Emily Lane, Bret Schnitker
January 31, 2023
Emily Lane 00:03
You know, finding a partner that has really established relationships that they trust to are extremely important. We have heard some horror stories on this side of companies trying out different manufacturers and finding some surprising challenges along the way. One of which was a client that we'll actually hear a little bit from Caitlin, who comes from Mantle Clothing, not once but twice. Did she experience something just the we were just astonished by in more than one country? Yes.
Emily Lane 00:44
Welcome to Clothing Coulture, a fashion industry podcast at the intersection of technology and innovation. I'm Emily Lane
Bret Schnitker 00:51
And I'm Bret Schnitker. We speak with experts and disruptors who are moving the industry forward and discuss solutions to real industry challenges.
Emily Lane 00:59
Clothing Coulture is produced by Stars Design Group, a global design and production house with more than 30 years of experience.
Emily Lane 01:10
Welcome back to another episode of Clothing Coulture, we are once again in the world headquarters of Stars Design Group. And Bret and I are joined by an extra special guest today, a third co host, Iggy Pup, for those of you who are watching on our YouTube channel, we'll get to see our little mascot, the Yorkshire, the one and only Iggy Pup joining us. So if you hear some panting it's not me. It's not Bret, it's the dog. So today, we are not here to talk about dogs and apparel. But we are here to talk about the complexity of apparel, you know, we talked about in a very robust space with lots of areas where things can go wrong. And you know, there's so many people involved in making garments today at all levels that there's there are a lot of opportunities for something to go along throughout the process. Knowing today companies are operating leaner and meaner, you know, you've got a lot of expertise that's retiring out, you've got younger people coming in wearing multiple hats, there can be great value and to bring some outside expertise in just help provide a little additional perspective and make sure things don't go off the rails too far before it's too late. So we're gonna kind of talk about all those little areas of opportunity today, I think we should kind of start at the beginning of it. Because some of the foundational points of of business, you know, we talk to a lot of aspiring new companies and startups or companies that are looking to scale or pivot. And Bret, you always give some staggering numbers there of you know, the the amount of companies that make it and those that don't. And one of the things that you talk about in ensuring success is
Bret Schnitker 03:01
Good business plan. And I think that that not only is applicable for startups, but every year reviewing and analyzing company business plan, I think continues to be important, especially with how rapidly things are changing in the globe and the apparel space today. You know, the number that I always say is, is pretty rough. You know, it doesn't incentivize a lot of people to put tons of money into the industry as a startup, but it's an important part of understanding how important it is to have your ducks in a row when you're launching a brand. You know, I think overall stats that we've heard is definitely 90% of the companies that start fail. And you know, as we walk through the conversation today, there's a number of reasons why they do it's not that they don't have necessarily a bad product or a bad idea. They just don't have a good business plan and they don't understand time and money it takes to really build reasonable revenue and profits to cover overhead and right you know, and all the investments included in starting up a brand
Emily Lane 04:09
you know, your your so correct you know, time timing can be important when when going to market or making a shift in your plan and vetting out market need where you fit in the market. All of these things are considerations in your business plan. And to your point Bret, even well established companies should be looking at those plans every year we do internally at Stars do both a sales and marketing plan and really look at where we're sitting in the market and you know, where our areas of opportunity and where some decisions to make that we could make better and all of those things are things as a company that really can make a big impact
Bret Schnitker 04:48
Companies can get comfortable and complacent in the world can move past them.
Emily Lane 04:52
Right and you know, even Stars Design Group at one point had an outside opinion come in to take a look at that that strategy correct myself included.
