Dorry Kordahi's new book 'Win Big Risk Small' reveals his meteoric rise in the ragtrade. In this exclusive series, he reveals some of his winning strategies.
All business sectors are cyclical, and that means terrific highs and terrifying lows - just look at property, banking and Australian car manufacturing.
Fashion thrives on change and is a completely discretionary purchase, so is it a notoriously unstable industry too?
History has all the answers, because it reveals everyone’s mistakes as well as their successes.
Too many companies attempt to imitate their competitors’ successes, whereas I try to learn from other companies’ mistakes, and then tailor our business plans accordingly.
In recent years, I have actively diversified our company’s activities and investments.
One major area has been the acquisition of five fashion brands, all of which had operated in the tough middle market of the Australian retail sector, and all of which had ended up in administration.
Naturally I was aware of the risks and vulnerability of the market, but believed I could successfully reposition all those brands.
I was also acutely aware of the impact the arrival of global megabrands like Zara, UNIQLO and H&M were having on the domestic market.
These companies have deep pockets and massive manufacturing capabilities and can constantly deliver an ever-changing stream of fast fashion, at a fraction of the price of domestic brands.
Their model is, ‘If you like it buy it now, because it won’t be here in a couple of weeks.’ It’s a very effective demand model with a very short inventory tail.
That is why it was so difficult for domestic brands to compete. The days of selling shirts for $249.95 were history.
Traditionally middle market companies had big infrastructures that were far too expensive to maintain.
They clung to traditional, seasonal offerings with high stock holdings, which left them with too much unsold inventory at the end of each season.
They then relied on heavy, end of season discounting to make up budget deficits. Eventually, this business model permanently devalued their brands.
My plan therefore, was to move our brands into more niche markets where we could work with independent boutiques and offer them much more exclusive designer ranges, that had distinct points of differences from the mainstream.
Rather than directly competing with these international megabrands, we were servicing areas of the market that they couldn’t tap into.
Also, I ensured that costs were kept lean and wholesale prices sharp. It had to be a win-win situation.
To make this happen, I designed a tight, multi-skilled staff and an overhead model for all our fashion brands.
This meant we could deliver small run, high quality ranges to discerning buyers, at a fraction of the cost of the traditional Australian management model.
By focussing our brands on areas where they will not go head to head with global giants, I have made them sustainable.
The way to survive in any business, not only in the Australian fashion industry, is to choose who you want to fight, when, where and how. Be prepared, and you will win.