Hawkins & Shepherd Turns 5 Years Old | The Mistakes I Made

The critical mass will tell you it takes 3 years before you generate any profit from your online store. With Hawkins & Shepherd we sold on our first day of trading and I'm pleased to say have enjoyed a healthy trajectory. However, it could take another 10-20 years before it reaches a level that I would be happy with.

Today Hawkins & Shepherd celebrates its 5th year in business and in this article I will tell you all about the mistakes I've made and what you need to be mindful of should you be looking to start an e-commerce store. 

 

SINGLE POINT FAILURE

AW17-SS18 has been the most challenging year for me. I've suffered great losses through supply issues.

With Hawkins & Shepherd the shirts are all handmade so it is extremely hard to find a factory that has skilled workers who will deal with the relatively small orders that I'm placing.

We have always used the same supplier for 5 years and there lies a problem. Looking back to my IT Networking days, that would be classed as a 'single point of failure' which needs to be avoided at all costs.

 

HOT-STANDBY

The same applies with fashion/clothing, by having one factory making your goods is bad business. You always need a 2nd option which will take over if one factory experiences issues. In the world of IT we call this a hot-standby. (I know it sounds like a rolodex of page 3 girls' phone numbers that Charlie Sheen would have on his night stand). 

Alternatively, you could place your orders between two factories known as Load Balance. 

 

£10,000 DOWN THE TUBE? 

For around 9 months I had ZERO shirts being made and I thought my investment of around £10,000 in cotton fabric was going to be lost.

I run out of my most popular shirts around the AW17 season which is my biggest profit turner and also SS18 which is wedding season.

It hurt, it hurt bad. Not just on the business but on my confidence in people and my ability to continue to run Hawkins & Shepherd.

Over the last month, I've got all of the shirts made and I've also found a second supplier who are currently making samples for me and are in the state of approval to move forward with either taking over production or sharing it with my current supplier.

 

TURNED THE CORNER

Looking back this lesson has been hard but it has taught me valuable lessons and in the long run made the business more robust. At the same time, we've been working on a complete website redesign to showcase our products and services better.

We've been developing new shirts and searching the world for the best fabric to use in a new premium shirt range...we'll be using Alumo fabrics, renowned throughout Savile Row and the world for being the best (*expensive though!).

We've gone live with our first outdoor advertising campaign in the form of two black taxis fully wrapped and branded with Hawkins & Shepherd promoting our Shirt Subscription Service 'The Collar Club'.

For anyone thinking of getting into clothing and an e-commerce business there are so many challenges and things to overcome but taking advice from someone that has been there done is is crucial.

 

KNOW YOUR MARGINS

In fact, the other week I was discussing this with a friend who wishes to start something up. In short, he was going to make a product for say £25 and sell for £50. This just doesn't work; your margins are way too low.

For someone starting a business who has no experience may think that is good, you are making 100% on everything. Incorrect!

If you cost in every single penny, your profit will actually be a lot lower. For example what about the costs for, start-up, designs, pattern-cutting, warehousing, packaging and depreciation of stock value over time (the latter being the most important). Don't even get me started on wholesale! 

 

BUSINESS 101

I'm starting a new Business series on YouTube which will take you on my journey of creating Hawkins & Shepherd, how I got into blogging and crammed with my tips to be successful. So subscribe below to make sure you don't miss it.

 

Are There Any Stable Jobs in the Retail Sector?

It's really a fascinating time for the high street. I'd hate to call it exciting as many people within the retail sector will be echoing the words of President Whitmore, "EXCITING? People are dying out there. I don't think "exciting" is the word I'd choose to describe it."

Okay so maybe I'm being a little dramatic. But you have to sympathise, not only is the pressure on these positions under immense scrutiny, but living with the insecurity knowing it could be your brand that will consolidate its workforce, or simply go out of business altogether is enough for a few sleepless nights. 

This week in high street news, Shop Direct announced the closure of three of its sites across Greater Manchester leading to nearly 2000 job losses with many of the roles being replaced by automation. Mothercare expecting to announce closure of a 1/3 of its stores and WHSmiths rumoured to be in a spot of bother. 

So what are the current stable jobs out there? Well amidst all the peril and what some industry experts are referring to as 'media scaremongering' some sectors of the retail industry are not only hiring, but showing exponential growth.  