Emily Lane 05:15
In looking at a selection of garments assortment planning, you know, where are some areas of opportunity here where having an outside perspective might help,
Bret Schnitker 05:23
you know, we just finished another episode that added complexity the assortment planning that customers are dealing with today, it's not only taking a look at understanding the balance between core fashion basic and fashion, those percentages that you're going to allocate to a particular type of product and your overall sort of and how many colorways and how many garments make up a good capsule or collection for a season. And a unique added feature important added element two that is fit and size. And, you know, within most launches in apparel, we don't typically have a one size fits all solution, there's always either numbered sizing or alpha sizing that comes into this. And as we start talking about inclusivity, those size ranges get bigger. And understanding the importance of who your demographic is what that niche in terms of the size ranges are. That becomes a very added important component, in addition to all the things that we've mentioned. And an assortment planning begins at one point, taking as much information as you can, from an existing business, if it's already in place, analyzing that four percentage of sales to percentage of inventory, how quickly is the sell off?
Emily Lane 06:45
What are the sizes, there's the size and color,
Bret Schnitker 06:48
what is the percentage of sell off and sighs by all those things, doing all of those kinds of analytical things within that. But then distilling the good bad and ugly within your assortments understanding that no matter how much thought process you go through, we're human beings we're going to, and we don't have crystal balls, we're going to have learning experiences, we're gonna have things that we thought were okay and will become great for whatever reason, and we'll have things that we think are great, that won't be for whatever reason. And so really stepping outside of the emotion of it, analyzing the business consistently throughout the process. And then, you know, taking a snapshot, after the season is over making modifications for future seasons are good merchant strategies, and that assortment planning continues to be organic.
Emily Lane 07:38
Yeah, the numbers part of it, we always talk about is so important, and that can be tougher, and industry of aesthetics, you know, it's not always the sexy side of it, you've got to really take a look at the, at the numbers, because there's a lot of powerful information there. You You mentioned the good, bad and ugly wall, I'd love for you to explain that a little bit more.
Bret Schnitker 08:00
I think when you when you're looking at a snapshot of a season, you can always take your garments, in all of the companies that I've worked with and for, you can always take your range of garments and split it up that way, you know, good is something that maybe you thought it would be good and it is good. Something that you thought would be okay, and it's good. There's a learning curve there wow that particular color outperformed my buy this is the good section, this is things that we need to understand that our particular current consumer demographic is liking and buying at a rate better than average, the bad I lump those into different ways is that one bad is and maybe that's a harsh term, but it might be something that you consider that would outperform the industry average, and is not it's performing maybe at average, or slightly below average. There's a learning curve for that, hey, we had not anticipated this result from this garment. Okay. And so that's kind of in that category. I think anything that's that's underperforming, should be kind of in that bad area, but not dramatically underperforming. And then inevitably, there's always an ugly one, there's this thing that you look at, right, you don't want to look at it. Like what was I think the customer say? What were you thinking? And again, looking at that, and understanding those mistakes, builds, experience and skill. I think, you know, we talked about this whole consulting thing and, and the benefit of having consultants in your mix from an overall kind of perspective. The right consultants are the ones that have been there doing this for a really long time. We've made as many mistakes as we could possibly make throughout our career and as human beings probably continue to make some. But we also our goal is to help others not make those same mistakes. And so the good, bad and ugly as part of that reminder that we all can't be right all the time
Emily Lane 10:13
Well consultants don't necessarily have that same emotional connection to that project that the the originator might have. So does that can be helpful to
Bret Schnitker 10:22
Yeah, hopefully an objective I to a degree, a skilled objective.
Emily Lane 10:38
Talking about that, I aesthetics and design, there's a lot of areas of opportunity here, especially as this world of designs changing more technologies coming into play. There's adoption of this technology learning curves there, there's all kinds of areas really in which design can use some support. Can you kind of further explain some of the areas of opportunity here?
