Australian Fashion Chamber GM Courtney Miller talks business with Jac + Jack co-founder Jacqueline Hunt and Macgraw founders Beth and Tessa MacGraw.
How did you first start your labels?
Beth: We're sisters so we've been planning this for a long time.
When it became real was in 2012 when we first started our business and pretty much immediately started selling online through Big Cartel.
We didn't have the funds to have our e-commerce site so this gave us cash flow, which was great.
We started working on our product and said: in two years, we want to be stocked in 20 stores and do our first Fashion Week show. Which we did.
From there, it's taken off for us a bit. In our second Fashion Week, we started picking up international stockists. Now we're now on Moda Operandi and we just picked up Lane Crawford, which is really exciting.
We've had a really great year this year, we've won a few awards.
Jac, you guys started almost 14 years ago and have a very different model. How did that come about?
Jacqueline: We now have a retail model, so we’ve just opened our seventh store down in Melbourne. Our first six years were spent wholesaling.
Lisa, my business partner and I approached our business in a slow and considered way.
We wanted to establish the market in Australia and then eventually open our first store, which we did after six years of business. We opened our first international store in London a year and a half ago.
This was a really interesting test case. We wanted to explore the new market, but we didn't want to do the wholesale model. We felt it just didn't suit our brand.
We opened a very small store in W1 Central London, which we treated as a test site really. With a lot of stores, obviously, running and operating them is about profit. We hope!
Jacqueline: (laughs) With London, it wasn't our goal.
It was about information about the new market, our client, our price points. Did we get it right? Didn't we? Get a bit of a feel for it. We thought, if it can wash its face and break even we'll be very happy.
Then within 18 months, we can make a decision about whether we'd open a second store.
That was the way we wanted to test the market and hopefully we'll open our second store in London in early 2017. It's been really great for getting that information which we wouldn't have.
With wholesale internationally, it takes a really long time to get to the same results. It was probably what we call a bit 'calculated crazy'. So we're all about retail.
Did you have a few setup issues in London?
Jacqueline: Certainly, many issues. We're setting up on the other side of the world. My business partner Lisa went over there for three months to set up a store.
So she not only set the store up, she ended up with a boyfriend as well, which is amazing. (laughs). There were issues: the tax system is different, the way business is done, how stores are set up, the pricing structures.
It's starting again. Lisa and I were joking, it's back to 2004 for us.
It was also equally exciting because it's a new market, everything is new, nobody knows you, it can kind of reinvent things again.
We can take all the experience we've had in Australia over the last 14 years and apply it to kind of a new business. It's never smooth!
What are the big financial hurdles you've had to meet in building that next phase?
Jacqueline: Opening stores is hugely expensive, as anyone in retail knows. Not only are we funding production but our wholesale, marketing and eCommerce, which we're not great on that platform.
That to me is like a big black hole of money that ends up getting devoted to that. You have to choose. We've found we've just got to choose what we want to do, which avenue is right for us.
We got rid of a lot of stuff that seemed to be a drain on resources and financing and just focused in on retail. On our own steam, we can open two stores a year. This is what we've done for the last six years.
And now in a new market.
Jacqueline: With London, that's a whole different ballgame because it's just way more expensive.
Our store that we're opening in 2017 in Walton Street, the rents are phenomenal. But in saying that, the revenue line is also phenomenal. So it's stages of risk. We opened the store in Bondi this Easter.
That store per square metre is more than the CBD of Sydney and it's more than W1 in London. So it happens here as well. Lisa and I were freaking out. How can we be paying this sort of rent? But we took all the emotion out of it. We looked at our modelling.
Worst case scenario: if we're doing $10,000 a week, we can't open a store for that. If we're not making money, is this still a good thing for the brand? Is this still what we want to do?
And the answer was yes. You can model everything, take the emotion out of it, and make an educated decision. Our Bondi store from day one has been fabulous. It's such a great location.
Macgraw doesn't yet have a retail store. How do you approach the business?
Beth: Our parents had a business when we grew up. We watched two people work very steadily and very hard for our entire lives. We had that base and them to bounce things off.
I never did any tertiary business education. I'm good at budgeting, so there's a framework there but not many designers are so it's a good thing to have.
Tessa: We saved up to start this business. We knew we were going to do it for a long time so I think, we've saved and thought about everything. We've been considered and frugal with money.
Beth: Little things like, we've got a photoshoot and how much have we got? Okay, $1500. How do we do that? You can offer part-contra, part-pay. We've got friends in the industry. Use your network.
For us, probably the biggest investments were getting our proper eCommerce site going and doing it right the first time. So many people want to redesign their websites after a year.
We went to the best place we could find and just did our research really. Once we had that going, our online store has helped us fund our other big ventures like Fashion Week.
The first year, it killed us but the second year, we got it partly sponsored and the last one was fully sponsored.
In terms of your business plan, can you see yourselves in that retail space?
Tessa: We were talking with Jac earlier and she was like, it's really important. I know for you guys, yes. I don't know. That's something to think about, it's a dream to have a Macgraw world.
That's something we'd like to create, to have the customer see it as we see it. That's why we love Fashion Week so much - because we can create a world. I do think it is important but I don't see us doing it for five years. That's overextending.
Jacqueline: It was six years before we even contemplated it.
People were egging us on and we wanted to. It is the manifestation of what you are trying to create, which is just so important. But everyone is different; it's when you're ready and if you want to. But it changed our business. That was the real shift.
And now it's starting to go global with London.
Jacqueline: We get such a cross-section in London. French, Russian, German. That's great. We have no brand awareness whatsoever in a massive city like London.
All we have is our retail space, our staff and our clothes. No marketing, no heat and no hype.
Our stuff is expensive over there by the time you add on all the costings and VAT. It's up there. There are £700 sweaters. We've got a big returning customer now and it's just extraordinary.
Lisa and I are so pleased and amazed at the same time. There's something in this.
How do you differentiate yourself and tell that Australian story?
Beth: The first thing for us was the Australian-made factor. Everyone asked us.
We didn't realise how important it was until we showed to internationals. It's good when they come into the Alexandria showroom in Sydney and ask where we're made.
We can point and say: just over there in Marrickville. Their eyes light up. They love that. The Americans love you to tell your story, where you came from, why did you pick this blue.
We don't think it's interesting but it's what connects them to us, what connects them to our clothes. It is important.
What kind of advice would you share with young designers when starting a business?
Jacqueline: You've got to have a plan. You've got to be strategic about it. You've got to stick with it and it's going to be really, really, really hard work. It's so exciting to have a brand, your own business.
I think a bit of less advice is good advice. Get into it and do it and be prepared to work hard. If you can plan and you can be a bit strategic, that helps. Short term, medium term, long term. The rest falls into place. It's surprising how quick it happens. I can't believe this is our 14th year.
Beth: Have people you can trust. We took our time finding partners with production, with graphic designers.
Tessa: We've made mistakes with partners too. Products that we couldn't put to market. Thinking wow, we've just lost all that fabric.
Beth: It's not a race. It took us a while to find our customer, our aesthetic, what sets us apart. There are a few collections where I look back and think: I don't like that at all. You've got to just start. You've got to get out there. Make mistakes. Once you find that group of people, it works and evolves. Go with your gut.