VOL. 33, NO. 1 SPRING 2009
Spotlight on sportswear ISPO Winter ’09 CPSIA update
The industry wins a reprieve, but for how long?
Credit and risk
How to mitigate risk in a tough economy
PM#40787580
CAF wins labelling dust-up
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ontents VOL. 33, NO. 1 SPRING 2009
4 Message from
the Executive Director
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7 Spotlight on sportswear
A sold-out ISPO Winter ’09 pulled in the crowds, including 22 exhibitors from Canada Cover photo courtesy of ISPO. Copyright streubel-photo.de
Industry News
9 The CPSIA saga continues
Now is the time to get ready for the Consumer Product Safety Improvement Act
12 Forestalling over-regulation
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Prompt action by the apparel industry wards off needless regulatory changes
13 Getting intimate
Buyers turned up in record numbers at the CurveNY shows in New York and Las Vegas
15 Credit and risk
How to establish a client’s credit and mitigate risk in today’s tough economy
© 2009 Canadian Apparel Federation. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the Canadian Apparel Federation. Articles and information in this magazine represent the opinions of the writers and the information that, to the best of our knowledge, was accurate at the time of writing. Users of any information contained in Canadian Apparel are encouraged to validate that information by independent means. Published April 2009 for: Canadian Apparel Federation 708-151 Slater St. Ottawa, ON K1P 5H3 Phone: 613-231-3220 Fax: 613-231-2305 www.apparel.ca
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Events
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Advertisers Index
Bob Kirke Executive Director
Published by
Canadian Apparel Federation Phone: 613-231-3220, ext. 224 Fax: 613-231-2305 Email: bkirke@apparel.ca
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The Canadian Federation hashas signed an agreement with with The CanadianApparel Apparel Federation signed an agreement MediaEdge PublishingInc., Inc., a leading publisher of association magazines, MediaEdge Publishing a leading publisher of association magazines, to produce and distribute our official magazine, Canadian Apparel. This to produce and distribute our official magazine, Canadian Apparel. Spring 20092009 edition is the firstfirst oneone to be issued under this This Spring edition is the to be issued under thisnew new partnership. partnership.
The magazinewill, will,under underthis thisnew newpublishing publishing arrangement, offer The magazine arrangement, offer an an informative mix of profiles, articles about the industry, and issues of informative mix of profiles, articles about the industry, and issues of concern to in the industry.
concern to the industry.
Our magazine is the sole publication in Canada devoted to the entire Our magazine the sole publication in Canada devoted to suppliers, the entire apparel apparel supplyischain, including textile mills, technology apparel supply including textile mills, with technology suppliers, apparel producers andchain, retailers. Our partnership MediaEdge promises to producers and retailers.better, Our partnership MediaEdgeof promises to make the publication and more with representative the entire industry. make the publication better and more representative of the entire industry. Our publishingpartnership partnershipwith withMediaEdge MediaEdge ensure a quality Our publishing willwill ensure a quality publication that readers will look forward to receiving. It allow us publication that readers will look forward to receiving. It willwill alsoalso allow to better meet the needs of advertisers. MediaEdge will be contacting you us to better meet the needs of advertisers. MediaEdge will be contacting about advertising in the upcoming edition, and will be forwarding additional you about advertising edition, and will be forwarding Apparel information on plans in forthe theupcoming year ahead. Advertising in Canadian additional information for awareness the year ahead. Advertising Canadian is a cost-effective wayontoplans spread of your servicesinand to support Association, and industry as a whole. Apparel isthea cost-effective waythe to spread awareness of your services and
to support the Association, and the industry as a whole.
Thank you for your ongoing support for Canadian Apparel.
Thank you for your ongoing support for Canadian Apparel.
Yours sincerely,
Bob Kirke Executive Director
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CanadianApparel Spring 2009
Industry News Better data for retail marketers Thanks to a new arrangement between Ipsos Reid and Tell Us About Us Inc. (TUAU), marketers in Canada’s retail sector can access superior data collection, analysis and insight. The new offer from the two companies, announced in March, combines the best resources from each. TUAU’s data collection and reporting engine OnlineKMC integrates data from online, interactive voice response and mystery shopping into one easy-to-use client interface, while Ipsos Reid’s team of research professionals translates it into strategic insight for marketers. IPSOS uses TUAU data to outline a road map for setting objectives and aligning a business to changing customer needs, thereby providing clients with a better perspective on what drives customer satisfaction and loyalty.
Coast Mountain Sports sponsors MOMAR
Perry Ellis nabs Callaway apparel licence
Coast Mountain Sports, a corporate banner of The Forzani Group Ltd., has the Title Sponsorship for the 10th annual Mind over Mountain Adventure Race (MOMAR) Series. The company will provide an outdoor gear prize package for each race series, special offers for registrants plus an outdoor grand prize package for MOMAR’s big end-ofseason contest. It has also put together an exclusive Recommended Gear Guide available at MOMAR clinics and select Coast Mountain Sports stores. MOMAR tests mental acuity and physical endurance with train runs, mountain bikes, kayak, rappel and bushwhack over 50-km and 30-km courses. The Forzani Group Ltd. is Canada’s largest national retailer of sporting goods, operating stores under corporate and franchise banners that include Athletes World, Sport Mart and SportChek.
