Putting a strong and organised buying strategy in place is the foundation of any business, but successfully forecasting stock buying can be a complex mission.

Careful planning, a responsive approach and flexibility should all be embedded within your forecasting.

“The best piece of advice I could give is to have a dynamic view of your stock levels,” says Maria Malone, principal lecturer for fashion business at Manchester Metropolitan University. On a day-to-day level she advocates storing the data in a WSSI – Weekly Stock and Sales Intake –spreadsheet, which tracks in detail what has been sold and brought into the business in any given week.

“That WSSI is the most important document in the management, planning and control of any stock,” she says. “You can use it to see the growth or decline [in sales] in any given item. If a product category is on the decline, then you don’t necessarily put money into it.”

Cheryl Penman, co-founder and design director of accessories brand The Foundry, and former Arcadia and River Island buyer, explains that other factors come into play for young businesses: “Demand forecasting is difficult when you are a new business and you have no real historical data to work with. Therefore, it is important to analyse other tangible things such as the profile of your target customer and key events they are likely to attend, the weather, consumer or cultural trends to pinpoint key dates you require stock intake.

“Ensure you link stock buying to accommodate any planned marketing you are doing – such as collaborations on social media – on your working calendar.”

The type of product impacts hugely on strategy – for example, core, basic products need a different approach to more expensive products or more experimental “fashion-led” items. Careful planning and detailed research can alleviate some difficulties.

Malone notes that in-store testing, direct conversations with customers and internet software and online tools – such as stock analysis service Edited – can help inform strategy, and present a picture of what is selling well across the industry in general, which helps to indicate what is a “safer” investment.

Debbie Taylor, former Selfridges buyer, and buying and merchandising tutor at the Fashion Retail Academy, adds that building strong supplier relationships can be beneficial for young businesses working with more expensive, “risky” stock: “Develop a relationship with a supplier so that you can buy small quantities to trial but then repeat your order at short notice,” she says.

“Factories close to home are ideal to build a small business. They will be more expensive but can save future markdowns. Wholesale or agents can also be a useful way to build your business without committing to huge quantities.”

Kate Hamilton, co-founder of content and communications agency Sonder & Tell, says that the key to successfully introducing paid-for marketing revolves around purposeful targeting: “Build out a really clear picture of who you’re already reaching organically in terms of demographics such as age, location, income, but also psychographics: what motivates them? What keeps them up at night? Then set your goal.

“Decide if you want to be reaching more people within that niche or if you want to attract a different type of audience.”

Investing in a marketing or PR specialist can pay dividends for a business.

“It will save you ad spend in the long run, and a young brand will have limited hard audience data, making targeting more challenging,” explains Sam Burgess, founder of Small & Mighty, a content marketing and small business hub for independent retailers.

Burgess notes that investing in strong lifestyle, product and campaign imagery is “essential” when moving into paid-for marketing. This increases the impact of PR, social media and websites. “These should not be overlooked,” she says.

Haeni Kim, founder of womenswear brand Kitri, advises taking an innovative approach to employing PR and marketing professionals when on a tight budget: “A lot of people don’t realise how difficult it is to make sure your brand gets in front of the right people. You could really see a lot of benefit from investing in a PR professional.”

She advocates using freelancers on night shifts, or friends of friends on an ad hoc basis to keep costs down and brand awareness high.

Carefully planned influencer campaigns are also a solid investment, explains Burgess: “Budget should be split in terms of gifting of product and paid-for activity with influencers.

“Influencers still can make or break brands, and young businesses should not overlook the possibility of increasing awareness and subsequently, sales.”

In addition to paid-for work with influencers or investment in Instagram marketing, Louisa Clack, founder and director of PR consultancy Louisa Clack PR stresses the importance of “earned media” [gained through promotional effort rather than payment] – such as organic social media or press coverage – for young businesses.

“For a very young, pre-profit business, marketing probably isn’t where they should spend just yet, as there are so many ways they can use earned media, now more than ever,” she says. “The only cost of PR is hiring the professional. If a business doesn’t want to hire a full-time employee or an agency, there are loads of courses online and on LinkedIn to learn the basics and do it yourself.”

The UK Fashion and Textile Association (UKFT) is the leading UK body offering support both for young manufacturing businesses, and young brands and designers seeking to work with UK-based suppliers.

Alongside general business support, seminars, workshops and guidance on areas such as international exports, the UKFT runs programmes specifically for early stage and small businesses.