Jane Foley, Head of FX Strategy for Rabobank which is responsible for the G10 currencies, told BBC's Wake up to Money yesterday

'It really depends what sector of retail we're talking about. People want an experience, see their friends, drink coffee etc, but are becoming less bothered about shopping for clothes or shoes.' 

So what jobs should people be looking for right now if they're looking to get into the retail sector? In another interview on the same podcast, James Hick from ManpowerGroup cites, 

"We're seeing significant demand for shop floor specialists, I.E sales assistants that can up-sell you something you don't necessarily want. There is also a huge demand in digital marketing, e-commerce supply chain and of course cyber security is a massive growth area across the retail sector.

What to do if you've just lost your job? 

If you've recently been made redundant from the retail sector you should focus on those transferable skills. Many people are transposing those customer service skills they've acquired in retail to the service industry. In the UK 3 coffee shops are opening every day on average. 

Look for jobs in retail outlets slightly beyond your postcode. Huge outlets like Bluewater in Kent, or Bicester in Oxford boast 97% occupancy rates so their retail metrics and employment stats paint an entirely different picture compared to the high street.

Look to strengthen your knowledge gaps in and attend digital marketing evening courses at the University of Westminster

Stay tuned for more articles like these, as we'll be looking to go into more depth with the state of retail. Next week we'll talk to Anton Welcome e-commerce specialist and editor of Maketh the Man about what brands are getting it right! 

What the Hell is Going on With A Suit That Fits?

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As many of you know by now, one of my competitors* A Suit That Fits has collapsed into liquidation. In a very informative article by James Hurley of The Times, Daniel Warwick, the companies’ director, has blamed a weak retail environment, higher import prices linked with Brexit and an earthquake in Nepal, where its clothes are produced.

The brand was launched in May 2006 and were very transparent with their model of having their production in Nepal, even citing their generous payment methodology of paying it's foundry workers and seamstresses over 50% the average local wage. 

The idea initially being you can get measured by appointment by a local stylist, pick your cloth and styling, and have a suit turned round in 8 weeks. If you needed additional fittings (which of course you would) then that would be dealt with by their own alterations department which would take up to a month. Alternatively, you could measure yourself and order an e-Suit through their website. 

ASTF (A Suit That Fits) ran into trouble into 2013, fell into administration and was sold for a minute sum to a person called Keith Watson who decided to resuscitate the business through crowdfunding promising a ROI of over 9 times the share price. Third parties at the time pointed out to Crowdcube (the equity investment platform) that the directors’ previous insolvency had not been disclosed to prospective investors.

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As well as the article by James Hurley, I thoroughly recommend that you read this blog post by the Equity Crowd Funding Experts who deliver an excoriating assessment on the character of Keith Watson. Almost a crusade of sorts to deliver the man from the shadows into the gallows. 

'Round about 2012 ASTF used the services of an accountant, Keith Watson. Now it turns out that Watson was in the market for a failed company and was the only offer the administration for ASTF received. He paid a few thousand pounds for the business. Keith we will meet again.'

I've reached out to DW Clothing Limited, the trading division of ASTF for a comment but they have not got back to me. They have also failed to update their website and at the time of writing, have not issued a statement on their social media. 

My personal view is that Brexit has become this axiom for companies struggling to justify their lack of sales. Some sources and competitors I know have informed me that Brexit has boosted sales, especially internationally thanks to the weaker pound. Retail is tough but then ASTF was not shackled into any leases, no bricks and mortar so I'm not sure how they managed to hemorrhage so much investor capital. 

They might want to look at how dated and their platform has become. The tutorials offer zero personality and when it comes to augmenting the styling, it's an increasingly frustrating and tedious procedure. Not to mention all of a sudden, that 2-piece suit that you were promised for under £300, has now spiraled into 5, 6 or £700. Which is still not a bad price for a bespoke 2-piece, but all of a sudden you have to question its USP. 

Plenty of thoughts on this, very keen to rant on the podcast that's currently in the making. Stay tuned. I'll leave you with the last review posted by a customer on the services of ASTF found on Trust Pilot

'I ordered two separate set of multiple suits worth well over £3000 and they are refusing to repay me claiming that the company behind the brand is in liquidation, yet offering to complete my order. A task they have failed to accomplish in the last few years. The staff are rude and unhelpful and purposefully misdirect and lie in regards to support queries.'