Perry Ellis International has been licensed to design, manufacture and distribute Callaway golf and sportswear apparel in the U.S., Canada, Latin America and the Caribbean. Perry Ellis International will service better department and specialty stores, as well as corporate channels, and Callaway Golf will service the green grass, off-course and sporting goods channels. Perry Ellis will also undertake the embroidery, embellishing and warehousing of products for Callaway. For the balance of 2009 Callaway will continue servicing the market with products produced by its earlier licensee. Perry Ellis International’s designs are scheduled to begin shipping in spring 2010. In less positive news, the apparel company reported a loss of $21.6 million, or $1.58 per share, in the fourth quarter, and it expects revenue to decline for the year by high single to low double digits, it was reported. Some growth was seen in the company’s Hispanic men’s brands, swimwear, golf apparel and denim business. With the Callaway deal, Perry Ellis International expects to double the size of its golf business.
Joe Fresh partners with Rethink Breast Cancer Rethink Breast Cancer has joined forces with Joe Fresh Style to design, produce and retail the iconic Target T-shirt for its eighth annual Fashion Targets Breast Cancer campaign. The national fundraising campaign focuses on the sale of limited-edition T-shirts to remind women to target their breast health. They will be available during May at all Real Canadian Superstore locations nationwide, retailing for just $12. All of the net proceeds from the sale of the shirts go towards funding research, support and awareness programs operated by Rethink Breast Cancer. Fashion Targets Breast Cancer was created by Ralph Lauren in 1994 and since then has turned into a global initiative with more than 13 participating countries. It has raised over $40 million for cancer charities worldwide.
Unique Solutions acquires interest in top competitor Unique Solutions Design, Ltd., a market leader in 3-D body scan measurement technology, has acquired the majority interest in its top competitor, Philadelphiabased Intellifit Corporation. The acquisition brings forth strong retail brand partnerships such as Levi’s, Lane Bryant and Fashion Bug Stores. Intellifit’s patented Virtual Fitting Room is the only 3-D whole-body anthropometric scanner that can take measurements of a fully clothed individual, says the company. Unique’s original BodyScanner offers the same measurements plus weight, height and BMI. The move allows high-traffic locations such as department stores to offer clients 3-D body scanning, reducing returns due to inaccurate sizing.
CanadianApparel Spring 2009
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Industry News Barbie bursts on the Toronto scene The Bay’s Toronto Queen Street location is the site of Canada’s first Barbie lifestyle retail store in Canada. The Barbie Signature Shop at the Bay’s Toronto Queen Street location launched its two-month Barbie celebration in March. The event includes thematic store windows along Queen and Bay streets as well as 1,350 square feet of space devoted to Barbie-themed adult apparel, dolls, accessories, jewelry and more. The retail celebration also coincided with the first ever Barbie by David Dixon fashion show at LG Fashion Week’s opening night. Additional touches to the celebration include a Fashion Salute to Barbie with dolls designed by the likes of Diane Von Furstenberg, Burberry and Armani as well as a whimsical Barbie furniture line created by Glenn Dixon and exhibited exclusively at the Bay. Photos by Dave Cyr
New face at La Senza Limited Brands Inc. has appointed Joanne Nemeroff president of the lingerie chain La Senza, where she will head the company’s Canadian and international operations as of April. Nemeroff comes to La Senza from Aldo, where she was group vice-president.
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Adidas under fire A group of irate Queen’s University students are pressuring the university not to renew its contract with Adidas, claiming that not all the clothing is being made in Canada, reported the Queen’s Journal. According to the student group Queen’s No Sweat, students were originally told that all the sports clothing supplied to the school by Adidas would be manufactured in Canada. Representatives of the group have since discovered that of the 342 Adidas items being supplied, only 162 are produced in Canada, by Saxon Manufacturing in Brantford. The rest of the 180 items, including jerseys, shorts and jackets, are manufactured primarily in factories in Asia and South America. The university’s contract with Adidas is set to expire in 2011.
The return of Linda Lundström Longtime Canadian design diva Linda Lundström made a splashing return to the country’s fashion scene during Toronto’s LG Fashion Week in March. With the help of a silent investor, Lundström launched her fall 2009 collection. A new Lundström boutique at Cumberland Avenue in Toronto is set to follow. The fashion show featured a number of environmentally friendly touches, including a “green” version of the designer’s famous LaParka coat, which has had an annual reincarnation since it first launched in 1986. In a new twist, the label has been shortened to Lundström, and is already being sold to stores in Canada and the U.S.
