21 March 2014

VAMFF Fashion Industry Forum 2. Fashion Investment.



The Australian fashion and retail landscape has changed dramatically over the past decade with more brands turning to external investors to ensure ongoing viability or market growth.

Erric Morris from the PAS Group explains that the apparels market is more fragmented than ever and there are less major players in the retail landscape. The Pas Group have grown through either Acquisition or bolt on strategies. The group includes Review, Metalicus and Black Pepper. The PAS group only invest to grow.
Unique market positioning is most important to surviving. What is unique about your designs and brand?

Launa Inman
Former Billabong director, VAMMF board member.
Has had extensive experience in the Australian fashion landscape.

What investors look for is that you can demonstrate a good business plan which is viable for long term growth; this can be up to five years. Return on investments may not be evident in the first few years due to the nature of the fashion industry.

The Investor & brand ideally should have a cultural fit.

When then profits aren't there the love goes out the window, investors need to be clear of the risks. Inman explains it's better to Under promise and Over deliver.
When they find out too late!

In the beginning of the relationship plan small projects, once again comparing investing to marriage, think of a project and outcomes like a date, testing the waters between investor and designer.

When looking for an investor it is necessary to ask key questions like:
What are they're attributes?
Is it just about the coin?
And what skills do they bring to the table and most importantly does the investor they have a say in the business? And to what extent?

When is the right time to look for investors? obviously you need a strong long term plan and be clear on why you are looking for an investor. Are you in trouble or looking to grow the business? Or starting out? Most often in Australia it's struggling fashion business that are looking for a lifeline.

What is the first thing investors look for when coming aboard? They look for the
in -efficiencies , what the cash flow is doing and is their lazy money. The investor trims the fat so to speak.

Aurelio Costarella
In the beginning of his carrier he had sourced his own network of buyers in Western Australia and by 1994 wanting to expand into new territories had opened store in Sydney,
Soon after he took on an investor partner; and then the relationship went sour and he was advised to break the partnership due to major debt. At the time the partner who had a large percentage of the company was able to still design and sell garments under Aurelio's name. It was around 1997 he started designing for Miss Glady Sim Choons, a well known Adelaide standalone retail store in Rundle st Adelaide, when he was struggling, he then made a comeback to the industry.

He now trades in Australia and expending internationally as Aurelio Costarella international. Aurelio now owns his name, designs and license.
Glynis Trail Nash brings up the point Australia designers are ignoring China, on the discussion of Aurelio expanding to overseas markets. There are major risks and long term planning, H&M, Topshop and Zara didn't just appear overnight, they have been in Australia researching the local fashion landscape for years.


In Australia the retail landscape provides limited distribution opportunities compared to overseas markets.
Eric states that investment is looked upon as growth opportunity where as here in Australia you're starting out or in trouble !

Who wears the pants in the relationship the INVESTOR VS designer
Launa asks the question how much you are going to require? And is there any further capital required along the way. The use of K.P.I are needed to constantly evaluate the relationship.
You need to ask What are the expectations on both sides?
Levels of investment- is there a magical ratio ? No

In closing; the Fashion Industry forum on Fashion Investment bought up the similarities of bringing on an investor into your Fashion business as a marriage - A partnership, testing the waters, been clear on a long term plan and if all goes well an outcome that would benefit both parties.

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