Special Report: ENTERPRISE: Marketing: DIRECT SELLING
HOME SHOPPING--WITH NO TV
Patricia Finn, a 38-year-old securities trader, doesn't have a lot of time to hunt for clothes. But then, she doesn't need it. With each change of season, her personal wardrobe consultant comes to her Manhattan apartment armed with samples and swatches from the Doncaster Collection, a line of women's clothing sold by appointment only. Ninety minutes and roughly $2,000 later, Finn has her wardrobe. "It's much easier for me to shop this way," says Finn. "I don't have to go running from store to store."
For decades, women have bought housewares and cosmetics in their homes from such companies as Dart Industries Inc.'s Tupperware and Avon Products Inc. More well-heeled professional women with no time to prowl the stores are buying clothes in private showings, too. A clutch of small apparel makers, eager to bypass domineering retailers, are selling their wares through direct-sales agents who show off the goods at trunk shows at home, at their customers' houses, or even in a hotel suite.
HOUSE CALLS. Apparel makers and their reps have to make up in superb service what they lack in selection. "Personalized service is what drives the business and distinguishes us from traditional retailers," says David DeFeo, president of Doncaster in Rutherfordton, N.C., a division of privately held Tanner Cos. Founded in 1931, and with estimated sales of $50 million last year, up 14% from the year before, Doncaster is the oldest of the direct-sales women's apparel companies. Doncaster's 3,500 reps keep a detailed file on each client's preferences. If a customer can't make it to a show, they will bring samples to her home or office.
Doncaster's success has spawned a host of imitations. New York's Carlisle Collection Ltd., an upscale collection with a network of 800 agents, was founded in 1980 by a former Doncaster designer. And Worth Collection, also in New York, was started in 1991 by two former Carlisle designers.
Other small clothing makers are shifting to direct sales as a way to survive a ferocious retail environment. In 1988, French Rags in Los Angeles sold $10 million worth of knitwear to department stores but lost money. Brenda French, the owner and designer, says stores tried to dictate styles, ordered only parts of her collection, and merchandised poorly. Half of what they ordered was returned, and payments were late. Now, she sells her sophisticated skirts, jackets, and vests for professional women through 65 reps, and she manufactures only after clothes are ordered and paid for. Sales are much smaller now, at $6.5 million last year--but net profit margins run between 10% and 15%.
While other manufacturers get most of their feedback through the retailer, direct sellers hear loud and clear what customers like--or don't. Doncaster's DeFeo says that he gets "very vocal" comments on everything from buttons to size ranges from reps who have an interest in making improvements--their 25% sales commission.
That's not to say direct selling works for everyone. The high level of service dictates high prices. "My clothes are for women who can spend $1,000 without batting an eye," says French. "The nature of the business is in high-ticket items and low transactions," says Peter Simon, a consultant at NPD Group in Port Washington, N.Y.
And don't look for cutting-edge fashion. Direct sellers want their customers to build on previous purchases with new pieces each season, ruling out radical redesigns. Customers also won't find a department-store-size selection. They can get almost any color or fabric they want, but they have to picture for themselves how the finished garment will look. Then, they must wait three to six weeks before their purchase arrives in the mail.
These direct sellers aren't about to put Nordstrom's out of business. Nevertheless, smart marketers who offer classic, comfortable business clothing may be able to sew up a niche serving women such as Finn, who have more money than time.
The Portable Boutique
DONCASTER Sales: about $50 million. Sales agents: 3,500. Price of an outfit: $300-$450
CARLISLE Sales: about $65 million. Sales agents: 800. Price of a suit: $700
WORTH Sales: $30 million. Sales agents: 400. Price of a jacket and skirt: $650
FRENCH RAGS Sales: $6.5 million. Sales agents: 65. Price of a winter jacket: $565
DATA: BUSINESS WEEKBy Silvia Sansoni in New York