Trade Show Review By Brian Dunn P hotos courtesy of ISPO. Copyright streubel-photo.de
Spotlight on sportswear T
he recession doesn’t appear to have impacted the activewear and sporting goods business, judging by the number of exhibitors and attendees at ISPO Winter ’09 held in Munich February 1 to 4.
Despite a strike by Munich’s Transportation Authority, more than 60,000 industry visitors from over 100 countries attended the world’s largest sporting goods trade show, down slightly from 64,000 visitors from 113 countries in 2008. The number of exhibitors presenting product innovations and fashion collections for winter 2009/10 was also down marginally at 1,950 versus 2,026 a year earlier. However the show, which took place over 185,000 square metres at the new Munich Trade Fair, was essentially sold out, according to Birgit Mertens, spokesperson for Canada Unlimited Inc., Toronto, the official
Despite an economic slump, a sold-out ISPO Winter ’09 pulled in the crowds, including 22 exhibitors from Canada CanadianApparel Spring 2009
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Trade Show Review
CAF’s European Export Service helps members determine if they should export to Europe and the right course of action to take to penetrate the market Canadian representative for the fair. “I was happy with the show. It was extremely busy and the economy was not a factor with 47 countries exhibiting, including 22 participants from Canada,” she says. Canadian apparel exhibitors at ISPO included Arc’Teryx, Bula/Filmar Sportswear Canada, Canada Goose, Harricana, Mitchie’s Matchings, Mondor, Nobis, Quartz Nature, Sitka and Westcomb Outerwear. ISPO got a boost from an unusually cold and snowy winter in Europe, forcing retailers to reorder, according to Marc Lugert, who runs the Canadian Apparel Federation’s European Export Service, which helps Canadian apparel suppliers get connected to European markets. “The two major buying groups, INTERSPORT and SPORT2000, reported an 18 per cent increase in orders from their existing members,” he says, adding “What recession?” Buyers can expect to see flashier colours next season, with bright yellows and bright reds dominating, says Lugert. “People want to make a statement. There’s more of a crossover with active sportswear becoming fashion items. Function and fashion at the same time,” he says. Trade show participants, exhibitors and visitors alike were pleased with ISPO Winter ’09 and gave it consistently very good marks, accord-
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ing to Maud von Hoff, communications manager, consumer goods for show organizer Messe München GmbH. “The good mood among all was a result of a very positively progressing winter sports season, as well as of the multi-faceted and high-quality selection of exhibited products.” Safety products were especially in demand, says von Hoff: “Helmets and protectors have become absolute top sellers.” As a result, many manufacturers have invested considerably in new product development which, in addition to the safety aspect, takes into account the user’s demand for lifestyle characteristics. In addition, the subject of sustainability continues to be on everyone’s mind. This year’s ISPO Winter featured the first new, independent Eco Responsibility Award for products incorporating sustainability not just as an aspect of a certain lifestyle, but as a philosophy. The response to the award was pleasantly high, says von Hoff. It shows that the industry has recognized the importance of sustainability, with an increasing number of companies using recyclable and natural materials that don’t compromise function. ISPO Winter ’10 will take place in Munich Feb. 7 to 10, 2010.
Trade Show Review TRENDS Innovations in alpine skiing fashions • Most collections aim to increase their relationship with nature and provide a feeling of individuality with exclusivity. This leads to fabrics like Loden, boiled wool, cashmere, as well as silk, merino and corduroy with technical artificial fibres to ensure pieces are suitable for athletic activity, yet retain their elegant looks • Technology- and ecology-oriented outfits gain popularity • New neon colours • Insulated jackets are getting more stylish • Soft shells for the legs
Colours • Colours for the upcoming ski season are freely mixed and bright, sometimes even loud, and very dynamic. In outfits for young free riders you will find eye-catchers like bright and more muted neon colours. Bright colours are often mixed with pastels to create a very personal look. • Above all, blues of all types rule, sometimes cold, sometimes muted and soft, from dark blue to bright royal, sky, fresh ice or turquoise Tahitian blue.
CAF’s European Export Service The Canadian Apparel Federation’s (CAF) European Export Service is a special program designed to help CAF members in their European market entry plans. The program first helps members determine if they should export to Europe and then the right course of action to take to penetrate the market. It provides solutions such as one-on-one support, workshops, reference material, recruitment and consultancy. CAF works with Marc Lugert of Marc Lugert Consultancy, a German-based expert who offers assistance with the many issues and challenges CAF members face when targeting the European market. For more information, CAF members are invited to contact Marc Lugert at Europe@apparel.ca
• Also on the slopes, many shades of green, especially lighter shades such as lime to apple, grass and petrol green. • Add to this mix bright egg-yolk yellow, fresh oranges, strong, sporty reds from cherry, raspberry, to full Bordeaux reds.
