Seduce Group has finally cracked the American market, with solid department store distribution and development work underway for Bebe and Forever 21. Assia Benmedjdoub speaks to its founders about their humble beginnings.
It was a single can of Coke that threatened to disrupt the fortunes of Peter Li. When he first entered the door to his rented garment factory one morning in the late 1980s, he knew he would not be making any deliveries that day.
Folded skivvys which had rested on a long cutting table the night before were no longer there. Clothing rails stood bare. Packed boxes were cleared. The Marrickville factory had been raided.
It wasn’t the initial $2400 he and his sister Judy ploughed into the production of these garments that came close to breaking him: it was the sight of an aluminium can resting on their fridge.
“We were just about to deliver to customers, everything was ready,” Peter recalls. “That happened six months after we started our business and it nearly killed us.
“It made me more upset to see that once they finished the ‘job’ they helped themselves to a can of Coke, and left it on top of our fridge for us to clean.”
When the two siblings emigrated from China to Sydney in 1987, they had no great ambition to enter the ragtrade. It was by chance they secured work as cutters for a textile firm based in Surry Hills, working $5-an-hour odd jobs in between to break even.
On the advice of a friend, and with the help of a Chinese-born tailor who still works for them today, the pair decided to branch out into their own business shortly after.
It sounds less of a long shot when Peter explains their strategy. “We make only men’s skivvys: one style in six colours for $10 each.”
They knocked on the door of nearly every inner city menswear retailer – sometimes the same door, every morning, for three consecutive days – until they rounded up enough stockists to turn a small profit. With a margin of around $2 to $3 per garment, it was little wonder a theft six months later nearly broke them.
By 1995, the pair had long recovered their losses and were at the helm of a stable and strongly supported wholesale business. This is when they decided to change pace: they found two designers, gave them $10,000 each and sent them to Europe on a research trip for two weeks.
Seduce was born, and this time the strategy was simpler still. “Men only buy one item and keep it,” Peter shrugs. “We decided, we’ll do ladieswear because women buy more and more often.”
Initially targeting independent boutiques for distribution, the pair soon generated enough capital to launch their first store in 1997.
It turned out to be a pivotal year for the business, not only because their first foray into retail proved to be a powerful ‘advertising’ and merchandising tool, but because it also saw the launch of young sister label Blue Juice. A year later, they released the more classic Katherine label into the market.
“When we opened our second store in Sydney Central, that was the best advertising for us, because it was such a busy store,” Peter explains. “This is when [department store clients] David Jones and Myer noticed us.
“We will always have retail and wholesale so that we have two legs to walk on, and many labels because the Australian market is so small.”
There was another key decision which helped to secure their success early on, and this continues to pay dividends today. Using their knowledge of the Chinese manufacturing market – their father had forged a career producing electrical generators – the pair set about establishing their own knitwear factory in the late 90s.
Close to 80 per cent of their collections were comprised of knitted components, although with woven garments in greater demand, this has now swung in the opposite direction.
Today Seduce Group has offshore factories which produce both components and employ around 700 workers. The Seduce label itself releases three summer collections and two winter ranges per year.
The first summer drop (June – August) sees around 110 styles land in stores, the second summer (September – October) sees around 90 and the third (November – December) around 70 to 80. The first winter collection (January – March) has around 110 styles in total. Some 30,000 units of knitwear are produced per month.
On the home front, the company now operates a network of 17 stores, with a total of 160 staff working across its head office and retail floors. Peter is keen to expand the retail arm of Seduce but with his wholesale business accounting for around 70 per cent of revenue, he is also conscious of drawing battle lines with retail clients.
For instance, no Seduce branded stores exist in Western Australia because the majority of its wholesale business is based there.
Still, Peter has more exciting plans to attend to overseas. In 2008, just months before the global financial crisis rattled the northern hemmisphere, Seduce made its first move on the American market with a stand at trade show Magic.
It took the brand almost two years and a fully-fledged showroom in Los Angeles before it was picked up by department store giant Macy’s and, later, retail chain Dillard’s.The brand currently supplies its merchandise to 34 Macy’s and 33 Dillard’s stores across the country.
“A lot of people watch you at the trade show, that’s why you have to stay [in America] and wait,” Peter says. “Dillard’s watched us for a long time, later we found this out. First when we were at Magic, then they watched us at Macy’s to see if we delivered on time, if our product was always on shelves, if the quality always remained the same. They need to feel confident before they give you an order.”
Fast fashion giants Bebe and Forever 21 also kept a close eye on Seduce’s entry into the market. Bebe is currently in the process of trialling five styles (2000 units per style) in selected stores across the US, part of a development contract it recently penned with the company.
Peter says the brand is also in the process of negotiating prices with Forever 21, which operates over 450 stores, for a similar trial run.
“Their quantities are huge,” he says. “Just to start with: 15,000 units per style. The way we work with development is they come into the showroom in LA, view the range, they select the styles they like and then we [tweak] it, change something to make it for them.
“We work together until we are all happy with style and prices, we make samples, once they approve the sample, they give us the order, we deliver, we get paid.”
Peter predicts the company’s US business will one day outgrow its domestic operation. The company once undertook development work for local retailers, but was burnt $360,000 and $80,000 by two major chain retailers which are now under new ownership.
Growth in the Australian business will be determined by establishing flagship stores – the brand recently relocated its Parramatta (Sydney) site to a bigger, 140sqm store – which sell the Seduce, Blue Juice and Katherine labels. Seduce collections will account for 60 per cent of the merchandise offered in stores, while the two sister labels will account for the remaining 40 per cent.
“We do plan to open more stores in good locations that don’t compete with wholesale customers,” Peter says. “We’re thinking about a retail store in China, because that’s a big market now too. We will try to open a Seduce store in Beijing in the next six months and we’re talking to a few different centres.”
The challenge will be accommodating different seasons and a more conservative dress sense, Peter explains. But the perks, outside of a potential new revenue stream, will be bringing the Seduce story right back where the Lis first started.