In this exclusive extract from our February edition, Elk co-founder Marnie Goding how she grew a wholesale network of 1200 accounts across 20 countries. To subscribe and learn from the best fashion traders every month, head here.
Assia Benmedjdoub reports.
Tell me about the early foundations of Elk. What prompted you to launch the business and how did you secure your first accounts?
Elk was launched with a mixture of great enthusiasm and opportunity.
We started the business in a very different environment to what we operate in today and as such, we started with a more old fashioned approach.
The first accounts were secured by either cold calling and taking advantage of referrals which thankfully were abundant as most of our friends are in the fashion industry and then through participation in trade based events.
This format allowed us to meet business owners and buyers, gave us the opportunity to build relationships and to talk about our products – it was more personal.
Like everything, it takes time to build trust and to prove success.
Maintaining communication and by visiting accounts constantly (something we still do today) means we can secure reorders, gain feedback on successes and failures, have a closer understanding what customers need from a service and support point of view and help to refine product to better make sales.
What were the biggest challenges you encountered in growing the business in the early days?
In the early days and in some cases still today, we struggled to cut through in pure fashion stores. Because of the breadth of categories we work across, we fit in fashion, lifestyle and design stores.
We often found that buyers for stores with less product variety were used to buying only apparel from apparel labels or accessories from accessory companies.
These challenges have only spurred us on to make each category stronger and to ensure we can if necessary split the range and fit into different stores depending on their needs without making our offering look patchy.
What were some of the major breakthroughs?
Finding amazing agents has been our breakthrough.
A good agent with an established client network is guaranteed income. We were lucky from the start to find well aligned representatives who could fly our flag.
They have been willing to grow with us and to learn as we challenge them with new products. Finding great agents is one piece of advice I would give to any new label – the reality that you cannot do everything yourself is one of the best things you can come to terms with early on.
What was the steepest learning curve you encountered in growing the business?
There have been many little ones along the way. However, because we are very considered with everything we do, we have managed to avoid any grand disasters.
If I had to name one thing it would be in understanding how to best recruit and manage staff to protect the culture that we have taken such care to build. We are so lucky to have an amazing team that for the most part stay with us.
However, there have been a few occasions where we have stepped outside of our comfort zone thinking that we need to challenge ourselves by bringing in people that might not be our normal character. Guaranteed every time we have done this it hasn’t ended well.
These occasions have been reminders that we do know what works for us, we do have a certain type of person who fits our culture and just how perilous it can be and how risky for the entire company culture to have someone who doesn’t fit.
These experiences have in some way shaped how we employ now and have made us more confident that we steer this ship rather than feeling like we need others to show us a new course.
Elk is self-funded. Tell me more about this.
Managing the finances of a business like ours has and is a multi faceted management approach.
We have had challenges over the years thrown at us like the GFC but at every step we have done a few things that allowed continued, positive growth and financial viability even in some of the toughest times.
A strong financial team, reliable systems and planning have been key along with sound external advice and support of advisors who facilitate conversation and help guide us using the experience of others.
We have also never over loaded ourselves and understand that we are in a business that is 100% based on making sure that income comes from product that sells – it’s pretty simple really.
At all times everything we produce must be commercially viable – there is no point making anything that won’t sell. We also have a reasonable approach to our wholesale accounts.
We are often the last ones paid because we don’t pressure them for payments which can be very difficult. We realise that it is tough out there and that for some of our accounts, Elk can attribute up to 70% of sales.
A gentle approach builds trust and a supportive relationship where they can rely on us. Of course we have been burnt over the years but it is a calculated risk that has paid off – our customers always come back and the proof of success of a range is sell through and reorders.
What was the initial expansion strategy and at what point did the brand expand internationally?
Initially the strategy was to make sure we had the best domestic coverage we could. There is still some growth to be had domestically at a wholesale level and certainly great growth to be had through retail and online.
The cost of doing business domestically is minuscule compared to going offshore. In saying this, we did move into the Scandinavian market sooner than anticipated as an opportunity presented itself that would have been foolish to pass up. So you have to have a balance between reality, capability and opportunity to maximise potential growth.
We then made the decision to make a move into the US in 2011. It has been a slow, considered growth in this market – a strategy that has paid off as we have been able to accommodate the pressures on production and internal resources without overwhelming our suppliers or team.
What were the key points in establishing the export business? Did you secure international agents/showrooms?
The key to establishing an export business is to spend a great deal of time and effort trying to understand the market you are entering.
Every new audience has its quirks, standards, expectations and sometimes prejudices. We have found (whilst an expensive undertaking) that making one or two trips to the market is the most important thing you can do and helps you define any roadblocks to entry.
It is hard when you are looking at a massive market like the US so you can only do what you can! We secured international agents, showrooms and then put full-time Elk crew on the ground.
Training is the key though. Our business at every level has been built on relationships – by immersing those who sell our product into the Elk way of life.
No one starts with us until they have been trained and where possible brought to Melbourne to have some time with us, our team and to experience our Melbourne way of life!
It is costly but it is the best way for them get to know what we are about so they can eloquently and confidently talk about the product they are selling…. It all comes back to a more personal, old fashioned style of doing business.
