By Sally Kay
A global market and increased economic volatility fuel the fire of unrest within all of us. I do believe, however, that the most innovative ideas and creative thought processes emerge during these times of change and transition.
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And the speed of change has created both excitement and apprehension among hosiery industry companies of all sizes, as we endeavor to succeed in this totally new business environment.
THA Chairman Fritz Schulte selected “Unity Amidst Diversity” as his theme for the 2004-2005 year, because we have a broader scope of company interests that we try to accommodate. Schulte believes that despite our members’ differences in business philosophies, The Hosiery Association (THA) provides enormous value and benefits to the hosiery industry by offering information and other resources to assist everybody in making effective business decisions.
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He firmly believes that it is critical to enhance and generate networking and communications vehicles now more than ever. THA offers the framework and environment to support, build and enhance the movement towards unity among its members, but also is challenged to create and support special interest groups to better serve its members’ special interests.
All one has to do is turn on the television, listen to the radio, log onto the Internet or read the paper to realize the hosiery industry is no stranger to the proliferation of trade agreements that are transpiring within today’s politically charged environment. Hosiery has been traditionally more insulated than other segments within the U.S. textile business as it relates to the global business arena.
The Multi-Fiber Agreement (MFA) established quotas for the US, Europe and Canada in 1974. This mechanism guaranteed access for developing countries, but set quantitative restrictions, called quotas.
Before 1995, there were preference programs established with Israel; and then there were agreements negotiated with Canada and Mexico, more commonly known as NAFTA.
The World Trade Organization (WTO) was established in 1995 and included the Agreement on Textiles and Clothing (ATC), which required elimination of quotas in four phases: January 1 of 1995, 1998, 2002 and, ultimately, 2005 — which is the year of quota phaseout. The Caribbean Basin Initiative offers an opportunity for other neighboring countries to receive these types of preferences, and the trends have become more evident in the Western Hemisphere.
The onset of free trade and 807 special access provisions included ADTPEA and CAFTA. The distinguishing characteristic for the Western Hemisphere was the linkage to raw materials and yarns/fabrics.
The African Growth and Opportunity Act (AGOA) continues to create new paths and venues of conducting business.
China has captured the world’s attention recently — and rightly so. Since 2002, 29 categories were quota free and the average price decreased 44 percent. The base mix of products manufactured has shifted toward one that is more commodities driven. For instance, China owns a 95 percent share of Christmas decorations and toys; 82 percent share of rubber footwear and 95 percent share in bicycles.
There is a legal mechanism, referred to as a safeguard action, within the WTO agreement that can restrict China’s growth to 7.5 percent per year per category and is available through 2008. Some safeguard actions have been successfully implemented while others have not.
Customer driven
Tom Travis of the Sandler Travis Law firm said during a recent seminar, “There is no perfect answer and there are multiple answers for companies. Nothing is forever and things are not always as they seem.”
Subsequently, there will be a period of time for transition and companies across the world will be continuously analyzing strategies and addressing tactical issues. Even though their decisions may scatter among where they access the best raw materials and make the best products, they ultimately have one goal in mind — reaching the consumer.
“Consumers have served as the foundational mainstay for our economy during the past three years,” Marshal Cohen of NPD Fashionworld said recently, “yet they are now more diverse, distracted and difficult to reach.” Most agree that consumer education is of the utmost importance, in other words, knowing marketing techniques that enable the products to tell their stories based on targeted buyer demographics, including age, race and gender.
And, as if that were not change enough, the industry’s customer base here at home is also changing rapidly. Cohen asserted the fact that the consumer has changed more in the past eight months than in the past eight years.
They are in pursuit of products that are not only fashionable but also functional. Solution-based items are driving the retail sales. What will make them look firmer, run faster, feel better and keep them in style with the latest fashion trends? Not only do consumers have different expectations, they increasingly seek value, and are willing to shop across categories (i.e., department stores, chains, mass merchants) to find it.
Additionally, apparel, including hosiery, now competes with entertainment, electronic products and home furnishings for consumer spending. Today’s consumers assimilate lifestyle brands with value. Private-label programs should not be limited to promotional sales tactics.
Successful companies are those that create fashion items more quickly and do not remain complacent by simply garnering volume. Captivate the consumer ... learn what he/she wants, needs. Differentiate your products and invest in the future. Understand and manage value pricing.
Marketing of any product is key in today’s over-crowded advertising landscape. The average American is bombarded with more than 3,000 advertising messages daily.
“That is why it is vital for any industry to forge a powerful means of communicating its message to the consumer population,” said David Wolfe, creative director for the Doneger Group. “The hosiery/legwear industry faces a special challenge because it exists in two parallel, but different worlds; necessity and fashion. Each of those worlds demands different marketing approaches.
“To communicate with the fashion consumer, it is important to speak the ever-changing language of fashion and purpose,” he added. “We must focus on demonstrating how hosiery/legwear can reflect those trends, thus encouraging the fashion consumer to buy.”
I had the opportunity to speak with Patricia Marchand, legwear buyer of Wal-Mart, and greatly benefited from a candidly engaging discussion on what we, as an industry, can do to take a more proactive approach in simplifying the hosiery shopping experience for the consumer.