Alice Burkitt, consultant at UKFT, says: “We are a business support organisation and welcome manufacturing members into our network where we can help them with all parts of their enterprise. We offer advice on how to access skills and training to grow the team.

“We match-make business through our peer-mentoring programmes. We host a range of seminars each season on topics covering all parts of the business of fashion and textiles. We facilitate networking events throughout the year to bring like businesses together and for those businesses who provide services to others, we help them to promote themselves and find new clients.”

One example of this support is the UKFT Rise project – a networking event for early-stage fashion and textile businesses to connect, share their experiences and access business support.

UKFT website letsmakeithere.org is also a valuable tool for those looking for a manufacturer. Set to relaunch this summer the database of UK suppliers and manufacturers can help connect brands and designers to producers.

Make It British is another organisation worth investigating. Founded by Kate Hills, it has a database of manufacturers on its website where brands who want to produce in the UK can find contacts. It also runs networking events for British-made brands and UK manufacturers.

“The difficult thing when a business starts is that there are so many things to do,” says Judith Tolley, head of the Centre for Fashion Enterprise, who stresses that forward planning is integral when decision making on areas for investment. “They need to put a little bit of order in place to decide what they should be doing, when and what their priorities are. “

Protecting ideas and brand identity is one aspect that she flags as crucial: “If they have an idea or are a tech business, they need to be patenting their idea quite quickly – protecting their intellectual property [IP]. If they aren’t a tech business, they might instead be registering design rights, as well as the name of the business.”

She notes that because of political uncertainties caused by Brexit, businesses should ensure they are registered both in the UK and the European Union, as well as in any other countries they will be doing business in, particularly China.

“China is the place they are most at risk of intellectual infringement – even at graduate stage,” she says.

Tolley advises brands to engage a lawyer as early as possible to ensure they are doing exactly what they should. While not cheap, this could save money in the longer term by avoiding potentially costly errors.

“I would recommend they take legal advice from someone on the ground. It is possible to do it yourself, but you are in much safer hands with a lawyer.” She adds this does not necessarily demand a huge investment. “The landscape has really changed and there are a lot of resources you can tap into to get legal advice for small businesses. A lot of legal companies will offer a free half hour, for example, and all sorts of banks offer advice or run small incubator programmes. Find as much advice as you can for free before you start paying for things.”

Haeni Kim, founder of Kitri, says trademarking the brand name was one of the first things she did when plans for the womenswear brand began to take shape.

“People thought I was crazy to trademark Kitri so early,” she says. “It’s an incredibly expensive investment to make.

“It doesn’t have to be for everything that you think your business will do in the future: lots of businesses grow into owning different categories. For us, it was really important to check off all the fashion categories we wanted to trade in over the first three years.”

Kim also notes that non-disclosure agreements (NDAs) can play a role in protecting IP, and recommends brands embrace the security they provide, “particularly if it is a new idea or a new proposition”: “You will be relying on a lot of people when you bring them on board, whether that’s freelancers, interns or experts. The first thing you should do is get people to sign NDAs. People can be nervous about asking people to sign NDAs but it gives you security and peace of mind.”

Engaging a lawyer to assist in drafting NDAs, as well as other important aspects such as terms and conditions, privacy policy and acceptable use policy is also something Kim says should be a priority for a young business – especially a digital business.

“All of those things are incredibly important for us to safeguard our customers,” she says. “There is a huge element of trust from customers when they give us their money, so we wanted to make sure that was absolutely water tight.”

Growing a team that includes the right experience and expertise is crucial to ensuring successful development. While convincing the appropriately qualified people to take a risk on a nascent business can be a challenge, it is not necessarily a barrier to employing highly skilled staff.

Judith Tolley, head of the Centre for Fashion Enterprise, explains that the best way for brands to bring on board new talent and build a strong team is to ensure they have a clear vision of who they are as a business, and what they can and will offer to new employees.

“The important thing is to have really decided what the culture of the business is,” she says. “What is a new employee coming into? They have to have that written down and decided. It is all about finding out the character and skills of the person, and also being very clear about what you want from them and what you want them to do.”

When Haeni Kim, founder of womenswear brand Kitri began to build her team, which now comprises 17 full-time employees, she created a “brand book” to help communicate Kitri’s identity and mission. “Growing a team is incredibly difficult when you’re starting out,” she says. “Finding the right people to bring on board can be difficult: it could be quite a risky career move for them.