Bret Schnitker 11:01
Yeah, sure. We've said for a long time that that this business is now in the hands of the consumer, for many, many years, larger brands would dictate fashion for the masses, and the masses would look to that brand and say, they've called it this is what we're going to do when we're going to follow like lemmings. Today, there's a lot more interaction a lot more, I would say, are the customers much more savvy, when they make a choice on wearing a garment, it comes from more of an educated point of view. And frankly, that goes for everything today. Because we're so interconnected, we're connected with our phone, constant informational update. And so as someone recognizes that, even though we have a point of view as a brand, that's extending to the consumer, the consumer definitely weighs in very, very quickly on that, on that decision. How do we utilize technology in helping to vet decisions we might make, how to reduce the ugly, and the good, bad, and the ugly. And today, technology steps out in terms of really vibrant and robust 3D technology where we can, can go out and reach out to our customer and say, we're working on a particular program. And here's a 3D image of it, and it looks and feels pretty real. We all do a lot of interaction on our phone, the customer can come back and provide real time comments. They feel like they're part of that whole conversation. Now you can't, you know, it's challenging to always have them vote on everything, you know, you'll get some consensus. But you know, we're human beings, we agree and disagree on a daily basis .But you will get some guidance on particular decision points that will help avoid some of that ugly and so some of that design definitely helps in terms of that conversation with the client today. Design also helps teams internally, with a assortment planning, visualization of what things look like in stores. And as augmented reality, and things like that come into place, you really can see a visualization of flowers, this capsule rounded out, does it look full enough? Do we have all the right colors? Are we speaking the right message to the customers we're dialoguing and engaging with them? Are we listening to the customer and making the right choices in terms of the amount of solids the pattern or you know, whatever particular trends going on? And I think that's something that we've never had in the past. It used to be pretty simple sketches. And you know, you never really knew the result till it came out, oftentimes. And today that stuff looks astoundingly real.
Emily Lane 13:28
Yeah, you can really make some key decisions much earlier now
Bret Schnitker 13:32
for sure even down to fit 3D generation will help with that decision.
Emily Lane 13:37
Emily Lane 13:48
So, we've gone through design, there's the technical side of it. We've often talked about how the United States abdicated the apparel manufacturing many, many years ago.
Bret Schnitker 14:00
Wholesale I mean, like on a large format, there's still pockets of manufacture.
Emily Lane 14:05
Sure, but there's definitely a lot of expertise that is needed in this technical space. We talk about tech packs being the blueprint for production and how important it is to have really good technical expertise when it comes to great execution of your of your products. I'd love for you to talk about maybe some areas where you've seen some things go wrong and some interesting call outs in this particular space.
Bret Schnitker 14:31
Yeah, sure. You've already kind of prefaced the whole thing that tech packs are the blueprints for production. I really believe that a very robust tech pack defines what the the brand or company's expectation is of the manufacturer. The more clear it is, the better the result in my opinion, if you have the right manufacturer, but the challenge that exists today, within a lot of organizations, one is bandwidth tech packs are cumbersome. They take a lot of time, and then they take someone with a pretty high degree of technical knowhow or people that have a high degree of technical know how. And when we talk about the abdication of apparel wholesale on the large format in the US, the education system kind of follows in hand there, if we don't have opportunities for someone to really learn something technically than step into a manufacturing operation, schooling does not provide the education for something that's not supported in the US. Therefore, we don't have a lot of students or newcomers properly trained in the field from a technical aspect, they've got to learn it, if you will, on the job, right. And hopefully, the company that they're working for supports a lot of travel, which is expensive, but a lot of interaction with factories. So that person can learn those things. When you're dealing with consultants that have been there and done that over a number of years and stay abreast to technological advances in manufacturing and know which country produces what better than others, especially in a world today that is so complicated in respect to manufacturing, this is a very important part of having someone step in and provide some information because it's, there's not a lot of expertise out there in the US,
Emily Lane 16:22
you're making that perfect segway because I really did want to dive deeper into the manufacturing segment, because there's so many things to understand about this space. You know, there's the not every country does everything. Well, there's, there's, you know, not every factory is the same? Absolutely. There's new technology, there's new equipment, like understanding, you know, efficiencies, and manufacturing all of these things.
Bret Schnitker 16:47
Politics and the landscape. We've added all of these things in our industry that have greatly complicated the basic manufacturing tenant. And it makes for an interesting game, especially for newcomers, newcomers that don't have relationships with factories overseas that don't have years of experience under standing if you're going to vet a new factory, what are the telltale signs that make a good factory? Right. And what makes a factory not so good? And how do you keep that relationship? How often do you visit? What kind of certifications do you need? All these different things? It's, it's a very complex landscape.
