Sales agents tell Assia Benmedjdoub what the new s/s selling season means for the sector.
Mercedes-Benz Fashion Week Australia (MBFWA) has shifted from May to March and aligned with Premiere trade fair. Designers and buyers have had their
say – does it make sense from a sales agent perspective?
Phoebe Garland: The date for the last week in March is exactly when the buying season for trade is. Also, the merging of MBFWA and Premiere is a perfect match as it aligns with the trade buying season and makes the event much more commercial. Ultimately designers need to gain sales out of MBFWA and Premiere – the PR is just not enough.
Jon Hewitt: Absolutely. The whole purpose of Fashion Weeks internationally is to offer an avenue for designers to showcase the new season collections in their entirety to both press and buyers at the one event. Australian Fashion Week has always been scheduled after the majority of sales when brand selling internationally has finished, leaving buyers with little budget to spend over Fashion Week. Our sales take place in March/April for spring/summer.
Dominic Beirne: Yes. It needs to drop in behind or before the Northern Hemisphere shows to enable editors and other delegates to travel. It also, as Phoebe says, assists commercial realities. When it was announced, there were concerns because L’Oreal Melbourne Fashion Festival (LMFF) has been in March for 10 years, but is targeting consumers and so should work with High Street brands where MBFWA and Premiere are more trade and wholesale based.
Phoebe Garland: I agree 100 per cent with Dominic, there needs to be commercial accountability for all events. I am extremely passionate about some of these high -end designers actually succeeding in their career. And while it’s fantastic they get so much press, what happens after? I think the press is fantastic for branding but it doesnt necessarily equal sales.
While the March date does nestle in with the global fashion calendar, will global buyers order our summer stock around an autumn/winter buying period? What about resort?
Dominic Beirne: Yes they will source, because we don’t really do winter here and the product now is more transpersonal than summer. Look at the paps and what they’re shooting for the mags. Consumers are following these images and implementing them. Additionally, the speed to market of Zara, H&M and so on means that retailers need to get new product ASAP to ensure sell through and traffic. And, of course they buy when we sell, they just may not take delivery.
Phoebe Garland: Cameo, Finders Keepers and Keepsake sell overseas to Asos, Shopbop, Harvey Nichols and Myer, and they are all buying in alignment to the Australian buying season. They do monthly ranges so it’s pretty fast to delivery. There are seasonal ranges but also extra injection ranges.
Jon Hewitt: Our clients do deliver resort internationally but I believe that having a platform to showcase winter collections should come before a stand alone trade event for resort collections.
Do you believe the March date will maximise selling opportunities or will the event still have a strong marketing and PR focus?
Dominic Beirne: Too early to tell. Designers need to understand that they need the press to grow, but recognition only won’t grow sales. How many shows had buyers in the front row this year? How many designers worked with the buyers to manipulate the range to their needs? They don’t get how to work with their customers. They criticise retailers for poor service but then provide that same standard to the retailer. Press is a fallacy. It doesn’t translate into sales. It translates into traffic which is served by the on or offline assistants to create sales. Retailers are only served by the quality of their staff.
Phoebe Garland: I spoke with a high-end retailer that said she was situated in the back row and received few invites to shows. She is a very established buyer that has been around for over 30 years and is a prime stockist. The commercial reality for high-end designers is they are in a very difficult market with very low volume of sales and need their retailers to thrive. Sure they might get [department stores] Myer or crack David Jones but they will only be in about five or nine stores but not all.
Can agents help to steer these more emerging designers?
Phoebe Garland: I was approached by almost every start up designer after MBFWA but agents don’t want start ups, as it’s too much time and energy for very little return. For example, we have accounts whereby one store can do $140K a season including indent and stock. For high-end you need to look at the market in terms of the national scale, as the amount of rteail accounts you can service can be quite limited.
Dominic Berine: We have worked on 10 per cent commission and a label needs to be doing $1 million minimum in the geographical territory we represent them in. That is the break even for an agent. Remember also that the agent generally receives their commission once the retailer has paid the bill, if at all, which can be 18 – 24 months after the order was taken. The above numbers do not work on distributorships or any other model than state based agencies.
Phoebe Garland: From an agency point of view, I have no interest in taking on that for NSW. I could have another label in my showroom that I could show to 200 accounts as opposed to 10 or 15 accounts. We also work higher than 10 per cent. As an agency we wont work for less than 15 per cent and if its a limited stockist label with no stockists I would look at 30 per cent.
Dominic Beirne: 150 to 200 stockists each ordering $10K in the six states plus New Zealand is a very sizeable business It is valuable to the supply chain and the agents and if the feel through works then they will get paid efficiently as well. Start ups are lucky to hit the $500K mark in total.
Phoebe Garland: It costs money having a range in the showroom and because of the oversupply of garments there is a lesser volume of sales. You might be lucky at the high-end but I see it as too much of a risk to my business. Having said that, we do mentor a lot of our labels and designers to ensure their commercial success. We talk to our designers about price points, what sells and what doesn’t. And keep them abreast of customer feedback and commercial realities of the retail market.
Jon Hewitt: If the point of difference is there and the pricing is right, along with branding that works for our culture, then there are great opportunities for cutting edge designers to grab a hold of a percentage of the Australian market. We have an increasingly savvy fashion conscious population that want something different to what is offered by the mass market brands.
What about driving trade sales through alignment with Premiere?
