Blooming Clothing: The Case For Renewal - Download MS Word file


Introduction

"When the going gets tough, the tough get going". Martha O’Byrne hummed along with the song on the car radio. Battling with the Dublin city traffic, she reflected on how the song mirrored her own business situation. As managing director of Blooming Clothing, a small Irish clothing firm, she had led the business since its inception in 1995. Now it was spring 1999, and the millennium was just a matter of months away. The vibrant Dublin streetscape certainly showed off the current economic prosperity. It was a good time to think about renewal, new opportunities, and expansion to new markets. These would be the themes for the strategy meeting scheduled for this afternoon. "Let the good times roll", she murmured, as the traffic lights changed to green.

Blooming Clothing: A Short History

Blooming Clothing was established in 1985 by O’Byrne and two other partners. The aim was to specialise in a niche of the women’s outerwear market: maternity wear. The company started business with a retail outlet in Dublin and sold maternity wear under the Blooming label, which it outsourced through local suppliers. When this arrangement proved unsatisfactory, Blooming turned to manufacturing its own lines. By spring of 1999, the firm employed fifty people at a factory in the Liberties, an historic part of central Dublin, and a move to a newly built premises nearby was imminent. Ten other employees were attached to the retail operations of the company.

At this point in time, the firm had established a dominant position in Ireland, selling through its own retail outlet, a range of independent boutiques, and a concession arrangement with five of the Mothercare outlets in the Republic. In the UK the Blooming label was to be found in Harrods of London, and in the John Lewis stores. Sample turnover and financial data for the company can be seen in Appendix 1.

The firm felt that it had now established itself as a high quality supplier of branded maternity wear in the Irish and UK markets. Having survived the turbulence and recessionary phases of the markets that characterised the early 1990s, management now considered that it was in a good position to capitalise on the strong surge in the economic environment. And, contrary to the original forecasts, the birth rate in most of Western Europe was holding up well. With turnover at the £2m mark, it was now time to shape a strategy that would ensure prosperity in the years ahead.

The Management Team

Day to day management responsibilities was divided between three people. Martha O’Byrne was managing director and also took responsibility for sales and marketing. June Boore was in charge of design and production management. Liz O’Byrne was responsible for finance and retail operations.

With the experience accumulated in running the company through good times and bad, this core team felt it had a good base of skills. However, the day to day management of operations gave rise to several difficulties. The issues involved in keeping the factory going - sourcing supplies, filling orders and dealing with customers - took up a lot of everyone’s time. The necessity to travel and be away from one’s desk for a couple of days at a stretch meant that, on return, there was a list of problems pressing for management attention. In common with other firms in the clothing industry, management perceived a need for more formal, off the job training, but found it difficult to spare the time away from the day to day responsibilities of running the business.

The management team was in strong agreement about the company’s own unique knowledge about the industry, the technology, and about it’s own particular niche of the market. At recent board meetings, the team had discussed how larger clothing companies such as Bennetton had used their core knowledge as the key to expansion and integration of the organisation. The management of Blooming wondered how its own unique knowledge could be used to plot the future direction of the company.

The Product

Blooming Clothing offered maternity wear in a range of formal and casual styles. The objective was to offer a selection of lines that would suit all occasions, so that a customer could find all her needs satisfied by the one label. Collections were launched twice a year, in spring and autumn.

Blooming’s designs were regarded as being at the high price, high fashion end of the market. The label was geared towards the more affluent and fashion-conscious woman, who was, most likely, in the workplace, and needed a range of outfits to see her through her pregnancy. The company noticed that sales of the autumn collection were better than those for the Spring, and speculated that Spring and Summer wear, being more casual, could be bought from a wide range of outlets, not necessarily those specialising in maternity wear.

The Consumer

In marketing terms, maternity wear fits the description of an unsought good:

"Goods that the consumer does not know about or knows about but does not normally think of buying.....The classic examples of known but unsought goods are life insurance, cemetery plots, gravestones and encyclopaedias."

(Kotler, 1994:436)

In other words, here was a product aimed at the women’s market and at a situation specific niche, that is, all expectant mothers. The life of the product was relatively short: once a pregnancy was over maternity wear was no longer necessary.

From observation, it was evident that pregnant women relied on a range of sources for clothes. One possibility was to buy a size or two larger from any conventional retailer. Outfits could be borrowed from friends and family members. However, from it’s own research, Blooming knew that specialist maternity wear was more sought after by the second time mother, who appreciated the specialised tailoring and comfort of fit. The challenge was how to communicate this benefit to the younger first-time mother; whose perception of maternity wear was of dull, frumpy outfits seriously lacking in any element of fashion.