*I use the word competitor here loosely. I sell ready to wear suits with 100% British Wool fabric for £250 on my e-commerce site Hawkins and Shepherd.

Are Britain's High Streets in Turmoil? New Look Set to Close 60 Stores | What Does the Future Hold for Bricks & Mortar Stores?

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Last week news broke of another high street retailer New Look showing the cracks of a struggling high street as it announced the closure of 60 of its 593 stores. For us Londonites here’s how it affects us. The New Look London stores closing will be:

London - Marble Arch
London - Moorgate/ London Wall
London - Oxford Circus

Charlotte Pearce, retail analyst at GlobalData, agreed: “While the closure of stores will lead to market share loss in the short term, it is a long awaited and necessary move. New Look is now in danger of slipping out of the top 15 UK clothing retailers this year.”

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I don’t want to scaremonger, but I do worry about the future of the high street in our country. Bricks and Mortar are quintessentially a British thing, and as the saying goes, we are a nation of shopkeepers. We’ve already lost Maplin and Toys ‘R’ Us this year, both companies slipping into administration on the same day.

In other news Marks and Spencer’s continue to hemorrhage profits, reporting a 5.3 per cent fall in profit for the six months to the end of September 2017, largely as a result of the cost of pulling out of certain international markets. Basically they tanked in the U.S.

They also haven’t fully recovered from the cost of having to completely remodel their online platform in the early 2000’s. Yes, Gandy and Cheshire have done well with their ranges, but they’re not The Avengers.

If we’re looking at the other heavyweights in that area, shares are sinking in Next, as much as 8% wiped off the company portfolio in October last year. Debenhams had a shocker at Christmas prompting job cuts as their share price plunge wiping almost £70m off the market value of the Debenhams business.

Okay Carl we get it; you got up early and done your research. What do you want a Blue Peter’s Badge or something? How about you tell us what’s going to happen to retail in the next couple of years?

Well, since you asked. The future of the high street will be the continuation of pop-ups that you’re already seeing a lot of. If brands do well they’ll renew their lease, from 6 months to 12 and so on. Brands already doing this well are American Eagle who launched their lingerie off-shoot Aerie in a pop-up. The direct to consumer brands in particular will do well to exploit this. Then the next wave is apps getting into physical space like ThredUp who opened a store in Texas and are looking to roll out more. It’s these apps that have the data, this welter of information that can target the consumer directly. If anyone wants to read up more on that then check out the pioneering trend library WGSN.

The end goal for stores is to make their shopping experience marry their online experience. The stores of the future will use data to personalise the shopping experience. A bit like checking into a hotel where you’ll have all your ‘environment’ settings programmed ahead of your arrival. What kind of beers you’d like in the fridge, how warm you want the room, what sports channels you want to watch, etc. Technology will educate customer-service representatives with profiles on buying behaviour, product preferences and demographic information driving more sales.

Ok that’s it from me today folks, just some sketches, some thoughts. Hope you found it useful. Remember to go easy on the people behind the counter whilst you’re out shopping for bargains. Retail is fragile, the humans involved can be just as fragile and deserve our respect.  

 

Links and Further Reading

Iconic NME Magazine Prints it's Last Edition | What Implications Does This Have on Other Print Publications?

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This week marks an end of an era for yet another print publication. The NME will print its final publication today after a 66 year run, citing rising production costs and a "tough" advertising market. This feels like going back to that snooker club you’d use to frequent when you were 14, when you should have been in Geography class reading the back of your eyelids. Only to find the snooker club is now bordered up.

The truth is NME is going to be ok. More than ok. And now that it’s cut the dead weight of its haemorrhaging print circulation, it might actually start to improve the quality of its content. Although surely the content is reliant on the landscape of the world in which it sits. To quote Tony Parsons in a piece he wrote in GQ three years ago,

“None of this brave new world would matter if there were a generation of bands with good hair and great tunes setting sweaty basements on fire with bass, guitar and drums”.

NME is a monolith of a brand. Online it claims to have more than 13m global unique users per month, including 3m in the UK (data from Comscore and publisher’s own internal analytics). It has some 921,000 followers on Twitter and more than 883,000 likes on Facebook. It claims its social media reach is more than 200m per month (own data).

