Kylie makes fashion sense with Glenn Baker in the August issue of NZBusiness magazine.
The ability to react quickly to the constant winds of economic change has proved to be a business-saver for Kylie Tate. It’s the reason why her business Redhead Clothing is still going strong today – five years into the great world recession – while many other fashion brands have fallen by the wayside. What’s even more remarkable is that Redhead still manufactures here in New Zealand.
Kylie, who moved here from Australia in 1986, has a long association with the fashion retail market on both sides of the Tasman. She had been a buyer for the likes of Myer, Just Jeans and K-mart. Seeking a fresh challenge she decided to learn all about manufacturing fashion, encouraged by the possibility of contracts with the likes of Sally Synnott and Chrissy Conyngham at Pumpkin Patch, whom she’d worked with for many years.
Redhead Clothing began trading from Kylie’s spare bedroom on April Fool’s Day 2000, with a focus on ‘mass market product at good prices’ and clients included Farmers, Ezi-buy, Max Fashions, Storm, Pumpkin Patch and various others – all under their own house brand labels. With Kylie’s ‘sixth sense’ for what would sell, sales volumes quickly grew.
The Redhead brand was subsequently created as a secondary focus. Again locally made, Redhead fashion became available through some 50 up-market boutiques around New Zealand.
But then the pressure came on – import tariffs on clothing were being progressively deregulated and those mass market clients began to squeeze margins as cheap, imported garments made their impact on the local market.
“It became obvious that there was no future for us in this space,” recalls Kylie. “We didn’t want to go down the import road, so we had to quickly find a real point of difference.”
Max Fashions had been sold, but Kylie remembered that Redhead’s success with this particular client had been the ability to turn stock around fast and produce to very short lead times. China manufacturers work to a lead time of up to six months, she says, which meant they were generally slow to react to fashion trends.
The orders were still coming in, but profits were under threat – it was time to change direction.
“We decided to apply the quick turnaround concept to our Redhead range in the boutiques,” recalls Kylie. “We were the first to do that, and it was really successful.”
The brand had been available in Australia too since the early 2000s – where Kiwi creativity and imagination was in demand and malls were yet to dominate.
Today, with turnover around $2.5 million, Redhead services some 200 boutiques covering both countries, with more room for growth in Australia. While the market is still incredibly tough, Kylie is pleased to say that the financial year ended March 2011 was their best ever, and she puts this down to their unique flexible ‘just-in-time’ delivery model.
Despite Kylie describing Redhead as “the world’s best-kept secret”, the brand is now experiencing maximum exposure in New Zealand and it was time to put the thinking cap on again to grow the business further.
In April this year the Redhead Office range was launched online, borrowing from the same quirky, imaginative Redhead fashion formula. “There has been a distinct lack of corporate clothing on the local market for the past five years. The label is also the perfect vehicle for the Internet because most women who work are on a computer,” explains Kylie, adding that the Office range targets the 30-plus age group and is also sold at selected retailers. “Office is all about clothes to wear to work – not uniforms as such. They’re multi-purpose garments that can be worn on weekends if needed.”
Challenges and lessons
Kylie acknowledges that her previous training in retail assisted her in managing the business – but from day one, in order to retain control, she decided to engage a very good accountant. Despite her extensive offshore buying experience, she also made the decision not to deal with problematic overseas manufacturers, and outsource manufacturing in New Zealand.
Fortunately, support has always been readily available – especially through Pumpkin Patch’s creative team in the early days – and she has found other people within the industry only too willing to help. “If I struck a problem – I’d ring somebody.”
However, when it comes to funding the business, Kylie has gone it alone – utilising debt factoring and bank finance to help smooth out the cashflow peaks and troughs.
Redhead Office requires a different business model – she’s had to carry stock for the first time.
So would she start a business today? “No I wouldn’t. People don’t have the time to help you these days. It’s a ‘dog eat dog’ world now, and retail is tougher than ever,” Kylie says.
She’s had to learn her lessons through experience – the big one being to use your ears twice as much as your mouth.
“Your customers will always tell you what they want if you allow them to.”
Kylie says when the GFC first struck she paid a personal visit to all her customers and listened to their feedback on what they needed. “I then came back and supplied the exact garments they wanted.”
Lesson number two? Always analyse the previous season – it provides lessons about the future. “Repeat the winners, chain-stores do that. Tweak and freshen,” she advises, adding that they’re very mindful of fabric prices today, compared to before the recession.
And speaking of prices, Kylie tells me that people are becoming immune to “sales” as there are just so many. Women are now looking for “beautiful garments that they become emotionally attached to on sight” – and provided you don’t go over the invisible $299 price barrier, they’re happy to pay that little bit extra for fit and quality. “That’s the beauty of making the garments in New Zealand.”
Kylie has also learnt from Redhead’s creative manager, Paul Shadbolt, the importance of promoting the brand – which she admits she’s guilty of not doing in the past. Shadbolt is also her “IT genius” responsible for the Redhead Office website. “The brand adds validity to the garment, which is very important,” she says.
And a third lesson:
“Identify your point of difference. You can’t just get in the queue and expect to be successful. That’s why I stayed local – it’s Redhead’s point of difference. I could turn around quality fashion quickly, and at reasonable prices.”
Mind the quality
Is ‘Made in New Zealand’ a major draw-card to customers? Kylie thinks that it definitely comes into the buying equation but the initial attraction is the standard of design, fabric and finish. There is a distinct difference. She says she has a habit of instinctively singling out New Zealand-made garments whenever she’s shopping overseas. “I might be in London, Melbourne, wherever, and the garment I’m drawn to? The label unbelievably says made in New Zealand. It might be Sabatini, Kate Sylvester, it’s almost freaky – but the quality is the giveaway.” (To illustrate the difference in quality between ‘Made in New Zealand’ and ‘Made in China’, Kylie puts one of her jackets next to a sample on loan from a major New Zealand corporate. Even I can spot the difference in fabric and workmanship!)
Meanwhile, Australia holds the most promise for business growth – although being an offshore market it does require closer management of your debtors ledger, admits Kylie. The key is having a distributor based in Australia, one with integrity, discernment and who can ensure regular payments back across the Tasman. “Having one point of contact for the whole market makes everything simple and easy,” says Kylie.
She tells me that now, in order for the Australian market to grow further, it’s time for her to front up more often. She’s planning to spend more time across the Tasman. “If I just send over the garments to the distributor to sell, and do nothing else, the market will only have minimal growth. If I go over, meet and listen to the customers and they feel the passion that I have, then we’ll grow the business.” The Redhead Office website will also be opened up to the Australians in the not too distant future – hopefully before they close the GST loophole on online sales across the ditch, says Kylie.
A team effort
Kylie’s really proud of the fact that the business has performed well in a very challenging business environment, “thanks to the sheer determination and talent of every member of the team. “It’s the team effort and consistency in work standards that have made us successful.”
She admits to getting a thrill when she sees Redhead fashion while out and about.
“My scariest moment in the business was when we changed direction, and had to let our major clients go.” But from that change came opportunity; Kylie says when she hit the road with her new Redhead collection she managed to sell around $300,000 worth of orders in just ten days. “That’s the sort of thing that can happen when you have a point of difference.”
Kylie makes fashion sense with Glenn Baker in the August issue of NZBusiness magazine – Online Version.
Click on the image above to read the article on the NZBusiness website.