“The best way to communicate the brand to prospective employees is to show them the dream and the vision as concisely as possible. The brand book included anything and everything for Kitri: drawings, price points, competitors, our USP – I would put everything into the brand book. It is something you need to revisit to reflect the business as it grows. ”

In terms of practicalities, Tolley notes that in the modern age, there are numerous ways to attract and approach new team members. In addition to advertising on job sites and LinkedIn, she says many brands now communicate their vacancies via social media platforms such as Instagram.

In addition, Kim advises researching and directly contacting potential candidates: “I asked around for recommendations and reached out directly to people for key positions.

“You can also use recruitment agencies, if budgets allow. They may find candidates that would never even have considered you.”

There is no easy answer solution to the dilemma of deciding what constitutes an appropriate spend on rent. The answer will vary hugely from business to business and will depend on the nature of the business and the location, but also the purpose of the store.

“It’s an impossible decision to say what the ‘correct’ ratio of rent to turnover should be,” says one former retail finance director. “You may need a prime high street location because you’re not a massive name and you can’t rely on people coming to your store – in which case, the rent to turnover will be quite high and seem quite painful.”

He continues: “As you get closer to a ‘destination’ location, rents go up, but so will your turnover. It is a dilemma: do you save on location and risk low footfall or get a prime location that is more expensive?

“If you are in more of a “destination” location, you have to be much more aware of additional, fluctuating costs such as business rates and lease terms. You have to be aware of lease clauses and costs, and should take appropriate legal advice.”

“If you were opening a bridal shop, for the customer it is a once-in-a-lifetime purchase. It’s all about building a reputation to draw people to the store,” explains Maria Malone, principal lecturer for fashion business at Manchester Metropolitan University. “A customer is going to drive to get there.”

In circumstances such as this, investing in a strong location could prove beneficial for sales further down the line. The location itself may act as a selling point for the business and therefore warrant a higher relative spend.

Most companies report their store costs and revenues in their financial results, and reading through the documents can give an insight into differing approaches. Lifestyle retailer Joules has 125 stores in the UK and Ireland and a sophisticated multichannel offer. It reported store revenues of £75.9m for the 52 weeks to 26 May 2019. Store costs, including rent, renovations and other costs associated with running stores totalled £31.6m, representing a ratio of 2.4:1 turnover-to-store costs.

Meanwhile, Ted Baker reported fixed lease payments of £41.5m plus variable lease payments of £2.6m for the year to 26 January 2019 on store revenues of £339.3m, leading to a ratio of 7.7:1 – although this revenue figure includes stores operated by licence partners. Sales per sq ft for the period – excluding ecommerce – were £786.

It is important to note that for both of these figures, the store costs may not only include rent, but are also likely to include costs such as renovations and other bills.

Could there be an opportunity for small businesses to partner with larger ones to help drive sustainability? A recurring problem with small businesses is that they can’t command the volume to leverage the expense of investing in a total sustainability strategy.

 

Collaboration between large and small brands is certainly possible, but one director of sourcing at a large UK retailer says that at the moment it will require small brands to do a significant amount of the leg work, as there is currently no formal way of connecting.

She points out that while there are many different networks that have developed for brands to work together on sustainability, they are often controlled by global chains with the most clout. “They have big voices, so you often need to comply with what they want to do. Plus, many smaller brands wouldn’t be on the radar of these networks to invite in the first place, so you may need to do the legwork to reach out to them.”

The best organisation to join, she says, is the UN Global Compact, because of its broad remit and holistic approach to ethical and sustainable trading. Brands need to become signatories to join, which does involve a cost, but this is based on turnover so will be less for smaller businesses.

Once a brand has done that, it will have access to the UN’s UK working groups which cover a variety of areas, from modern slavery to sustainable sourcing.

Another option is simply to reach out to larger brands whose policies appear admirable, to see if there might be an opportunity to collaborate. Not everyone will be receptive, but, she says, “You don’t know who will be open and who won’t be. But if you don’t ask, you don’t get.”

Finally, she points out that smaller brands often have an advantage over bigger names in that they are more adaptable and can control their own supply chains more easily. “In some cases they can innovate more quickly, they don’t have the legacy or scale. There’s more of an ability to test and learn.”

As a small business we need the flexibility of using designers with different handwriting, which forum is best to use to access these?

Maria Malone, principal lecturer for fashion business at the Manchester Fashion Institute, says trade fairs are often a good place to start when looking for new designers. Plus, she adds, Graduate Fashion Week should be a focus for anyone looking for new talent.

Design competitions can be another good way of accessing talent. Large retailers often run them – for example, H&M’s Design Award highlights new names – as well as industry bodies.