“We try hard to have product the consumer wants,” Marchand said. “Therefore, it is important that we work closely with our manufacturing partners to accomplish that goal. Our sock departments currently offer a structured and organized schematic; however, creating a consistent message in our sheer hosiery areas has become incredibly confusing.
“When the consumer is shopping for hosiery, typically she needs to make a quick decision,” she added. “She has in front of her a large assortment and can’t decide which brand or product type because products that may have similar benefits are perceived as being completely different. I believe it is important to keep in front of us the fact that we have a captive audience when the consumer enters the hosiery department. If she becomes too overwhelmed, the chances of losing her increase significantly.”
Marchand said she is encouraged by the fact that the hosiery industry is creating more of a fashionable allure to the sheer category, but she believes it is equally as important to demonstrate to the consumer how to wear these products.
“We need to make the process easy, efficient and the choices clearly visible,” she added.
If point-of-sale materials are effectively displayed, the messages should be clear and concise. Even though the level of sales associate assistance varies among retailing outlets, those individuals should be generally knowledgeable about the products they are selling. It is critical that the industry work closely with the retail merchandisers in maintaining an ongoing dialogue of what is working and what is not.
Understanding change
Many leaders within our industry agree that legwear has made a concerted effort to distinguish itself from other sectors of the waning textile business by taking a proactive stance in investing in the knowledge, raw materials, equipment and facilities required to constantly develop new, solution-based products and train its work force to effectively and efficiently manage and operate the most technologically sophisticated equipment available.
Our industry has become more open to try new and sometimes unconventional ways, to improve in all aspects of business.
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(L-R) Bill Redding of Acme-McCrary, John Freeze of Commonwealth Hosiery Mills and Kevin Toomey of Kayser-Roth Corporation all say their companies have adapted to change to remain competitive. |
“I owe much of our company’s success to the grace of God,” said John Freeze, president and CEO of Commonwealth Hosiery Mills. “Aside from that, I believe we have a great group of employees who have a good understanding that change is occurring.”
The 1970s was an era where production was the company’s main focus. The 1980s and 1990s embraced a philosophy of supervisors focusing on the production and efficient flow of goods.
Freeze emphasized the point now is that there are four factors that Commonwealth refers to on a continuing basis: 1) being passionate about the business; 2) focusing on what the company is really good at; 3) facing the brutal facts; and 4) maintaining an economic engine that allows and matches with the first three.
“For example,” Freeze said, “profits are what enable us to be successful in our business; therefore, if it doesn’t fit into these parameters, and the economic engine doesn’t support it, we really need to be careful.”
Kevin Toomey, president and CEO of Kayser-Roth/Golden Lady, has also experienced considerable change and said he believes that innovation is the cornerstone of Kayser-Roth.
“New products constitute 25 percent to 50 percent of the business every two years,” he said. “Design is the driving force and is likely to get tougher.” Toomey emphasized the fact that he has seen more change in 2004 than he has in the past 25 years. It all starts with the product and the ability to differentiate the product.
The company’s brand Hue® has become its innovation machine. Its goal now is to create a similar structure to the No Nonsense® brand. Toomey added that they have taken new products from research and development and introduced them through retail in less than a 12-month time frame, which at one time was completely unheard of.
“It’s all about basics,” said Bill Redding, managing a 43-year-old career at Acme-McCrary Corporation. “Taking the time to find the right people for the right job has proven successful for the company. We don’t just fill a job if we have an opening,” he added. “The company’s management team is representative of the industry as well as diverse with experience from other industries. Our people must have a passion, be self disciplined and understand what’s important.”
With people who are empowered, Acme has been able to grow its sales by making significant changes. They have purchased five hosiery companies and created one new company.
“We are eager to work with retailers that are winners and believe by partnering with them more closely, it can have a positive impact for both,” he said.
Marketing dynamics, though, are what Redding believes has transformed most significantly for his organization. He refers to it as evolving into a marketing company with a manufacturing capacity. With manufacturing in North Carolina, expertise in getting product to the retailer and being successful at that is one of Acme most important strengths.
He noted that it is important to understand the consumer and know what makes her tick. “You need to know more about the ultimate consumer about your particular product than the retailer does,” Redding said.
Rekindling hope’s flame
Let me close with where I began: We all realize that the only constant in our lives is change. It is human nature to initially think, “well, if I work that much harder and do what I know how to do the best that I can, I will endure these waves of change.” Unfortunately, that mentality is no longer a viable option.
Sad but true, those who believe our world will be free from war, terror, economic uncertainty, hunger, sickness and natural disasters may be perceived by most to be completely unrealistic. Bad things will continue to occur, and we must accept it.
Our challenge is to rekindle hope’s flame amidst the looming caverns of despair and despondency. We should be mindful of maintaining a balance by responding to our internal drive that enables us to work with others rather than focusing solely on ourselves, our thoughts, and our well being.
By instilling the power of forgiveness and strategic thinking, we have the ability to succeed by working as a collective unit. But by making the time to share our ideas and lending an ear to others to listen, we serve as the beacon of hope for a stronger future.
Sally Kay is president of The Hosiery Association, Charlotte, NC. She can be reached at sally.kay@hosieryassociation.com.