Dominic Beirne: In terms of driving sales through partnerships, I think this is only a first step. Accreditation and co-location are the next steps that need to be shared. The same, or very nearby venues would be a key step and Premiere should be a showroom suite type event. It should be kitted out appropriately and the runway shows should all be staged at MBFWA. Registration at one gives the other. If I run a parade at MBFWA, then my showroom is at Premiere and so forth.
Phoebe Garland: I think Premiere needed the traffic and MBFWA can provide that. MBFWA needs the trade fair element but I agree with Dominic it needs to be easy for buyers to visit both.
Will it make the commercial landscape easier for designers?
Phoebe Garland: It’s a very hard industry and I see of these young designers with such wonderful dreams and then they find out the hard commercial reality. You will never volume at $700 price points in this country. With so much discounting in the industry it makes much more sense for LMFF to move to February in alignment with new season deliveries in-store for designers to obtain a longer sell through without having to discount. It’s a consumer event and deliveries are getting earlier and earlier each season into stores. It would really give designers the opportunity to sell at full price for longer and it would provide a month break in between events.
Dominic Beirne: I never saw a problem in running MBFWA and LMFF around the same time; it would have provided greater critical mass for the industry to have more cut through at a Government funding and consumer level. They are targeting different segments – you could put Witchery, Cue and the High Street brands at LMFF, with the wholesale brands at Premiere/MBFWA without detracting from either. Also LMFF could then have greater relevance to the public.
Phoebe Garland: I think it’s too much to be at the same time as both will lose participants. I still think LMFF in February in alignment with new season deliveries is a stronger move. I can never attend LMFF which I always want to as it clashes with my selling time.
Dominic Beirne: I think we also need to look at delivery timings as part of the equation. Why deliver winter in February or summer in July? The old time lags the department stores had are gone. The suppliers now send producet direct to store, ready for floor in a lot of cases. Later delivery, suitable for the season, would increase sell through also. The deliveries were only in February and July to accommodate the processing delays in central warehousing when the department stores moved to group buying in the late 70s early 80s. Yes I remember those days. Now that those delays have been effectively eliminated the deliveries could be later. The key benefit is sell through and payment. Deliveries later in the year result in better sell through and stronger cash flow. Less discounting and less disposable product.
Phoebe Garland: I agree, but the off season trading is a fixture across the world. Our agency recommends early delivery and staggered deliveries to retailers because of the discounting in department stores. In terms of deliveries, we do 20 per cent in July, 30 per cent in August, 30 per cent in September and 20 per cent in October. The reason why we suggest staggered deliveries is so the retailers have fresh injections of stock and budgeting so it helps them with cash flow and they are not hit with a $75K bill to pay in one month.
Dominic Beirne: The problem is the duopoly we have and the concentration of market power between David Jones and Myer. Each is trying to beat the other by screwing suppliers down on price and service. They then take delivery earlier and earlier in an attempt to be first when they should attempt to be best. Delivery at an appropriate time for the product to be on the floor is what is needed.
What do designers need to be aware of in being prepared to service department stores?
Dominic Beirne: It could send them bankrupt because that can’t deal with the requirements. Department stores very rarely lose margin. When they discount, the discount is passed on to the supplier. The rebates relate to volumes ordered over the season and then discounts plied during the sell through. Six weeks is the longest they will go before discounting starts. So if coats are delivered February 1 then
discounts will start on unsold stock March 15. Further discounts at the four and two week marks so by end April unsold stock can be returned and the designer takes the hit.
Phoebe Garland: Yes, quite often independents do not want to buy product in department stores due to the discounting. So you need to decide whether or not you want to put all your eggs in one basket with a department store sometimes to get a volume order or supply independents. I know many of our brands will not go back to department stores. And the department store order, while it’s a good order, is usually only in selected stores and it causes too many problems with independents having to price match. The difference is the independent isn’t getting the rebates and it cuts into the margin too much.
Phoebe Garland: Small designers can’t afford these rebates.
Dominic Beirne: Large designers can’t afford the rebates. How do you make $10 million in fashion? Start with $100 million. I maintain you need to be very cashed up in this industry to do manufacturing as the forward funding never ceases. Forward funding is paying for sampling, patterns, production fabrics, customs duty, GST and so on. By rights, principals should pay agents the commission once the order is written. That is where the agent has done their job. They can no longer effect the performance. Payment has always been delayed but now it is getting worse, and the industry is the toughest I’ve seen it in 30 years.
Phoebe Garland: Yes I agree even at our end I just finished selling the hardest season for summer. There was too much carry over stock from last season from late delivies, nerves with the finanical climate and also the weather as we didn’t have a summer. It’s getting worse; I have retailers paying for last year’s deliveries a year later.
So under all of these trading difficulties, what advice would you offer designers debuting at the March MBFWA 2013? Slow and steady wins the race?
Dominic Beirne: Slow and steady with business knowledge and experience working elsewhere first. Remember when Jayson Brunsdon launched his label? At that stage, he had how many years working at Morrissey? He had learnt the trade and understood the business at least a bit. He was an overnight success after 10 – 15 years. Even he has come out in the press saying he found it difficult in the global financial crisis.
Phoebe Garland: Yes, mentor with someone who is actually making money and be a sponge and put aside your love for what you like in fashion for what sells. Have realistic price points and start doing your own selling to understand where your product sits in the market. It’s imperative to know your customer.