Attitudes towards pregnancy had seen enormous change. The older picture was of a woman in the home, who disguised her pregnancy as much as possible. Now, most women in the childbearing age group all over Europe were in the work force. Pregnancy was an event to be celebrated and flaunted; recently several well-known media figures had featured in women’s magazines, celebrating their expectant state. Marital status was no longer an issue; in most European states an average of one in five births were to single parents. The immediacy of the Millennium was also forecast to have a positive influence on the birth rate.

Table 1: Relevant Social Trends in Europe, 1996

(Euromonitor, 1998)

The Market

While the 1980s and early 1990s had seen the age of first time mothers move upwards, the trend of the late 1990s was that mothers were getting younger. This trend was thought to be influenced by three elements: strong economic circumstances throughout Europe, a loosening of social mores, and medical information suggesting that younger mothers presented a significantly lower level of health risk.

These younger mothers-to-be were very fashion conscious, but less willing to pay a premium price for clothing than their more mature counterparts. Being at the "nest - building" stage, they were often taking on additional financial commitments in anticipation of family needs. They wanted clothes that were up to the minute, of good quality, at a competitive price. They were as likely to select a larger size from their usual brands of clothing as to seek out specialist maternity wear lines. They shopped along the high street, and were unwilling to detour or make special trips elsewhere. As they were busy at work, they were under some time pressure and willing to use catalogues and other ordering systems.

Table 2: The Women’s Outerwear Market, Europe, 1996

(Euromonitor, 1998)

The "Blooming" Brand

Since the establishment of the company in 1985, Martha O’Byrne and her management team had been very conscious of the need for a strong brand impact if the firm was to succeed in the market. As a business graduate and then an investment banker, she had witnessed the failure of businesses that did not take the branding message to heart.

The initial awareness of the name "Blooming" was through its own retail outlet in South Leinster Street, Dublin. Located on the fringes of Dublin’s premier shopping district, and beside the University of Dublin, the signage and design of the shop gave a clear indication of what was within. As the firm started to manufacture its own lines, the Blooming logo was used on the labels and swing tickets on the garments. Special bags and tissue wrapping were supplied to retailers and concessionaires. A new brochure was produced for every seasonal collection.

The brand’s qualities were perceived to be quality, individuality, uniqueness of design and the fact that it was made in Ireland. Blooming had turned down offers to produce private label lines for other retailers and manufacturers. It was proud of the fact that it was the only branded clothing stocked by Mothercare in Ireland: all other clothing stocked by Mothercare children’s and women’s range was under it’s own labels.

So far, the Blooming brand had received a positive response in the Irish and UK markets. O’Byrne and her partners felt that the brand would be of even greater importance if the broader European market were to be addressed. Branded clothing was of more importance to mainland European retailers than was the case in the UK, and European retailers sought to stock distinct ranges of easily recognised brands and labels which made their customers shopping decisions easier.

The Competition

In the generic sense, Blooming’s competitors spanned a wide field: manufacturers of conventional ladies outerwear, manufacturers of larger sizes and suppliers of specialist maternity wear. The nature and style of competition had moved along dramatically during the 1990s. (See Appendix 4: The Irish Clothing Industry: Shaping up for Change). Some retailers were now sourcing their own private labels of maternity wear at competitive prices. More significant though, was the arrival of European brands to the UK and Irish markets. These brands, operating on a large scale of business, were able to offer good prices and strong marketing support. The department stores and boutiques, which, ten years ago, would have only stocked the Blooming brand as their range of maternity wear, were now stocking two or three European labels alongside it. These new competitors had appointed regional agents in the markets and were offering good levels of service and support with their brands.

Blooming viewed the competition to be emanating from three sources: branded maternity wear being sold through the independent boutiques and department stores, own branded merchandise being sold through chains and department stores, and new specialist European chains which were establishing in Ireland and the UK. At present, the company felt that there were five such competitors across the range with a significant presence in its markets.

Roches Stores

This Irish owned group of department stores was currently reviving its fortunes after going through a period of low profits and consolidation of activities. Its clothing section carried a mixture of manufacturers brands on a concession basis and private labels. In spring 1999, it launched its own range of maternity wear under the label "Expectations". The designs were fashionable and the prices moderate.

