Catching up with clothing guru Ron Wurtzburger

…on the precarious sourcing scenario in China.

So how do you plan a business with prices out of China changing every day?Fortunately we saw it coming and bought much of our needs in advance. It’s like anything else: supply vs. demand. China had virtually no domestic business until they suddenly took a percentage of their production and opened their own market. Since they had no prices to compete against, they could price it however they wanted. It’s no different than the Arab countries selling oil: the price is what they want it to be… And it’s not just the labor situation in China: the bigger problem is the price of fabrics and linings and fusibles and canvas.

How much are they up?Every day is different: one mill yesterday went up $1.08 a meter. It’s like the stock market, but at least on Wall Street, prices go up and down whereas in tailored clothing, there’s never a downtick. Our prices just keep going up, and there’s just so much you can pass on to the retailer because he can’t pass it on to the consumer.

Some say another 10 or 20 bucks won’t matter to the consumer…I’m not so sure that’s right… I wouldn’t want to bet my business on that. And it’s not a question of waiting out the storm; I don’t think the storm is going away. They see that they were able to raise their prices and that there’s no other place for us to go!

Other places for fabric today (we’ve been searching the world) are Mexico, India, Vietnam or Turkey, which are all higher than China. Because China is like a sponge: they absorbed all the manufacturers of fabric and they can do what they feel like. Until some country that’s not in wool decides that they’re going to try the Chinese formula and go vertical, building their own spinning facility, we’re just going to have to go with the flow.

Would a boycott work? Should we go back to poly suits?You’re likely to see some companies testing fabric blends, not so much for fall ’11, but for spring 2012. Whether the retailer will buy is questionable. Poly suits have sold in the past, but I’m not sure the upscale guy will be happy wearing them. Our best hope is that after the Chinese New Year, wool prices might drop a bit since this is the busiest time for the Chinese… It’s been said that if every Chinese male bought two pair of wool socks, there’d be no wool left in the world. That’s what we’re up against: their market is huge.

How are retailers responding?They have to absorb some of it but they’re not going to absorb a 10 or 20 percent increase. It’s not as if clothing business is soaring and they’re going ahead 20 or 30 percent. They can’t afford to lose their competitive position and they have to maintain their margins because most are public companies.

Unfortunately we’re in an industry today that if you don’t sell the three big guys, there’s no one left to sell. It’s not like the old days when there were 100 department stores. Go back just six years: with a Macy’s and a May Company, we sold 14 different buyers. Now there’s one. And how many swatches can they buy from a manufacturer? Anywhere from one to eight; if you’re lucky, you’re the eight.

What are the key trends for fall?Fashion models are not as big as we thought they’d be. Once again, the Chinese no longer want to give you small cuttings of 300 or 500 units per color; they want 2,000 units per color. So you have to be a little safer in what you’re picking because you don’t want to take, for example, 2,000 units of six different colors in a DB model, even though DB is a viable trend. So that’s a problem…

The magic word for fall is slim, in all different versions. The consumer likes the idea of a tubular looking garment. Separates continue to be strong. Stripes are slowing down, replaced by sharkskin and weave effects, i.e. non-solid solids. (We used to call them five footers: from five feet away it looks like a solid…)

We’re fortunate: in a market like this, it helps to have eight powerful brands…

Can’t stores get better margins on private label?Not necessarily. They can raise their retails on branded goods whereas with PL, it’s all about the lowest price.

Other thoughts on fall ’11 suit business?New color of the season is black, black and more black. The problem with this business is that we’re either 100 percent of something or nothing. If you go back to the ’70s, everything was flat-fronts. Then someone came up with triple pleat and every thing went triple. Then double. Now it’s all flat. It was all DBs, then 3 -button, then 2-button. Unfortunately, there’s never a balance.

But on the plus side, sportcoats are getting stronger: bookings are 65 percent plain, 35 percent fancy and lambswool is the number one fabric. Trouser business is all about price.

But the really big problem is delivery: it used to be six months from when you sold something to when it got here. Now it’s eight to nine months.

Are stores placing earlier?Of course not! Most specialty stores deliberate over each swatch for four months before they buy it. They see it at the New York market, then in Chicago, then Dallas, then Vegas, the same swatches! I don’t get it: either they like it or they don’t! They need to stop “davening,” place their orders, and get delivery. If not, they’ll end up with second best swatches rather than what they really want.

Any chance of an industry-wide campaign to upgrade corporate dress codes?What industry? There’s no industry anymore. There are no majors, and not a lot of specialty stores for that matter. No one does anything together; each company is interested in its own position. Plus the biggest competition for manufacturers today is not other manufacturers: it’s retailers who think they can do it cheaper on their own. Most of them find that in the long run, they can’t.

I’m not sure I agree: it seems to be working for Joseph Bank…Joseph Bank has found a winning formula, but I’m surprised that the rest of the industry has let them get away with it.

Get away with what?Not giving true value. Putting a price on a garment that’s made up to cover the markdown that they’ll take. But I think their advertising is brilliant: everybody likes to think they’re getting a deal. And even if people know they’re being taken, they’ve created great buzz…

But don’t all stores price to cover markdowns? And what can the industry do about it: advertise against them?Why not? Point out their deceptive pricing; lots of people might not know they’re being taken… That said, they’re great at what they do: if I could get their prices wholesale, I’d give you lots of free pants!

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Comments

  1. great talk!
    you two should get together each month! added ‘five footer’ to my
    mens vocabulary… (and I always thought I was cool with ‘trouser eater’)..
    really well done Karen, and well responded/ (all should take note), Ronny,
    best

    larry roth

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