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There is no way on God’s green earth for any company with that kind of leverage to making a loss digitally. Or is there? I can speak from personal experience that the hidden costs to creating an online magazine can be staggering. You need to factor in editorial creation, content writing, design, software, circulation, marketing, hosting/bandwidth, not to mention the amount of coffee I go through sat at the desk writing these damn thought pieces. 

However, I’m still emotionally involved and divided on this one. Since the news broke there has been an exorbitant amount of gushing praise for a newspaper that also “discovered” an awful lot of trendy-for-five-minutes shite. But as much as I’m a slave to nostalgia, and love the feel of a magazine in my hand, I’m a digital content creator. My bread is buttered on binary toast and that breakfast menu is not going to change anytime soon for me.

So what lies ahead for print magazines?

If you take the NME as a case study. It hit its lowest circulation figures of 15,000 in 2015. Was it a last throw of the dice to turn convert the publication to an ad-funded, free title with a circulation of 300,000 or an investment into building its online platform?

In a release earlier this week Time Inc's UK group managing director Paul Cheal said: "NME is one of the most iconic brands in British media and our move to free print has helped to propel the brand to its biggest ever audience on NME.com. The print reinvention has helped us to attract a range of cover stars that the previous paid-for magazine could only have dreamed of.”

The NME’s digital director Keith Walker has said “Our global digital audience has almost doubled over the past two years.”

A counter argument for this will be the decline of eBook sales in recent years and rise of print sales according to industry bodies. But these are books. And the print industry is really only making money in the children’s fiction genre. In short, we’re not comparing apples with apples here.

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Instead we should be looking at stats like Glamour magazine, UK’s 10th biggest magazine, focusing on a digital-first strategy with a print edition just twice a year instead of monthly.

We should look at the capitulation and print closures such as The Face, I.D, Maxim, Sugar, Nuts, Bliss, Loaded, Zoo, Company and of course FHM.

But for all those worried about the fate of NME, as Lord Flash heart would say, ‘tell the Queen to stop blubbing, I’m not dead, I simply ran out of juice!’

Ironically the free print publication has bolstered the brands immune system, selfless sacrificing its own existence for the greater good; the survival of the digital NME.

 

EXTERNAL SOURCES REFERENCED

Why it's so Hard to Run a Successful Wholesale Clothing Business | SME Business Advice

This weekend just gone I was at the MODA event which is a fashion trade show where clothing brands (menswear, womenswear, footwear, accessories) showcase their new AW18 collections to prospective buyers from independent stores and large department stores. I've been visiting MODA for a couple of years as representative/founder of the brand Hawkins & Shepherd, this visit I was doing a panel discussion on the Dandy Dapper Trend (but thats for another post). Last year I decided to concentrate on building a successful online business rather than a wholesale business model which wasn't as successful as I first thought it might have been for a number of reasons.

Wholesaling is basically where brands such as Hawkins & Shepherd design a collection and sell 'bulk' to retailers at a wholesale price. This wholesale price is negotiable between the brand, agent and buyer but a general rule of thumb would be, for example you sell a shirt for £90 direct to customers, you will have to wholesale it at approx £30-35 (a 2.7 or 3.0 ratio). Therefore to make enough margin to run a profitable wholesale business you'll need to design, build, brand and land the shirt for £15. 

For me the buyers were driving down the price that they offered for your goods, for many reasons but mainly due to rent increases on bricks & mortar stores, risk management and also greed. When a clothing brand offers a wholesale price to retailers it is based on a large order promise. So therefore the brand can take these accumulated large orders and pass it on to their factories to get a preferential rate per piece. Furthermore the brands use the leverage of large orders to get bulk discount on textiles which is the justification to be able to offer the high discounts that a brand gives retailers. However on top of the retailers driving down prices they are also taking less volume of stock, which is a double hit for the brands wholesale margins making it really tough to operate as a small business owner in this wholesale space.

Trade shows such as MODA give an opportunity for brands to get in front of powerful buyers who have the ability to potentially make a brand mainstream and to build a brands value, appearance and popularity. Although these trade shows can be expensive, especially for a start-up SME business. For a smallish 12-15 metre squared pitch you are looking at around £3,000 although I've heard brands being charged up to £6,000. Then there are a number of added extras such as extra lighting, power sockets, decorating your stand, transportation, printed marketing material, cost of sample stock, staff etc. So you can see how to show at a trade show for SME's is difficult financially. 