Bennetton

This Italian, family owned clothing group had extended throughout Europe using the franchise route. It carried lines of bright, colourful, casual clothing aimed at the young and young at heart. It was famous for its advertising campaigns, which had generated worldwide controversy and publicity. It carried a limited range of maternity wear in its higher traffic outlets. Prices were regarded as mid-market, designs and fabrics were simple, in line with the rest of the Bennetton range.

Dorothy Perkins

This UK owned chain operated throughout Britain and Ireland, through a combination of its own stores and concession outlets in department stores. The chain offered a wide range of maternity wear styles under its own label. Quality was regarded as poor and prices were low. Dorothy Perkins’ advertising was conducted on an umbrella basis for the whole group. High quality brochures were used to promote different collections.

Formes

This French designed label sold through independent outlets and through its own group of stores in France, Belgium and the UK. In 1998 it opened its first Irish outlet, in Dublin. Design was sharp and covered a range of smart and casual maternity styles. Pricing was at the middle to upper range of the market, and quality was considered to be high.

Mothercare

This specialist chain operated over 300 stores in the UK, Europe, and the Middle and Far East. This included eight stores in the Republic of Ireland. Research in the UK had shown that at least nine out of ten mothers-to-be visit Mothercare at some stage during their pregnancy.

This chain stocked two separate ranges of maternity wear in its Irish stores. The Blooming range was carried on a concession basis with its own clearly designated space and display racks. The Blooming company was particularly proud of the fact that theirs was the only manufacturers branded clothing stocked by Mothercare.

The second range was Mothercare’s own maternity range, which sold under the brand name "Tomorrow". The range focused on casual everyday wear, and design was regarded as dull. Prices and quality were middle of the range.

Mothercare relied on its own catalogue and on word of mouth for most of its promotional activity. The store format was currently regarded as somewhat tired and in need of a fresh approach.

Marketing and Promotion

As a typical small company, Blooming did not have any one person responsible for marketing. Management resources were focused on production. If buyers did not receive their orders on time, sales would suffer.

The managing director herself undertook most of the marketing work, in consultation with the other directors. O’ Byrne also took on responsibility for sales, which entailed establishing contact and making presentations to key store buyers. The company produced a brochure twice a year, alongside of its new collections. This was distributed through all sales outlets, and to doctors waiting rooms and maternity hospitals.

The firm’s own shop in South Leinster Street acted as a flagship for the brand. It had a heavily branded shopfront and window display. Inside, the store layout and design reflected an upmarket image: so much so that some callers were surprised to find that the garments that attracted them inside were maternity wear only.

At the point of sale in all retail outlets, Blooming used branded card displays and brochures to highlight the merchandise. Purchases were wrapped in branded tissue paper and placed in a carrier bag bearing the firm’s logo.

Blooming did little advertising in its own right. It gave boutiques a credit towards any advertising or promotion undertaken for the brand. O’Byrne herself commented, "In marketing terms, I would give us one and a half out of ten at the moment. But we have succeeded with what we have done so far."

Supply Chain Management

The clothing industry, in common with the food industry, relied on a complex chain of interdependencies to pull its goods through from the point of manufacture to the point of sale to the final customer.

The relationships shown in Figure 1 demonstrate the range and depth of supply chain relationships in the clothing industry. At the simplest level, the manufacturer could produce directly for a customer or group of customers. This happens at both ends of the market: bespoke design and contract manufacture. The next alternative is to use an agent or wholesaler as an intermediary. In the UK, the agent was the typical arrangement used by exporters to that market, and each agent was responsible for a particular territory or customer group. In Europe, the scale of business was larger. Clothing agents and wholesalers were grouped together in a particular business centre, which typically had showrooms and exhibition space. This facilitated buyers, who could see a wide range of potential suppliers in one area. For the vendors, there were obvious synergies from being clustered together, in terms of costs, information sharing, peer learning, fashion shows and PR. In some cases there were tax advantages, which further reinforced the barriers to potential entrants outside of the system.

Clothing retailers were broadly of two types: the chain stores and the independent boutiques. Chain stores had strong buying muscle and were usually keen to get good value and keep or improve their own margins. They sought good design without compromising too much on quality. Mindful of the high street casualties from recessions of the eighties, the modern chain retailer was ruthless in evaluating the contribution of every label in the store. Operating the DPP (Direct Product Profitability) system, lines which did not perform were quickly dropped from a chain’s range, leaving an opportunity for new entrants. The experience of Blooming in its relationship with chain stores was positive. It found that once it secured the confidence of the store buyer, it was able to process orders efficiently and payment terms were good. The key was to pick the chains that were looking for new labels and were strong and well managed enough to survive threats to their business.