Emily Lane 17:24
Absolutely, we do have an episode on vetting manufacturers. So if somebody is interested in diving a little deeper into that particular facet we did a couple of seasons ago, I believe, produced that episode. There are so many considerations here in looking at product quality returns are a big contributor to compromising profitability for a company and you know, a key area of returns is defects. So really having the ability to make sure you're doing the vetting that you need to make sure that you're going to get the quality that you are expecting you your customers are expecting are
Bret Schnitker 18:01
Putting QA, QC in place to make sure that the result is good. And today within the industry, I think, overall, somewhere around 69% returns are due to some type of a defect in the overall industry. And then, you know, I think still we're struggling, obviously with size and up to 49 or 50% is exchanged or return for sizing. And you know, the defect things interesting because people that just get into this game, think that you know, there's such a thing as a defect free garment. I've not seen one, I can really find something on every garment that I might particularly say could be done better. But when you break out defects in a garment between criticals majors and minors, we've talked about that on other episodes. minors are things that everyday consumers really would wouldn't impact the buying purchasing, it wouldn't cause a return majors or something that would cause either a customer not to buy it or return and criticals or something that causes damage. When you look at those different levels and understand that there's resources out there again as consultancies, quality organizations, that can apply what's called an AQL to it, and AQL comes indifferent sizes and shapes, just like anything, you could have very tightened AQL you can have more relaxed AQL. You can have a very tight AQL on our majors and a very more relaxed on minors because there's no virtual impact. But you can kind of tailor these things and understand those things and having an outside organization with boots on the ground that take a look at those quality levels are really important. The worst thing that can happen is that an entire shipment comes in to your warehouse or into the US and it's fraught with major issues. One you've lost the timing for the season, you've lost all of your revenue and you'll lose customer satisfaction. They vote very very quickly on a one to five star rating five they like one they hate if there's a lot of quality. Everyone knows it quickly and it just might as well be a liquidation event at that point. So it's important to identify these quality issues, primarily during the manufacturing process, having boots on the ground within the lines, ensuring that if a seller has a bad day, they stopped the sewing line, they fix that situation, you can't inspect in good quality, generally, a strong inspection team will edit out defects as they see them depending on what level if they exceed the AQL level. But that means reduction of garments that you can sell, managing it within the line, ensuring that that factory is a good quality producer, they've trained their employees, right, and that they have monitoring on a daily basis is really, really important. And then these other functions, these other kind of inspections along the way, just to ensure that a neutral third party is saying, Hey, we agree with this or that,
Emily Lane 20:52
you know, finding a partner that has really established relationships that they trust to are extremely important. We've heard some horror stories on this side of companies trying out different manufacturers and finding some surprising challenges along the way. interesting case study comes from a client of ours, Caitlin Miller, who is the COO of Mantle, she has a pretty interesting story to share, let's hear from her.
Caitlin Miller 21:21
We had our original manufacturer and things were going really well with them, like the quality of the clothes and things like that. And then about two weeks before our website was actually supposed to launch, they came to us and said we want ownership in your company if we're going to continue to make your clothes. And we were like, Whoa, what do you know, we were just not expecting that and obviously did not want to do that. And so that was really difficult because we were like, well do we delay the entire launch and like save these clothes, but we had to pay for them. So we decided we needed to launch and sell them. But then after we had the initial launch, we had no inventory, we had nothing. And we had no plan for more because we had no manufacturer. So then at that point, it turned into a fight over the designs of the clothes. And we ended up not coming away with any tech packs or drawings or anything like that, because we didn't want to get into a whole legal battle. And so we really were starting from scratch. And the problem we were running into is no one wanted to take that on. That guy contacted some design manufacturer places and they all said, Well, if you don't have designed tech packs, or drawings or things like that, we don't even want to touch it. We don't want to do that, like we manufacture clothes, but we have to know you know what we're manufacturing. So that was another issue is we couldn't find a company that would start basically from scratch with us. And then we reached out to a group for just investment to get started. And same thing they were really interested, they flew us out there and then asked for complete ownership of our company. Will and I have said so many times how lucky we are to have found a design team like you guys. And it's I think so important to find people that are good at what you're not good at, because you can't be good at everything. And so in order for the business to be successful, you have to realize that and find the people that can do those things for you and bring them onto your team.