My first two trade shows with Hawkins & Shepherd were great, the orders came in and on-paper it seemed successful. Although that's where my problems started. The retailers that I dealt with refused to pay for stock up-front or even 50% now 50% on delivery. They would ask for small adjustments on the designs, yet in tiny quantities making it impossible to make any money as a brand. They would demand 'replenishment' of stock where they would order 1, 2 or 5 shirts per week/month depending on sales, yet still demanding the same bulk wholesale rate. They always paid late and on 3 occasions not paid at all leaving me around £4,000 being owed for goods that I have already delivered (and that was 2 years ago!) It is ridiculous and quite soul destroying. Yes you could say, well why did you deliver the goods without payment? But at some stage you need to have faith and trust people. The investment has already been made in terms of making the goods, so you just want to get the product into store as quickly as possible. All of my time was taken up managing these accounts, chasing payments, asking for sales reports and trying to manage a system of replenishment. I think it is clear that for a small business owner, wholesaling is difficult. Everyone will have a different experience, positive or negative, but my goal here is to offer my personal experience so that any new fashion brand thinking about wholesaling can streamline their processes or think about the alternatives before commitment.

There is another option which is selling online e-commerce and digital marketing. This is where I've driven Hawkins & Shepherd towards, focusing on building a digital audience through social media and using trackable digital advertisements such as google ads. Focusing on a pure online model means that your brand can take all of the profit without having the large operating costs of owning a store. It opens up a global marketplace that you can target. At Hawkins & Shepherd we have grown our American sales from 3% in 2015 to 29% in 2017 whilst also growing in Europe and other continents. Operating online you can really lean down your outgoings to a point where you are just spending money of Direct Expenses, Payment Gateway Costs, Accounting and Marketing.

Talking about marketing, traditionally the fashion industry has been led by print press publications being the highlight of how a brand is doing. It was always the goal to be in a major editorial for a large targeted magazine. Well now we have a digital footprint, we have bloggers, influencers and many other ways that can offer a greater return on investment for SME businesses and everything is tracked. Its the same with the wholesale model in fashion. Is this something that potentially will be phased out over time? I think not, but I certainly think more brands will try the lean costs for greater profit and therefore consider whether wholesaling is the way to go. So as marketing moves towards a more digital model of accountability and traceability will we see the wholesale model of brands move towards an singular online presence or online drop-ship model - but thats another discussion!

 

SHOP THE STYLED LOOK IN THIS POST

5 OFFICE WEAR ESSENTIALS

It’s easy to slip into old (and boring) habits with office wear: the same old shirt and tie combos, a worn out jacket, and some drab trousers. Are you guilty? It’s a simple formula that works, but it’s a lot easier to shake up your office wear than you might think. Take a read of my 5 office wear essentials...

The Friday Shirt

It’s a Friday and everyone’s ready to break out of the office and go for a pint, so meet your new favourite dual-purpose shirt. Smart enough to keep a professional aesthetic, but casual enough to go from office to bar by simply taking off your tie and rolling up your sleeves.

Brogues

Brogues should be an essential item for any man, especially within their office wear wardrobe. Their classic style is incredibly versatile: they can be worn with a suit if you work in The City or with casual jeans if you’re a media or tech worker. 

Socks

One of the easiest ways to add a splash of colour or personality to simple office wear attire is with a pair of socks. They’ve fast become a statement piece. Go bold but keep it classy in rich and bright colours.

Tie/Pocket Square

Another way to add some colour and personality to your office wear is with ties and pocket square. But one of my personal preferences is to not match the tie and Pocket Square. Never over coordinate or overdo the pocket square, tie, and socks. Too many bold colours, or using the same colour too often will look like you’re trying too hard and will guarantee a few dodgy looks in the office.

Gym Bag

The final office wear essential has to be the gym bag. Fitness is a major part of most men’s lives and the easiest way to incorporate a good fitness routine is by working out before or after work. Make sure you get a gym bag large enough to comfortably fit in all of your kit, trainers, and protein shake. Avoid looking like a 90’s office reject by opting for a duffle or barrel bag instead.