Fashion magazines (including Drapers) also feature young and less well-known designers, making these a good source of information for anyone aiming to form partnerships with designers early in their careers.

Finding individuals who investigate sourcing is likely to depend on an entrepreneur’s personal network, with most well-known consultancies often requiring a big budget approach.

Joel Jeffrey is co-founder and chief executive officer of luxury pyjama brand Desmond & Dempsey, which launched in 2014 and now counts Harvey Nichols, Net-a-Porter, Selfridges and Anthropologie amongst its stockists. He says the process is not a straightforward one, and that research is necessary for a young brand determining what it needs from a supplier.

“The biggest thing I wish we’d known more about before we started the brand is how to find suppliers and more information on the whole process,” he tells Drapers. “Even things as basic as the language and the terms we should be using to speak to suppliers – there are so many acronyms when you get into manufacturing that were foreign to us.

He chose to visit trade shows to find its first suppliers, combing Parisian textile show Premiere Vision for businesses he could learn from.

“We wrote a hitlist and just pounded the aisles to find people who would give us five minutes of their time. One of the best possible decisions we made early on was to work with factories that were close by. Because we were so new to the industry, we wanted to be able to visit the factory regularly to learn. We found a factory in London and the prices were crazy, but we knew we could make the margins work over time. We felt we were never going to have respect from suppliers or negotiate effectively if we weren’t willing to learn and understand every single process that goes into making our pyjamas – why a French seam costs more, details like that.”

Frankie Thorogood started his athleisure brand, TCA, from his bedroom in Hackney in 2012 with just £100 of his own savings. He says brand founders need to focus on finding suppliers who can grow with them, and that a trade fair in China helped him find this.

He says: “We’re fortunate that many of the suppliers we work with today are the same ones we found on our first sourcing trip to a trade fair in China. The best advice I got was to pick suitable suppliers. If you’ve got big aspirations, then you’ll want to go with the biggest suppliers with all the resources who work with power brands. The truth is that as a start-up, you’re too small for those businesses and you won’t get the attention you deserve. Find suppliers who are on the same page as you, who will support you and can grow with you.”

Fast fashion has changed the landscape of major fashion brands over the last 10 years. What do you see as the next major shift in retailing?

Jonathan Reynolds, academic director of the Oxford Institute of Retail Management at Said Business School, University of Oxford, says the demise of fast fashion is “a matter of when, rather than whether.”

Its downfall, however, is likely to be a drawn-out affair. “Even though we may be reaching peak fast fashion – as some consumers start thinking more about sustainability of clothes buying – any slippage still leaves many mainstream consumers happy to benefit from lower prices and disposability.”

For Achim Berg, senior partner and global leader of the apparel, fashion & luxury group at McKinsey, fast fashion is likely to survive, but with different dynamics.

He says: “Automation and data analytics have enabled a new breed of start-up to adopt agile made-to-order production cycles. Mass market players will begin to follow suit, aiming to respond more rapidly to trends and consumer demand. The result is likely to be a rise in just-in-time production, reduced levels of overstock and the rising importance of small-batch production cycles. And the so-called nearshoring can enable extremely shorter delivery times, which allows apparel companies to react to trends more quickly and be more agile in aligning collections.”

Reynolds agrees will be central in determining a brand’s success. “We can already see the democratisation of fashion, as the previous dominance of the fashion houses and retailers is replaced by an enormous expansion in crowdsourced trends and fads. Fortune will favour the most agile and adaptable.”

He adds retailers and brands should “seek to involve customers more closely in design, but their business models are presently slow and ponderous. Leaner, more agile challenger brands will emerge, with smaller production runs catering to more promiscuous consumer segments. Word of mouth from trusted influencers, scarcity and exclusivity will be the order of the day.”

He also warns the effect of the sustainability backlash is likely to increase. “It is instructive to look at other sectors where poor sustainability practices have triggered a backlash and at what has happened in those markets: for example, government intervention, once public disquiet reaches a certain threshold. Retailers should be anticipating similar pressures for change in fashion.”

Berg predicts that this focus on sustainability will herald a new era where ownership becomes less common. “The lifespan of the fashion product is becoming more elastic as pre-owned, refurbished, repair and rental business models continue to evolve.

“The younger generations’ passion for social and environmental causes have reached a critical mass, causing brands to become more fundamentally purpose-driven to attract both consumers and talent. And the trend can become a new threat for fast-fashion retailers as consumers are set to invest in used fashion over new clothes.”