Bret Schnitker 23:38
We've heard our share of Halen and Ali Baba stories, not pan any particular company and I put money out and this is you know, and I got crazy stuff back that's not the way to go about business. You know, when you're spending sometimes the amount of a new house or a large house or a mansion right you know you're not going to just use an unvetted supplier and so it's very very important to have someone that understands the landscape there
Emily Lane 24:06
Yeah, so many things to navigate including the waters the actual waters of getting product from one location to another logistics you've heard us say it it is just insane these days and there's a lot to understand duties, tariffs as you know, the various political climates a logistics really is kind of like that planes, trains, automobiles, ships of the entire industry. A lot can go wrong here
Bret Schnitker 24:34
and about as crazy as the movie planes. I mean, seriously, it's it's about as chaotic as I've ever seen it. There is some relaxation today to some costing but that doesn't mean that's going to be that we can count on that. Right. And I would say that a terrible nightmare would to do all these other steps, right? Beautiful garment and like hey, you're gonna have your stuff stuck in Chicago for six months and miss the season. And so getting it from manufacturer to your warehouse is critical a critical step and, and again, freight forwarders are like manufacturers, they're not created equal. And so you want to make sure that you're using the right team that cares enough to get your goods to you on time.
Emily Lane 25:19
right on time being key, you know, it's, you don't want to have to make last minute decisions to if you've planned on one method of transportation for your goods to now all of a sudden have to pivot and air things in or you know, just the cost and how that can really affect bottom line is very significant
Bret Schnitker 25:37
agreed, and consultants are not brought on to make you feel good or to tell you what you want to hear. Ideally, consultants should be brought on to tell you what they know from their skill and experience. And oftentimes, we're finding people lately that are being very optimistic in terms of delivery, not putting in the amount of time necessary, trying to push this quick turn envelope in an environment that fights against it. And the result is if you're going to be too optimistic, or try to push your way through all of these things, the result is missing the timing that you need, play on those steps in place, make sure that you've got them be frustrated by the amount of time it takes in the process today. But certainly work within that process so that you get your goods timely.
Emily Lane 26:25
Yeah, working with somebody that can really help you have realistic expectations about what is and isn't possible. That's a really good point, Bret.
Emily Lane 26:41
Since we're talking about the value of bringing consultants in to share their advice, and some of these key areas of the apparel making process, are there some maybe final thoughts that you want to share with regards to just vetting that right partner?
Bret Schnitker 26:55
Yeah, certainly vetting the consultant, right. Yeah. Because all these other components are unique and challenging. And some consultants will have a knowledge of more than one of those categories. And some of them will be specialists within one, right. And so there are times that a consultant can be the end all and manage all those different points, but ask a number of questions based upon that. See how long they've been in the business, really, vet that opportunity, and understand. You could also bring on additional consultants for specific needs upfront, that might be particularly challenging, particularly unique for each organization. It's okay to take your time, it's okay to ask a lot of questions. Because if you're going to listen to them and pay pay for their knowledge, you want to make sure that the right partner.
Emily Lane 27:46
yeah, that's all excellent advice. Brett, thank you so much for sharing that insight today, if we can help you navigate this very complicated landscape, of course, reach out to as we have been developing quite a network of amazing consultants actually, through this very podcast. We've met some incredible experts out there. So
Bret Schnitker 28:07
Solutions come in community, and we're building quite a community.
Emily Lane 28:11
That's right. So thank you for joining us today. Don't forget to subscribe. Stay apprised of upcoming episodes of Clothing Coulture.
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