The new snowboard fashion trends • Combinations: high-tech materials with style elements from the past • Classic: primary colours set accents in the snow • Similarity: the looks of snowboard and ski wear continue to come closer together • Padded garments with protectors • Versatile: collections for alternative sports in places with little or no snow • Rebirth: renaissance of the quilted jacket
New products • The heated jacket promises great comfort even on cold days • Skis, snowboard, helmet, apparel, accessories with a reptilian look • More recyclable jackets and pants
Accessories Consumers are demanding even more gloves, hats, caps, belts, bandanas, as well as bags for skis, boots and helmets. In the future, wall displays in sports retail stores with hats, gloves and goggles will expand and sometimes even exceed the ski displays. CanadianApparel Spring 2009
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Product Standards By Andrew Brooks
The CPSIA saga continues A stay of enforcement has some breathing a sigh of relief over the Consumer Product Safety Improvement Act. But it will eventually be implemented and now is the time to get ready
I
t was a moment to celebrate…. Or was it?
When the Consumer Product Safety Commission (CPSC) granted a one-year stay of enforcement on its controversial U.S. Consumer Product Safety Improvement Act (CPSIA), there were those who were ready to break out the champagne. However in hindsight, there is very little to celebrate. The stay, which took place just before the CPSIA’s deadline on February 10, did indeed amount to a de facto recognition that the testing requirements need to be clarified. But whether it clears up any confusion is a moot point. Consider the fact that while it defers the requirement to test or certify products as compliant with the new limits, it remains illegal to sell products that exceed them. As well, confusion surrounding testing requirements remains. “The CPSC required not only that you produce safe products but that you certify them as safe based on testing,” says Bob Kirke, executive director of the Canadian Apparel Federation (CAF). “But people have no guidance. Do I have to test a red T-shirt and a blue T-shirt and a green one, etc. to prove there’s no lead in the dye? No one gave any answers.” In fact, at a public meeting held September 4 to explain the CPSIA to affected industries, the chairperson of the CPSC, Nancy Nord, admitted the legislation was “incredibly complex” and that there were still grey areas such as the impact the new law will have on the industry supply chain. Kirke points to the experience of one garment manufacturer that was on the verge of launching a new program with a major U.S. retailer when the CPSIA was introduced. In this case the critical requirement was testing for flammability. The fabrics involved were very high-grade and sourced overseas. The garment manufacturer
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contacted the fabric supplier, only to find that they had no idea about the flammability of their fabrics. “What do you do next?” Kirke asks. “The garment maker at this point has to cut out yard-long samples of each and every fabric used — even one for each different dye — and send them to a testing lab. That costs money. No wonder people are freaking out as they try to come to grips with what the law requires them to do.”
Taking action Kirke says that major childrenswear suppliers in Canada have been much more proactive than their U.S. counterparts. This is partly due to a series of seminars that the Canadian Apparel Federation ran in October to help explain the provisions of the CPSIA and how they might affect the Canadian industry. Feedback was positive, with a number of member organizations crediting them for clearing up exactly what Canadian companies would have to do.
“Our recommendation is that companies try to figure out how to deal with this now, because it’s coming back”
The lowdown The U.S. Consumer Product Safety Improvement Act (CPSIA), signed into law on Aug. 14, 2008, focuses primarily on banning lead and phthalates (plasticizers) in children’s apparel, toys and other children’s products sold in the U.S. The act mandates product testing and certification, tracking labels and product registration certificates and increased whistleblower protections. The organization responsible for implementing the CPSIA is the Consumer Product Safety Commission (CPSC), a U.S. government agency tasked with ensuring the safety of consumer goods sold in the U.S. Given the complexity and multinational nature of its supply chain, the global apparel industry stands to be severely impacted by the CPSIA. Most significantly — and confusingly — for manufacturers, all goods to be sold must first be tested and certified as being within the maximum permissible lead limit. This limit was to be reduced first to 600 parts per million (ppm) by Feb. 10, 2009, then to 300 ppm by Aug. 14, 2009, and finally to 100 ppm by Aug. 14, 2011.