The situation with the independent retailers was different again. Boutiques were typically one - shop operations managed by the owner. These outlets were usually serviced by manufacturers agents. Boutique owners valued personal contact, and often felt that this element was lacking in their relationship with agents, who were focused on generating sales to make their own commission. The manufacturer did not have direct contact with the independent boutiques, other than to service the orders passed on through agents. This sector was expanding in numbers, as provincial towns were experiencing the demand for as fashionable a range of clothing as was to be found in the cities. Blooming had built a good sales network through general and specialist boutiques, but was now finding other European suppliers of maternity were approaching these retailers wear. Boutiques which ten years ago would have exclusively carried the Blooming range were now stocking two or three other brands, in response to availability and a perceived demand for more choice and a wider range of price points. From a financial viewpoint, supplying the boutiques with merchandise incurred high overheads on delivery costs and agency commissions.

International Markets

From start-up, management at Blooming was aware of the need to seek new markets, and the relative size of the Irish market was also a strong impetus to move abroad. Like most other Irish companies, Blooming initially looked at the UK market. Over time, it had built up contacts and sales in chain stores owned by John Lewis, Mothercare, Harrods and Miss Selfridge. The business in this market was handled through a London based agent, Gwenda Favoro, with which the company had a long standing and satisfactory relationship. For the future, it was targeting John Lewis as the chain with the strongest prospects for business development. The firm was also actively seeking agents in Scotland and Northern Ireland to develop business in those regions. The UK’s nonparticipation in the Euro currency was causing problems in price negotiations and profit forecasts for that market.

Blooming had travelled further in search of business. Agents had been appointed in Sweden and Belgium in 1994, but these markets were in recession then and sales were disappointing. In 1995, orders were filled from a Japanese agent, but there were major differences in sizing which took some time to sort out. The slide in the value of the yen made the market unattractive, and Blooming did not pursue any further business there.

In January 1999, the company took a stand at a specialist European clothing trade fair in Cologne. It had two objectives in mind: to generate orders and to eyeball the competition. En route to the trade fair, disaster struck, with half of the collection being stolen. Undeterred, the company exhibited at the show and came away with a strong positive feeling that its designs could match any of the Europeans for style and for price. It vowed to return to Cologne next year, and looked forward to a stronger impact with a complete collection.

Manufacturing and Outsourcing

At present, Blooming manufactures its designs from its own factory, with a workforce of fifty people. The company relies on the CMT (cut, make and trim) system, whereby designs are made and finished in-house. In 1995, it hired two new young designers who made strong improvements to this aspect of the range.

In common with the rest of the Irish clothing industry, the company was keenly aware of the global trend towards outsourcing of manufacturing, particularly to lower cost countries in Eastern Europe, Asia and North Africa. For a small company, this presented logistical difficulties, but the bigger players in the clothing industry were marching ahead and in some cases were already outsourcing their entire manufacturing requirement. This would leave an organisation free to concentrate on design, branding and product development. For a smaller company, there was also the possibility of outsourcing closer to home, using one or several CMT houses. Blooming was already outsourcing knitwear from an Italian company.

Another perceived change in the market was in the relationship between clothing retailers and their suppliers. The relationship was moving from one of distance to closer interdependency. Retailers were reducing the number of suppliers on their contract lists, and looking for mutual trust in return for mutual benefits and partnerships. There was also a perceptible move towards more own-labels, leaving the individual supplier with less room to manoeuvre. Small clothing companies stood to benefit from this change if they had the internal strengths and knowledge base to offer the foundations to a partnership.

The Case for Renewal

Management at Blooming was pleased with the progress the company had made to date. To have survived thus far in such a competitive industry was in itself an achievement.

But the directors appreciated that there was little room for complacency. "In a sense", O’Byrne reflected, "the boat has already gone out. The weaker players in this market have been eliminated." The home market was more competitive and growing in strength. The European market was going through a phase of consolidation, but Blooming felt that it could match any of the players it had seen in the competition there. The move to a new premises offered the opportunity to grow sales, and bring in new ideas. To be a stronger player in the market, the firm would need to push for higher turnover. A two pronged marketing strategy was needed, to defend existing markets and to develop new ones. It was time to start making decisions, and to plot a new growth strategy.

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ByEdel Foley, School of Marketing, Faculty of Business, Dublin Institute of Technology.

The author wishes to acknowledge the kind assistance of Martha O’Byrne, Blooming Clothing, in the preparation of this case study.