With more retail giants now sourcing their product directly from offshore manufacturers, local wholesalers are beginning to feel the squeeze. Fraser McEwing meets one ‘new age’ player whose connections are helping him secure some elbow room.
Gary Sacks sits in an unremarkable office at the top of the stairs. Outside his door, eight staff members scurry about doing the unglamorous work that never makes editorial coverage in fashion magazines. They deal with orders, production, deliveries, payments in and payments out, all generated by racks of samples gathered from around the world and now standing patiently on a lower floor, ready to procreate.
There is no designer’s alchemy going on here. Just the flow of business created by picking the right styles and then convincing over-serviced buyers to put them into stock.
The commercial unit that houses Sacks’ company, Ideology Fashions, looks out on to Gardiners Road, Alexandria. It’s in the thick of Sydney’s new garment district which has grown up on seeds blown from a now too-expensive Surry Hills. A three iron away is its shipping agent and from there a well-hit wood could land in Sydney airport.
Sacks is a new age garment wholesaler. New age in the sense that Chinese factories are as close as your computer and you’ll probably never see the goods you sell unless you stumble upon them in the mid-market fashion retailer that bought them.
But there’s nothing new age about the challenge of taking world trips to find fresh but saleable styles for five ranges a year. Overseas inspiration has been the pattern of Australian garment wholesaling for more than 60 years and Sacks is following suit – except that he holds a couple of aces in his hand.
One is an exclusive agreement with the giant Arcadia Group in the UK, forged four years ago through a 20-year friendship with one of its production executives. The exclusive agreement covers being able to use Arcadia’s established factories in China (Arcadia acts as production manager) and having access to all Arcadia’s designs and fabric sources.
In short, it gives Sacks a crystal ball into upcoming budget and mid-market styling as well as access to this giant’s huge factory power in China. Nobody else in Australia has this conduit.
For the record, the Arcadia Group is the UK’s largest privately owned clothing retailer with more than 2500 outlets. It owns seven prominent fashion brands comprising Burton, Dorothy Perkins, Evans, Miss Selfridge, Topman, Topshop and Wallis.
The brands can be found in 30 countries across Europe, the Far East and the Middle East via 420 international franchise stores. The company also owns Outfit, which offers a mix of its brands in mostly out-of-town locations.
Because of this association, Sacks’ clients are promised a huge selection of market-ready styling from Arcadia, in addition to his own overseas search for jeans, tops, dresses and separates for a finicky Australian market in the moderate price area.
He claims to have an open book policy when dealing with big retailers. He tells them his factory price and the small margin he adds to run his business. Not all of them believe him, he acknowledges.
“It is about trust between people,” he says. “You don’t earn that in one season, or even two. And then there’s the question of quality. You can always make something cheaper, which distorts the impression of value. Using Arcadia’s factories with the addition of my low-profit margins, I know I can’t be beaten on value for money. But every now and again another supplier comes along with what appears to be a cheaper price and I can lose the business. At the time, the buyer can’t see that saving a few cents on a price will probably cost a lot more later, either through returns or, more seriously, a drop in customer perception of quality of the brand.”
At 41, Sacks had been through a hard school before opening his own company in Sydney three-and-a-half years ago. With two partners he ran his own substantial garment manufacturing business in South Africa for 18 years before coming to Australia to work for Millers for four years.
He understudied Paul Hotz and took over as general manger of Tajura when Hotz resigned. But Millers was not really comfortable with an independent supply division and it slowly morphed into just part of the buying process. That’s when Sacks decided to go out on his own. He worked from home for the first 18 months before moving into the present location in Alexandria.
Softly spoken and with a smile always hovering, Sacks remembers his days in South Africa as like living in a wild-west movie. Everybody in his office was armed. He worked with a shotgun laid beside him on his desk. Buyers arrived with small armies to protect them and intimidate suppliers. The most popular jobs were as security guards – preferably with military training. There were continual holdups and gunfights.
The last straw for Sacks was when one of his partners was murdered. Australia seemed to offer solace and a chance to succeed without violence.
Sacks is not alone in the problem of wholesalers trying to get a foothold in supplying major store groups. Most big retailers are moving inexorably towards doing their own styling development and factory liaisons. They see it as a weakness to buy from a wholesaler, irrespective of price, quality or service.
Many of them treat wholesalers as a waste of space. For all his politeness, fashion skill and reliability, Sacks has his share of put-downs. One big group granted him an interview, took a cursory glance at what he was offering and told him to contact their man in Hong Kong who would want to know what factories Sacks was using and where he got his styling ideas.
“If retailers want to set up their own supply departments, they have to be run as profit centres, not cost centres,” Sacks says, adding that a supply department has to be good enough to research styling, find factories and deliver on time to show a profit on its activities. That profit should be measured against what an outside supplier could offer. And Sacks believes he could beat most of them.
His line of work isn’t without challenges. In order to keep his margins paper-thin he must do the job of three people – until he has sufficient turnover to loosen the screws a little and look for a sorcerer’s apprentice.