MIDSIZE FIRMS TRY OUT QUICK RESPONSE

Byline: Scott Malone

NEW YORK — As they try to make the jump to the big time, several midsize jeans firms are adopting one of the strategies of their larger competitors: offering quick-response deliveries.
The benefits are clear: Keeping retailers in stock boosts sell-through rates and reduces lost sales. But there are risks: Firms that are used to running a tight financial ship find themselves investing heavily in technology, space and inventory to run quick-response programs.
Dick Gilbert, president of Mudd Inc., a New York jeanswear vendor that tested a small quick-response program last fall with one customer, May Department Stores Co., is rolling it out to other top department store accounts this spring. Gilbert has high hopes for the program.
“We think it will increase our volume 25 percent; that’s what we’re hearing around the market from retailers,” he said.
Overall, he expects quick response eventually to represent as much as 30 percent of the company’s sales. The investment required was substantial. Gilbert said Mudd, which expects to top the $160 million mark in revenues this year, spent $500,000 on updating computer systems to prepare itself for quick response.
“For a garment company,” he said, “that’s a whole lot of money.”
In the past few weeks, the four styles the company includes in its quick-response program have had weekly sell-through rates double that of the rest of Mudd’s 40 to 50 styles, he said.
The fact that quick-response styles represent only about a tenth of Mudd’s lines underlines the main risk of the concept for fashion vendors — keeping inventory of styles that may or may not catch on.
That risk has also prompted Paris Blues, based in Los Angeles, to keep the quick-response program it is rolling out this spring tight.
“It’s a huge risk for a manufacturer to take anything close to a fashion style and plan it out for next year,” said Lisa Engelman, national sales manager at Paris Blues. “For this program, I had to cut back to school three months ago.”
Paris Blues, which also tested the concept last fall with May Co., now has quick-response programs in place with two of its top department store customers. It’s offering each about six of its 120 junior bottom styles for quick response.
Engelman said she’d like to roll the program out to more chains, but was limited by the company’s capabilities.
“The only thing that’s stopping me from a major rollout right now is, I have a space program in my warehouse,” she said. “The quick-response items have to be stocked in an organized, separate manner that requires a lot of space.”
She said the company was looking for a 100,000-to-120,000-square-foot site in Los Angeles, which would be double the size of its present location.
The need for a dramatically different warehouse highlights the culture change Paris Blues is undergoing to provide quick-response deliveries. Previously, it hadn’t worried much about inventory, since it cut all its clothing to order.
“It’s been interesting for us, to keep a perpetual inventory,” she said. “This is a whole new thing, thus the space problem.”
But while quick response increases a company’s worries, it also provides new information about shifts in the market. Engelman said that after the fall test of quick response, she realized there was much more demand for very small-size jeans — zeroes and ones — than she had previously believed.
“When I had to sit to do initial cuts for back to school,” she said, “I had to re-think where I had gone last year and load up more on the smaller sizes and not think so much about the 13s.”
While it’s logical to start an inventory-intensive program on a small scale, some said fashion-driven companies need to keep quick-response programs small.
Silver Jeans, a resource based in Winnipeg, Manitoba, has been running quick-response for years, but has kept its program to five styles, according to Michael Silver, president. He said the current strong fashion cycle in jeans made the programs even harder to manage.
“In basics, it’s rarely a problem, but when you get into fashion denim, it’s tricky,” he said. “I have 168 styles and, darn it, 50 are selling really well. I’ve chosen a little bit safer route and instead of having a monstrous number [of styles available for quick response], am barreling out four or five that are good.”
Engelman said Paris Blues hopes eventually to expand the quick-response program to other customers, but she didn’t expect to cover a large number of styles.
“I will take it to other people, but it will have to be an extremely organized program,” she said. “I’m not going to do 27 styles. It’s still going to be a commodity, day-in and day-out program.”
Gilbert said the Mudd program had great promise, but acknowledged it was not risk-free.
“It’s a lot of money tied up,” he said. “We’re very confident, because we’re doing well, but we have close to $10 million in garments in inventory. We may have 400,000 quick-response items on the floor and another 200,000 regular items. With back to school coming, you have to be in stock in late April and May. When the rollout starts in mid-June, you can’t still be waiting for your factories.”