—Bob Kirke, Apparel Federation
U.S. companies, on the other hand, tend to be larger, and this puts them ahead when it comes to having the resources to do the kinds of testing required. For one thing, says Kirke, U.S. companies tend to have formal compliance programs in place that are virtually unknown in Canada. They ensure that anything made or sold complies with all relevant laws and standards. While some of the furor around the law is dying down, partly due to the stay of enforcement, it is important to remember that this is an illusory calm since the stay will probably expire next February. In the end, Kirke believes that the long-term effect of the CPSIA will be positive for the Canadian apparel industry, despite the haphazard way it was introduced. For one thing, he says, some major retailers are still asking for the certificate of compliance because they want to show that what they’re selling complies
with the new limits. This suggests that there is positive marketing potential in compliance. And the CPSIA may force many companies to tighten up their supply chains and seek out better suppliers. Kirke cites the hypothetical example of a garment that wholesales for eight dollars, of which the fasteners account for 52 cents. If the fasteners fail to meet the CPSIA’s lead or phthalate limits, the whole garment is unsellable. The manufacturer is better off sourcing better fasteners now — even if they cost more — to avoid sacrificing the rest of the investment. “Our recommendation is that companies try to figure out how to deal with this now, because it’s coming back,” Kirke says. “When it does, the CPSC may have smoothed off a lot of the rough edges but you know that they’ll also keep the bulk of the provisions.” CanadianApparel Spring 2009
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Product Standards By Andrew Brooks
Forestalling over-regulation Prompt action by the apparel industry wards off needless regulatory changes that could have slammed it with millions of dollars in compliance costs
T
here’s no substitute for concerted action. When faced with unfair regulatory changes that would have made bras and padded garments subject to Ontario’s Upholstered and Stuffed Articles Regulations, the industry revved up its engine and acted fast in fighting the changes. As a result, there’s a happy ending to this regulatory ruckus. As described in the September/October 2008 issue of Canadian Apparel, in July of that year the Technical Standards and Safety Authority (TSSA) abruptly redefined garments with shoulder pads as “upholstered and stuffed articles.” In one fell swoop, these items became subject to Ontario’s Upholstered and Stuffed Articles Regulations, along with the padded undergarments (including foundations and similar garments with components made with components from moulded foam) that had been added to the Regulations the previous January.
The changes had immediate legal effect and required significant, expensive changes to the licensing and labelling of these items. Among other concerns, the Canadian Apparel Federation (CAF) objected to the changes being made without consultation with the apparel industry and with virtually no attempt to notify the industry in advance of their taking effect. The changes, which threatened to disrupt complex supply chains, would be difficult to comply with given the volume of goods in the supply chain. Moreover, they would cost the industry millions of dollars “for no apparent benefit.” According to CAF, millions of garments would immediately be non-compliant and subject to removal from store shelves by order of TSSA inspectors. The Canadian Apparel Federation reacted by assembling a coalition of manufacturers and retailers across the country and abroad. In early October of last year, this coalition lobbied for a deferment of the changes to Jan. 1, 2010, in a meeting with the TSSA. Ten days later the TSSA indicated its willingness to roll back the regulatory changes. However
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what emerged instead was a rollback for padded undergarments only, not garments with shoulder pads, and only to July 2009 rather than January 2010 as requested.
Snowball effect By then the issue was snowballing. There were meetings between the U.S. and Canadian federal governments, with U.S. representatives expressing concern that the changes would introduce a non-tariff barrier to trade under World Trade Organization rules. The European Union had similar discussions with Canada, while Ontario and Quebec held bilateral meetings. The American Apparel and Footwear Association pressured the U.S. government to act. Ontario’s Ministry of Small Business and Consumer Affairs also became interested, asking the Federation for more information and responding positively to apparel industry concerns. Then on December 3, as TSSA inspectors were ramping up their warnings to Ontario retailers about the impending changes, the Ontario Ministry of Small Business and Consumer Affairs advised CAF that the Ontario Cabinet had issued revisions to the regulations. The revisions reestablished an exemption from the labelling requirements for garments with shoulder pads and created a new one for padded undergarments. Responding to the news, CAF issued a Regulatory Bulletin stating that the exemptions addressed the two most important issues raised by the TSSA’s regulatory changes. It concluded by acknowledging the contributions of retailers, manufacturers and others to the success of the lobbying effort. The apparel industry was fortunate to find a responsive ear in the Ontario Ministry of Small Business and Consumer Affairs. But the success in forestalling this example of over-regulation is due, in no small measure, to the industry’s ability to act quickly and in a unified way on a number of fronts, within industry and the public sector.
Lingerie By Brian Dunn Blush was one of seven Canadian companies exhibiting at both the New York and the Las Vegas show
Getting intimate Buyers were cautious and price conscious but they still turned up in record numbers at the CurveNY shows in New York and Las Vegas
E
ven during a recession, the show must go on, as they say, which it did in February at both CurveNY in New York and CurveNV in Las Vegas.
Both events were sold out, according to Laurence Teinturier, executive vice-president of CurvExpo. In Las Vegas, attendance was up 12 per cent from a year ago, reaching 1,764 buyers and featuring 150 lingerie collections, while the 1,937 buyers in New York previewing 250 collections marked a 25 per cent improvement from last February. The notable difference this year was that while major department stores still sent their purchasing reps, this often consisted of one or two buyers instead of the larger delegations of the past, notes Teinturier. “Destination stores from all over North America were spotted on the (New York) floor,” she says, including Collange of Montreal. Solange Cohen, who owns two Montreal-based Collange boutiques, was a bit “disappointed” with CurveNY. “There didn’t seem to be as much traffic as previous shows and there didn’t appear to be anything new in terms of collections,” she says. “I did place orders, but not as many as last year due to the economy.” Buyers were cautious, but were still writing orders, according to several exhibitors. Given the economic slowdown, basics were top sellers but a key trend was sourcing newness, fashion colours and treatments. Retailers were also looking for items that featured fashion combined with function, fit and quality while offering consumers the perception of enhanced value.
