with a test company that is placing Cyrus in stores this fall.
“If they do well with the product and they can put us in the right stores, we might give them the licensing deal in Canada,” he said.
The company will launch a Web site this fall, though it will be used only for marketing purposes.