Flannel managing director John Lawrence discusses retail expansion with Ragtrader. For more in-depth interviews like this, subscribe to our print edition here.
Australian designer womenswear brand Flannel is trading against the broader retail market, continuing to expand its brick-and-mortar network despite the growth of eCommerce and tough retail conditions. Flannel has just opened the doors to its 15th standalone store, this time in Santa Monica, LA. This is the brand's third boutique in the US, with a total of 12 womenswear stores and three menswear stores in its overall portfolio. It is owned and operated by husband and wife team John and Kristy Lawrence.
John, when did the first store open?
Flannel’s first retail space opened 2007 in Cottesloe, Western Australia. The space itself felt right for the Flannel aesthetic, which to this day has not changed.
How did this opening come about?
From its inception, Flannel has always been a lifestyle brand and was initially only wholesaled. The opportunity to lease the Cottesloe space, which we still have, happened very organically. We were living in the area so felt connected to the customer and what they were looking for from the very beginning. We have continued with the same philosophy when choosing store locations ever since, which you can see in our Brighton, Melbourne store and Mosman, Sydney store, for example.
What was the process for more rollouts?
Our first store was an instant success and traded way beyond our expectations which fed into the confidence and capital to open more stores. Our second store opened in Sydney before we rolled out an additional two stores in Perth, followed by expansion into Melbourne, Queensland and the US. One year we opened three stores but on average it is a store a year. We intend to continue working on our physical footprint simultaneously with our online store.
What is the biggest challenge involved?
Vertical retailing has proven to be the best option for us. It allows us to be flexible and dynamic with the product, as well as have complete control over the direction, look and feel of the space products are showcased within.
As we grow, the main challenge is the constant and careful management of cashflow. For fashion, it has always been the biggest challenge retailers face as it is difficult to predict revenue streams at the same time as managing production inflows that are so far in advance in terms of booking fabrics and cut and sew.
What is the biggest opportunity?
The advantages of having a retail network are around inventory control, creative freedom for design and the flexibility of product release. It also provides you with the ability to carefully control and curate the product to tell a complete brand story.Showcasing Flannel in this wholistic way is important to us, as customers want to connect with a brand and feel as though they are a part of the journey. Our retail stores guarantee Flannel is displayed in its entirety as well as showcasing how garments can be styled and worn.
How do you select locations?
Locations are carefully thought out and whilst we know where Flannel will work best in any given area, it has to coincide with a multitude of considerations. Firstly, there needs to be an opportunity in that area that fits in terms of size and store presence, along with commercial terms that keep our fixed costs under control and in line with our economics.
Do you have a leasing agent?
All of our leasing is done ourselves, however we have strong relationships with a number of leasing agents which we keep in regular contact with.
How do you finance your retail expansion?
A new store will only open when we can finance the expansion from working capital. We have always operated this way and will never finance a new store through any debt facility.
How many stores do you have now?
There is a total of 15 Flannel stores across Australia and the US; 12 of which are womenswear and three menswear.
What made you expand to the USA?
After winning an award during Australian Fashion Week we were flown to the States and it was then that we fell in love with Abbot Kinney Boulevard in Venice, and in particular the street. It was nowhere near as popular as it is now, but we resonated with it immediately. It took a few years for the right site to become available and we opened in 2012. We felt it was an area where Flannel could make an impression and provide us with a foothold into the wider US market, which is exactly what it has done.
What was the process involved?
We don’t have an office in the US, however are in constant contact with our fantastic US team which includes our retail team who manage our four stores across L.A and NY, as well as our wholesale agency.
What was the biggest challenge?
There were definitely some initial difficulties and learnings, which mainly stemmed from establishing a US company and understanding those commercial responsibilities. Having opened our first US store at the end of 2012, we have been slowly but steadily increasing our presence and have made some exciting inroads in the wholesale market within the last three years.
What has been the best outcome?
Continuing to expand our retail footprint without having to close stores and realign. We have been strategic with our growth curve and will continue to drive expansion with handpicked retail stores coupled with e-commerce.
How many wholesale accounts are there?
To date we have approximately 45 US stockists which include Wrights, Beach, Therapy and Sloan.
What is your channel revenue split?
Our split is approximately 75% retail, 15% wholesale and 10% eCommerce.
How do you manage markdowns?
Communication around promotions and markdowns are targeted to segmented databases to ensure zero cross over between countries. This has been achieved through a separate US website and database.
Are there any further locations planned?
There are always specific areas we are watching. These currently include Brisbane, Adelaide, San Francisco and Texas.