Canada was well represented with 12 companies exhibiting in New York and 11 in Las Vegas, with Sterling Group, Patricia Lingerie, Kayanna, Christine Designs, Blush, Kenan Enterprises and Montelle appearing in both shows. As well, the Canadian Apparel Federation ran a special promotional program that included a Wear Canada lingerie supplement highlighting different Canadian brands. The supplement was mailed to 3,500 buyers across North America and 6,000 copies were distributed at the Curve shows.
Orders placed Grenier was one Canadian supplier attending Curve that was optimistic spring and summer won’t be too severe, based on orders for immediate delivery that were placed at the show. “I was surprised how busy it was considering the economy,” she says, “although buyers were more price conscious than before. But most people know our products.” Several brands made their debut at the New York show, including La Fée Verte, a new lingerie label from Sakara International of Montreal. “I’ve grown up in this business and I wanted to bring a fresh line into the market,” explains Adam Sakara, creative director of La Fée Verte. The new line has a higher-end price point than Sakara’s other mass volume business, with bras retailing for around $50. Sakara describes La Fée Verte, which includes organic bamboo sleepwear, as a fantasy line where “the Garden of Eden meets Alice in Wonderland.” Hence the name La Fée Verte, meaning green fairy in CanadianApparel Spring 2009
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Lingerie Canadian-based supplier Grenier received several orders for immediate delivery that were placed at the show
Lingerie from Christine Vancouver, whose new collection was well received at the show English. “We had a giant mushroom and a throne as props in our booth in New York to convey that message,” says Sakara. “We were pleased with the show, as we picked up some new orders and we plan to return in August.” Bravado Designs of Toronto, a line of maternity and nursing bras and apparel, opted to exhibit in Las Vegas over New York in order to tap new markets out West, explains Nadine Harding, director of sales and marketing. “We did the Vegas show last August, but were not part of it
Retailers were also looking for items that featured fashion combined with function, fit and quality while offering consumers the perception of enhanced value last February and saw it as an opportunity this year to penetrate new markets out West,” she says. “As a niche category, there seemed to be heightened interest in our products than in previous years,” adds Harding. “We also didn’t notice any price resistance, but at $75, we’re more of a bridge price point.” Bravado is introducing two new styles for fall that Harding wouldn’t reveal. Christine Designs of Vancouver, a high-end sleepwear and loungewear line under the Christine Vancouver label, went to Las Vegas specifically to show its collection to Neiman Marcus, one of its major accounts. “Traffic is traditionally slower in Vegas than New York, but we’re starting to see some of our major customers from Calgary, Edmonton and Vancouver at the show,” says Erin Williams, sales director with Christine Designs. “We showed everything for immediate delivery and built in some great price points for our chemises, knowing there would be some price resistance for luxury items. We did some mix-and-matches at $80 wholesale.” While the collection was well received, Williams said buyers were conservative in how far out they were buying and in their buying depth. “We came back with more Canadian orders than U.S. orders, which was interesting and possibly an indication how the two economies are coping with the recession,” she notes. The next CurveNY is scheduled for August 2 to 4 and CurveNV for August 31 to September 2.
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Financial Services By David Schachter
Credit and risk:
Making the right decisions How to establish a client’s credit and mitigate risk in today’s tough economy
W
ith the economic crunch, establishing the credit of your clients and lowering your risk are crucial to keeping your business afloat. Below are some guidelines to help you ensure that your business doesn’t fall victim to a client’s credit crisis.
Establishing credit Establishing the credit worthiness of your clients is one of the ongoing challenges of operating within our business environment. In the end, establishing credit lines is an art as well as a science. The level of credit that you establish for any of your clients will define both your profitability as well as the level of risk that you are comfortable with. So what would you want to know in order to make a rational credit decision? Here are some factors that warrant investigation: Recent payment patterns. Longer-term payment patterns. Have there been any NSF checks? Has there been any collection activity? Do the owners or any related parties have any preferential security? What does the balance sheet look like? What is the status bank credit facility? The actual and current status of these factors are relevant but even more important is if there have been material changes in any of the above factors. Vendors want to see stability in payment patterns even if they are not “perfect.”
An account that has a history of paying in 90 days for the last 10 years may be less of a concern than an account that has changed their payment patterns from 30-day discount terms to net 75. A vendor whose owner has recently securitized his position may be sending signals to his vendors. A retailer who has an occasional NSF creates less of a stir than an NSF from one who never has had an NSF. Now where does one obtain this information one needs? You can start by looking at the following sources.
Credit applications Much information can be gathered from a properly drafted credit application. In particular, the retailer’s agreement that bank information be made available at the vendor’s request can be established. Information such as home addresses, cellphone numbers and financial statements can be gathered at the beginning of a business relationship, before any issues exist.