What is the core challenge in managing a wholesale network of over 1000 accounts?
We have great staff, great systems, clear communication and are very organised.
Communication is the key – we try to second guess anything that one of our accounts may want to know and provide them with this information up front.
The other key to this is to have agents who can act as a conduit between the customer and us.
They do a lot of the work and so to make sure they are fully up to speed we are in daily contact with each of them, we have a bi annual conference in Melbourne and then visit them up to four times a year.
Seasonality has been tricky to manage from a stock holding point of view so we have set the sales periods with the Northern Hemisphere accounts following on from our season here. So effectively (as we do two ranges a year with three drops per season) that our ranges run for 12 months.
This is a bit of a challenge for our warehouse but it allows us to test product domestically and weed out anything that’s a bit twitchy or on the flipside shift slow moving stock in another market.
In regards to payments, it’s not a huge drama as all international accounts are prepaid and we cost all duties, taxes and other known costs into the product.
The other most important thing is to cost your product in the market. It is essential to thoroughly research what the end RRP will be to assess viability and competitiveness.
After 15 years primarily in wholesale, the brand has ventured into retail. Why?
The decision to open a stand alone store in a traditional retail precinct was aimed at increasing brand awareness in line with our expansion strategy.
As a primarily wholesale brand your product is filtered into stores along with a multitude of other brands which is great, it makes for a diverse offering. However, our collections are designed holistically with a trend or theme and this story is often lost.
A stand-alone store gives us the opportunity to express our voice, to showcase our design aesthetic and ultimately for existing customers to get to know the brand more in depth. It is of course also aimed at finding a new customer and the CBD is the best location for this.
During the week, we see the business clientele and on the weekends we see both domestic and international customers.
The spin off from having a well placed retail store has also been an improvement in wholesale business. Especially for interstate wholesale customers they get to immerse themselves in our world, which bolsters their confidence in the brand and has encouraged them to buy deeper into categories.
They are excited about being a part of a growing, successful Australian brand and they love being able to say they stock Elk – it has been wonderful to see.
Is this vertical strategy long-term?
We understand the importance though of supporting the back bone of our business ,which is wholesale. We are considerate not to cannibalise our own trade and so it is not in our plans to roll out dozens of stores!
The opportunities to grow the business vertically are not limited to the domestic market.
We have had some interesting proposals come from offshore contacts that we will look into over the coming 12 to 24 months.
What are the best performing lines?
We have seen growth mostly in leather goods and in apparel.
This is attributed to us tirelessly working on a balance of producing products that are equal parts our own designs, well priced, accessible, well made and don’t have clear competitors. Products such as our vegetable tanned leather goods are some of our best performers – they don’t have clear competition in the market and so sell easily.
How do you approach production?
We manufacture both on and off shore.
Production is a significant challenge for a brand like ours as we have such a huge breadth of categories. As previously mentioned, we work on building strong relationships both internally and externally so we don’t try and spread ourselves too thinly with too many suppliers.
We prefer to work more intimately with ones that know us, who can meet our standards and who operate transparent business that allow us to visit several times a year and sit with them whilst our products are made.
We are very close to everything we do – we want to know what, where, who and how our products are made. It gives us a sense of connection to our items, we know everything there is to know about them and not all suppliers like to work like this.
So the changes to the supplier base have only come about when we work with someone who isn’t open to working closely with us or who we don’t think we can trust 100%.
The business now employs over 40 staff - how did this figure grow?
We are actually upwards of 60 now! Initially we ran with a ‘work till we are about to bust’ approach and then would bring new people on. Now we are more strategic and try to anticipate and plan for growth better.
To cope with the growth, we have had to change our thinking from running as an operation with a very flat structure to putting more of a hierarchy in place. We still like to operate with an open, relaxed environment but we have had to realise that this can bring with it some major challenges.
The best thing we have done is to promote key people in sales, design, warehouse operations, planning, HR and IT to allow the business to forge ahead confidently.
We have formed a management team and had to work a lot on figuring out the best ways to communicate to the entire crew.
We have also learnt to listen and learn from those that work with us and are never afraid to bring in people who are more experienced.
Let's talk online commerce. How do you approach this area? Is it a substantial part of the business?
Our website is, for a great number of people, the only contact they will ever have with our brand.
As such, it is a hugely important part of the business from a branding and communication point of view and as a key revenue generator. We have a new website in the pipeline which will reflect much improved eCommerce practices, improve back of house efficiencies and give us greater flexibility to geographically customise content for international markets. You have to approach any website (old or new) as a continually unfinished project.
As a business which started without the internet, we have had to adapt to keep up with the technological changes that the web has brought with it.
It has opened us up to the whole world and whilst keeping up can be overwhelming, we have realised that there are a multitude of external resources available to support us and make sure we are operating with best practice.
What are some of the growth plans ahead for Elk?
The new website is our first priority for 2017, followed by exploration of new international wholesale markets. We are also about to take on new full time staff in Dallas and Chicago in the US, have a possible outlet store in mind for mid-year and are keeping more retail sites on the radar too.
Internally, we are growing our team and doing some gentle team restructuring to support the growth. There’s always something going on - that’s the fun of it, we are keeping our foot on the pedal.