After direct sourcing out of China for the last 15 years, The Warehouse Group has taken an assertive move to be nearer to what it considers as the two critical sourcing destinations today – India and Bangladesh – with the opening of a sourcing office in New Delhi, and which will serve as the ‘nerve centre’ of sourcing from Southeast Asia. While India sourcing will be more focused on textiles and home wear, apparel will be the key product from Bangladesh. By the end of the year, other manufacturing bases like Vietnam, Indonesia and Cambodia will also be explored for value products.
Just a day after the official opening of the beautifully located office in the Aero City complex on the outskirts of the Indira Gandhi International Airport, Team Apparel Resources caught up with The Warehouse team of Tania Benyon – CEO – Group Sourcing Support & TWL/WSL Merchandise, Nick Tuck – Executive GM – Direct Sourcing and Anika Passi, Country Manager for an interactive one-o-one.
Excerpts from the exhaustive interaction…
AR: What is the strategy behind having an office in India and what are the expectations?
We have been operating out of China since 2004 and we had buyers coming here but not with all that support you get from having your own people on the ground as we relied quite heavily on agents. So, 18 months ago we decided that it was time we had an office here in India, as we knew we would have access to lot of countries who are neighbours of India.
In next 24 months, we plan to shift around 40 per cent of our Apparel/Home business from China to India. A lot of our home business is already here like bedsheets and towels. But we are seeing lot of opportunity in the home decorative area as well. We have got some big targets and are looking for 40 to 50 per cent growth. We will be investing here and in Dhaka and then exploring rest of the region as well. We have right now 15 people in Delhi and 5 in Dhaka; and in 6 months since we started working from India, we have seen a 250 per cent growth from last year. We have been lucky that we have had good support of the business to invest. By the end of FY ’19, we want to do 80 per cent of our private label as directly sourced.
AR: How do you propose to achieve these ambitious targets?
On an international scale, we may be small, but in New Zealand we are very big. We have 92 warehouse stores and 240 outlets, and since the country is small, it takes maximum 30 minutes to reach our retail stores from any destination. Not many retailers can talk of that. We are really a big part of the community because everybody shops at The Warehouse and practically the whole population of our country comes through our doors every month.
So, being able to work with suppliers who can understand and have flexibility around volume is really important. But then the other thing is that our business like everyone else is growing online and that is our opportunity to have more extended range – more than you can put it in a physical retail store. It is unlimited, but the difference is the quantity you will have behind every item, and so we want to explore out of this office where we can have more ranges, test them online, risk them with small quantities and winners will end up in stores with bigger orders.
AR: Do you think the industry is prepared to do this sort of business?
They need to start thinking a little bit more about vendor management and company programmes. Right now, it’s a big departure from simply manufacturing in terms of taking orders and seeing the end as shipment; increasingly they should also be dealing with online retailers because otherwise they would be missing the big segment of the market…, so vendor management and understanding the supply chain will be the big thing going forward. So, someone like us will still do bulk orders because we have got brick and mortar retail stores, but extended ranges and market places are definitely opportunities.
Today many vendors participate with the customers in terms of helping them manage programmes through forecasting and capacity booking. It’s the natural next stage because it’s all about speed to market. And, the thing with online is that it brings super speed to the market; we can’t ignore and need to move quickly. So, next move is managing everything from raw material base to potential vendor management programmes.
AR: What are the factors that are bringing in the change?
Things are moving fast, earlier market was manufacturer-driven, then retail-driven, and now it is consumer-driven. We need to understand them and that’s where supplier needs to understand us. The co-ordination and collaboration will be more integrated now. It is exciting. There is a message in our business; being faster and at the right time. The old fashion of having seasons is really gone. I think there is no season anymore, it’s more like a trend. It changes every week. It started from apparel and now it is in homewear segment – not that fast, but it’s coming. Home and apparel are not two distinct segments anymore.
It’s very easy to have a bestseller and keep doing it. One of the benefits we get coming here and being at the sourced is that you get more inspiration because what we are telling buyers is that you cannot remain same. You need to reinvent yourself and we have to do that in collaboration with the factory. No longer can you buy the product and keep selling it for 5 years. It doesn’t work anymore.
And, more positively vendors too have started thinking about more vertical businesses and having design facilities and so the teams can actually work with retailers to create a new product all the time.
AR: How does Product Development happen at The Warehouse
We started the journey of outsourcing when we opened our office in China and sourced what they offered, but increasingly in the last couple of years, it’s been the implementation of our own design team. So, our design team travels a lot and studies trends to create our own forecast based on what our market wants. We have to consider colours, shapes, sizes, etc. We have to translate those trends to our ranges, so, we are developing ranges basically on a 9-week design cycle. We do the forecasting of main trends twice a year, so we still do a big summer and winter trending programme and then we start to interpret down to our monthly level and check/revisit our forecast on a 3-monthly basis and then develop on a 9-week rolling cycle and that is basically for 2 months at a time, and so we are just rolling it through.
Though, the design process is done in New Zealand, factories can also contribute. The other part is that factory accreditation is a huge enabler to the concept of speed to market; important to design and strategically work together in terms of forecast, capacity bookings and ownership of alliance, so we can change quickly. We want that factories should support the elimination of sample approvals for which collaborations and closer working relationship is a must.
AR: What is the direction of fashion today in New Zealand?
Fashion is changing fast; it cannot be mass fashion. Now the biggest trend coming is individualism, it has to be personalised. As for fashion in New Zealand, it is very casual. We are very relaxed in our dress sense and our colour palette is very dark. There is lot of black, so every season there is black, but the new generation now wants some pop of colour. There are always stripes and of late we have become very big on prints as well.
We are mass market retail, but we do not compromise on standards. We want to make desirable and affordable products. New Zealand is not a wealthy nation and you still need to have an attractive product at affordable price. Things you buy at low cost don’t need to look ugly.
AR: What are the qualities you look for in a vendor?
We see if the vendor is ethical and whether or not they are aligned with our values. If that door doesn’t open, we don’t go there. So, a buyer cannot place an order until we have made that assessment. We have our own code of conducts. What I want is that any customer, who buys a garment in New Zealand, should feel that they have made a good choice – not only on price and quality but also on the ethical point of view. We are proud of being a company in New Zealand that takes care of its community and so that extends to our supply chain and it’s very important for us.
We have been doing CSR for last 20 years; it’s not new for us. The good thing is that factories themselves are now aware of environment and importance of going ethical which will help in making things move faster for us. We want to build relationship with factories. And, if they don’t want to work that way, it is fine; we can then position somewhere else.