Contact with customers responsible for credit Regular contact with management can provide valuable input. Information gathered in this way must always consider the fact that retailer management has a vested interest in maintaining the flow of the goods.
CanadianApparel Spring 2009
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Other vendors Other vendors will often provide credit updates, high credit positions, payment trends, NSF and collection activity. But this information is only available on request; you are usually not advised when significant changes occur. There is no guarantee that you will receive the information at an appropriate time. Furthermore, most vendors develop reciprocal credit information relationships with a limited number of other vendors and so only receive a limited view of each retailer that they investigate.
Credit bureaus Credit bureaus provide a much wider view of a retailer’s financial activities. Bureaus gather information from many vendor sources large and small, including factors and credit insurance sources. Bureaus also subscribe to court records and news clipping services that provide information that is not readily available or available only at a prohibitive cost. Credit bureaus, because of their wider reach, also provide more complete information related to NSF and collection activity as well as security registrations that may have been taken.
Financial statements
What good is having something valuable if it’s not used properly? Existing Systems Evaluation Existing Systems Improvement Needs Analysis New System Search / Selection Implementation Project Management Best Practices Consulting Change Management Logistics / Operations Consulting E-Commerce / EDI Support Data Mining / Reporting Add-on Tools
Contact: Elliot Schiller 1.888.816.0222 ext. 102 eschiller@teegerschiller.com www.teegerschiller.com
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CanadianApparel Spring 2009
Financial statements are, of course, the most important information that can be obtained and analyzed. Audited statements are more revealing than statements that are identified as “notice to readers.” It is crucial that the notes that accompany the statements be made available. Reading and interpreting a financial statement can also be a challenge. Referring a statement to your own financial professional or to a credit bureau that you belong to is wise if the amount of credit that you are considering is substantial. Most businessmen understand the basics of reading a balance sheet, but the devil is often in the details and important facts may be missed by the untrained eye.
The level of credit that you establish for any of your clients will define both your profitability, as well as the level of risk that you are comfortable with
Mitigating risk International Trade Fair for Technical Textiles and Nonwovens
The internal review
Credit insurance is available from a number of sources, including EDC (Export Development Canada), Euler and Atradius. Accord Business Credit and GMAC are factoring firms who provide financing along with insurance coverage. Coverage may not be available on every account you ship and at times only partial coverage may be available. Terms of coverage are negotiable, as well as premium rates that are charged. Some vendors find it useful to deal with more than one provider in order to get the coverage that they are looking for. In any event, insurance coverage has become essential in order to observe the covenants that banks and ABLs require in order to provide financing to vendors.
16 – 18.6.2009 Visit the leading international Techtextil show and the parallel Avantex Forum. the innovation interchange
Benefit from innovations, enhancements, global solutions, valuable contacts and knowledge exchange. International suppliers will be showcasing specific industry solutions for designers, outfitters and manufacturers of sports and outdoor equipment. For further information and tickets for Techtextil and Avantex visit: www.techtextil.com Tel. 905-824-5017
Credit bureaus There are a number of credit bureaus that provide credit reports and credit-related information to vendors. Equifax and D&B provide information on a per-report or report package basis. National Apparel Bureau (NAB), which has served the Canadian apparel industry for over 75 years, provides information on a yearly subscription. Some bureaus arrange regular meetings/teleconferences at which specific accounts are discussed and credit issues reviewed. CanAM Credit provides reporting specifically on U.S. retailers to Canadian vendors on a report package basis.
Using terms and collection for credit Vendors can use the offer of discounts to encourage early payment and therefore reduce risk. Faster payment turnover can allow the creation of a line of credit that at the same time mitigates risk and increases volumes. More stringent collection habits and more vigorous accounts receivables management can also reduce average exposure and create a more positive credit environment. Most of all though, if you pay as much attention to your credit/ collection issues as you do to your merchandising/product issues, you will increase your likelihood of success. David Schachter has over 30 years of experience in the apparel industry. He owns and operates National Apparel Bureau (NAB), an industry-specific credit bureau which, for over 75 years, has reported on credit issues as they relate to apparel retailers in Canada; ACA, a collection agency that recovers commercial receivables; TAR, Targeted Asset Recovery, which provides consultation and recovery services to creditors involved in bankruptcies; and CanAm Credit, a provider of credit reports on U.S. retailers. CanadianApparel Spring 2009
KANADA_engl.
Credit insurance/Factors
The forum for innovative apparel textiles
DU: 20.02.2009
Zero-based budgeting concepts can be used in the area of the credit lines that you establish for your customers. It is a valuable exercise. Every client’s line is reduced to $0. A new line is then established using the information that you have available. Financial information, credit bureau data, historical data and references from other vendors should all be used. Emotional attachments to a particular retailer also have a place, but keep in mind the relevance of the information you are using and give it the appropriate weight.
