Welcome to our NuORDER Chat series starring Alternative Apparel’s CEO, Evan Toporek! NuORDER’s CEO, Heath Wells, had the chance to (virtually) sit down with Evan and discuss sales strategy, how the retail industry is changing, inside sales as a big growth area, the importance of going digital, and strategies for successfully running an apparel brand.
Evan has been with Alternative Apparel since the brand’s inception in 1995, when he and his team set out to create soft, sustainable clothing that were as comfortable as they were eco-friendly. Through innovative apparel design and a commitment to sustainability, Alternative Apparel has become a leading fashion lifestyle brand offering best-in-class basics with more than 80% of products being made with sustainable materials and processes. Along with selling directly via its eCommerce website and standalone stores, Alternative Apparel currently serves over 1,500 wholesale accounts across United States in addition to around the world.
In this first blog post, Heath and Evan discuss sales planning, forecasting, tracking and growth in retail.
Heath: How do you set a sales plan, and how do you set a forecast?
Evan: We’re not a public company, but we have the discipline of a public company. We have a very thorough planning process and we are constantly updating our forecasts, but it’s really a bottoms up and tops down approach.
Bottoms up, we do go by customer. We meet with our customers, they tell us where they’re planned, and they’re typically conservative, but we like to have a conservative budget. Then, we also plan top down with our finance department. We certainly have goals we need to meet, growth goals and earnings goals that we have in our business, so you’ve got to marry in the middle. The sales team is typically going to be pretty conservative, and the finance team is going to really drive you for growth. Hopefully those two forecasts are close enough because we’re going to have to end up adopting one, and it should be detailed enough to have both agree.
“We’re not a public company, but we have the discipline of a public company.”
H: How do you track against your plan? Often times a season ends and you end up being fairly off from where you thought you’d be. How do you avoid those mistakes and manage against what you’re hoping it to be in your forecast?
E: We take systems, reporting and accountability very seriously. We’ve constantly invested in systems here to give us an edge. I think of our company as being a two sided value proposition. Of course, the product, branding and marketing side of the business has to be wonderful or no one’s going to give you a look, but we’ve also invested a lot in our delivery model, being able to ship same day, and in our systems (including NuORDER) giving us clear visibility on a daily basis. It’s real-time. We know where we stand against planning last year, we know all of our margins, we’ve got excellent software, just like NuORDER, in other areas for analytical tools and our e-commerce tools, so it’s something we’re aware of on a daily basis. And, we have a culture of hitting our budget so everybody’s on the same page, looking at the same information, working hard towards our goals.
“We take systems, reporting and accountability very seriously. We’ve constantly invested in systems here to give us an edge.”
H: Really interesting that you’re looking at it daily, we do the same thing here. For all the readers: you can’t just assume that if you’re hands off for a quarter, you’ll be able to all of a sudden pop up and achieve the numbers you hope. So, let’s talk about something that does come up a lot for brands, maybe less for you guys, but clawing back lost dollars due to product cancellations, especially in the contemporary world.
E: First of all, that’s just a symptom and the cause is bigger. And I know it’s a problem especially in the pre-book model. You can’t hit minimums, so you have to cancel, and those that wanted the product won’t get it. Supply chain issues could crop up. Thankfully, we’ve been doing this a long enough time that we’re smarter in the design phase. We’ve made enough mistakes to learn everything you can. I mean we weren’t smart enough to think about this before we made the mistake. That’s where we learned it.
We’ve narrowed our fabric offering so that we do stripes, seasonal colors and prints, but we’re always kind of working within about five to ten fabrications. We have 10+ years working with our key suppliers, so I think the most important thing – and it’s hard for a designer and typically a start up is led by its designer – is to do something you can deliver. Design something that’s possible. We have a line here that we use: “Don’t sell what’s possible, sell what you can deliver.”
By the way, and this is going to be a tough one for smaller brands to realize, you do need to sometimes buy up to the minimum. You do need to take some risk, especially when chase business is very important to your customers right now. Buy-now-wear-now isn’t just a consumer trend, the wholesale customer is doing the same thing and you do need in-season inventory for that.
“Don’t sell what’s possible, sell what you can deliver.”
H: Growth comes from either existing customers or new customers. Give me a sense of how that splices out in your budget forecast. How much do you want to drive with new customers versus existing?
E: New business is expensive. We look at new channels more than new business because there’s a way to reach many new customers if we decide we should enter a new channel. So first and foremost, we really want to be a good partner to our existing accounts and help them grow their business.
Second, we want to see where our product and our brand makes sense. For example, outdoor retail became a new focus for us two years ago. We noticed at the consumer level there may be less spending on clothing and more spending on experiences, and outdoor retail seemed to have a lot more energy, even the apparel space, because younger consumers and millennials were spending more money vacationing or getting outdoors and being active. So, we opened at the Outdoor Retailer trade show last year and we had another booth this year. We’ve had a real strategic effort to grow in that market and a lot of new business has come from it. I don’t think it’s specifically an account by account thing, it’s where can your brand go in opening new channels.
“We look at new channels more than new business because there’s a way to reach many new customers if we decide we should enter a new channel.”
H: Outdoor for us has been a strong growth vertical as well, as is activewear, and I’m sure you’re seeing that as well. For the brands reading: when you say “opening a new channel”, think about how many new yoga stores and activewear stores are opening every single week across the globe. When you say “a new channel” you’re attacking that as a segment with the proper strategy and go-to-market approach that you’ve thought out, rather than “hey, we’re just going to sell to this account and that account.” Is that correct here?
E: Yes, just yelling at a rep that they need to get more new business is not being strategic and it’s not being fair. We look at initiatives corporately and we establish no more than five big ones a year, and it crosses all departments. Entering outdoor retail is not just showing up one day with your booth, it’s doing the prospecting work and being strategic. We send great sample kits to land the appointments at trade shows. Before we even show up, we know with whom we can meet. It’s visiting their stores to see where we could fit in and it’s making sure operationally we’re set up to ship to them. We’re proud to announce that we’ll be in a 129 REI stores starting September, a brand new business.
They actually came to us saying they had plenty of young shoppers in their hard goods – their coolers, bikes, and everything you do outdoor – but their clothing shopper was over 50 years old. They really wanted a cooler, hipper brand to sell more clothing to younger consumers so that’s strategic. We’re a perfect fit for that and that’s an example of entering a new channel with a real plan versus just handing out cards and hoping you get business.
Want more insight from Heath and Evan? Check out next week’s blog post when they discuss how the retail industry is changing, and what that means for brands.