51989-002 • Messe • Techtextil • SPORTTECH • Canadian Apparel • 95x265 mm/ssp • CMYK • CD-ROM • jk: 17.02.2009
Your bad debt history may be excellent but that is no guarantee that you will not suffer an unanticipated loss. Our world has changed considerably and the past may not be an accurate guide. Taking measures to refocus on your customers’ credit worthiness is prudent.
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Events MAY 2009
The Clothing Show – Spring 2009 The Better Living Centre, Exhibition Place Toronto, Ont. May 1 to 3 www.theclothingshow.com FAME The Jacob K. Javits Convention Center New York, N.Y. May 3 to 5 August 2 to 4 www.fameshows.com Moda Manhattan The Jacob K. Javits Convention Center New York, N.Y. May 3 to 5 August 2 to 4 www.modamanhattan.com FHNB Fashion & Accessory Expose Calgary Round-Up Centre Calgary, Alta. May 24 to 27 Nov. 18 and 19 www.fashionhasnoborders.com
JUNE 2009 The New Mart Los Angeles, Calif. June 5 to 9 Aug. 8 to 14 www.newmart.net Atlanta Women’s & Children’s Market AmericasMart 3 Atlanta, Ga. June 13 to 16 Aug. 22 to 25 www.americasmart.com
JULY 2009 Texworld USA Javits Convention Center New York, N.Y. July 14 to 16 www.texworldusa.com
SPINEXPO New York The Metropolitan Pavilion/Altman Building New York, N.Y. July 20 to 22 www.spinexpo.com POOL Mandlay Bay Convention Center Las Vegas, Nev. July 24 to 26 www.pooltradeshow.com Igedo Fashion Fairs Dusseldorf (CPD, Body Look, HMD & Global Fashion) Messe Düsseldorf Düsseldorf, Germany July 26 to 28 www.igedo.com
AUGUST 2009 CurveNY Javits Galleria New York, N.Y. Aug. 1 to 3 www.curvexpo.com Southern Clothing Market Embassy Suites Charlotte, N.C. Aug. 1 to 3 www.mensapparelclub.com Moda Manhattan The Jacob K. Javits Convention Center New York, N.Y. Aug. 2 to 4 www.modamanhattan.com Printsource New York 7 W New York New York, N.Y. Aug. 4 to 6 www.printsourcenewyork.com The New Mart Los Angeles, Calif. Aug. 8 to 14 www.newmart.net Atlanta Women’s & Children’s Market AmericasMart 3 Atlanta, Ga. August 22 to 25 www.americasmart.com
Advertisers Index
Colintex......................................................... 9 www.colintex.com
International Garment Fair Association......... 14 www.indiaapparelfair.com
Interac............................... Outside Back Cover
Magazines Canada...............Inside Back Cover www.magazinescanada.ca
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Montreal Gift Show Place Bonaventure Montreal, Que. August 23 to 26 www.montrealgiftshow.com CurveNV The Venitian Hotel Las Vegas, Nev. August 31 www.curvexpo.com KIDShow Las Vegas Bally’s Hotel Las Vegas, Nev. August 31 www.kidshow.cc WWIN Show – Women’s Wear in Nevada Rio Resort Hotel or Mandalay Bay Hotel Las Vegas, Nev. August 31 www.spectrade.com
SEPTEMBER 2009 Mode City Eurexpo Exhibition Center Lyon, France September 5 to 7 www.mode-city.com Milano Unica Milano, Italy September 8 to 11 www.milanounica.it Trends the Apparel Show Northlands Park Agricom Edmonton, Alta. September 10 to 14 www.trendsapparel.com Ontario Fashion Exhibitors market (OFE) Toronto Congress Center Toronto, Ont. September 12 to 15 www.ontariofashionexhibitors.ca Texworld Paris Le Bourget France Sept. 14 to 17 www.texworld.messefrankfurt.com The Clothing Show – Fall 2009 The Better Living Centre Toronto, Ont. September 25 to 27 www.theclothingshow.com Material World West Los Angeles Convention Center Los Angeles, Calif. September 30, October 1 and 2 www.material-world.com
Messe Frankfurt Inc..................................... 17 TD Canada Trust...................Inside Front Cover Teeger Schiller Inc....................................... 16 www.teegerschiller.com
Magazines bring together people, passions and the products that interest them, all in one of the most intimate and engaging media available. In fact, somebody is engaged in a magazine this very moment. Discover how advertising in magazines can help you make connections with consumers of your own. Visit www.magazinescanada.ca
YOU HAVE A LOT OF QUESTIONS Is chip good for my business? Do I need to re-train my staff? When will my customers have the chip debit cards? What are the relevant dates for chip conversion? Does the migration differ by service provider? Is upgrading to chip a big project?
We can help you with some answers. Visit InteracChip.ca ® The Interac logo, the armoured truck design and “Everyday Simply” are Trade-marks of Interac Inc. Used under licence.