Viz-a-Viz chief executive Rinku Loomba is on a mission to shake up independent fashion wholesale - one PartnerShop at a time.
Wholesale has many limitations, in my personal opinion, and there is a better, more collaborative way forward,” asserts Rinku Loomba. The charismatic 44-year-old chief executive of the Rinku Group, parent company of womenswear brand Viz-a-Viz, believes he has devised an alternative strategy that takes the risk out of retailing for independent businesses.
Speaking to Drapers at the company headquarters in Park Royal, northwest London, Loomba describes Viz-a-Viz’s PartnerShop business as a hybrid of forward and short order. Launched in January, the partnership means independent retailers, or PartnerShops, are supplied with 10 fully co-ordinated Viz-a-Viz capsule collections over a 12-month period. The deliveries are phased into five drops per season, which retailers pay for as they sell, with any unsold stock then returned.
Independent retailers commit to a year’s contract, with an opt-out clause after six months allowing them to review the brand’s performance at the end of the spring and autumn seasons.
Aimed at fashionable over-40s women, the collections span coats, jackets, dresses, knitwear, skirts, tops, trousers and tunics. During the debut spring 14 season, Loomba says the Viz-a-Viz team reported some “spectacular results”, especially for a minimal linen jacket (£30 at retail), which achieved an 80% sell-through in eight weeks.
The autumn 14 collection retails from £20 for a basic scoop-neck top to £60 for a herringbone cocoon-wrap coat. There has been a strong reaction to quirkier pieces in the range, which first dropped in July, such as a striped cowl-neck tunic and textured, floral long-sleeved tops.
The cornerstone of the proposal is that the retailer does not have to make any upfront financial commitment. If the garment sells, the retailer pays a commission to Viz-a-Viz,although Loomba declines to confirm the percentage. If garments do not sell, Viz-a-Viz takes the stock away and replaces it with another drop, at no cost to the retailer.
The brand then identifies another store able to sell the returned stock.
Loomba argues that this collaborative approach gives retailers the chance to sell competitively priced branded product, safe in the knowledge it cannot be found cheaper elsewhere.
“With traditional wholesale, brands deliver the garments and move on to next season, while the retailer is left with the stock they committed to six months earlier,” says Loomba of the old model. “If the stock sells at full price, all well and good, but if it doesn’t the retailer takes a big hit on profitability. They probably sell stock at a loss or carry it forward to the next season. All the risk lies with the retailer, not with the brand, which is not a sustainable relationship [in today’s competitive market where consumer spending is constrained].”
Viz-a-Viz says it is committed to long-term relationships with retailers and, as such, promises to work exclusively with one independent in each UK town. Approximately 210 are already signed up to the PartnerShop scheme, many of whom converted from wholesale at the start of the year - stores that do not sign up are taken off the stockist list. Loomba’s target is 300 PartnerShops by autumn 15.
There is a core team of 11 people responsible for designing and marketing the collection, as well as sourcing PartnerShops that would be a good fit. Whereas some are specialists with lower footfall, the PartnerShop scheme works better with regular footfall. The retailer must be able to allocate space for a dedicated display of 150 to 300 garments and have complementary brand adjacencies such as The Masai Clothing Company, Adini, Olsen and Gerry Weber.
“We aim to offer value without compromise, by which we mean our products should not look out of place next to the best mainstream brands, but we should offer significantly better value [in terms of price],” says Loomba.
PartnerShop also requires a commitment from the retailer to merchandise Viz-a-Viz garments in a dedicated area. Larger stores are given branded shopfits, while smaller ones that cannot devote the same space are supplied with hangers, bags and point-of-sale material.
From an ecommerce perspective, PartnerShop also differs from traditional wholesale. Whereas previously a brand might undersell an independent retailer through its own website, Viz-a-Viz operates a nationwide pricing policy across its PartnerShops and its own transactional website.
Early reaction from stores that signed up at the beginning of the year has been positive, with 95% passing the half-year opt-out period and carrying on into autumn 14.
Viz-a-Viz has performed well across the board for Jane Cross, owner of womenswear independent The Old Smithy in Ventnor, Isle of Wight, with customers responding to the lower retail prices in comparison to other brands in store such as Gerry Weber (starting at £35 for a T-shirt) and Seasalt (with waterproof raincoats for £120). For several years, The Old Smithy only stocked the spring collection, before joining the PartnerShop scheme in January.
A stockist for eight years, Claire Strong, owner of womenswear boutique The Copper Tree in Usk, Monmouthshire, reported great sell-through on the PartnerShop garments since launching in spring 14, attracting older customers for the classic range and a younger demographic for edgier styles.
Despite this success, Viz-a-Viz has pulled out of retailers that were not merchandising the collection properly or sending over necessary sales data, although Loomba declines to reveal names. Some stores have also opted out as they were uncomfortable giving up control of their buying strategy, though again he declines to say who.
Drapers spoke to womenswear independents not currently involved in the PartnerShop scheme who, while interested, expressed concern over how much space would need to be devoted to a branded area. Helen Wilson, buyer at Tyrers department store in St Helens, Merseyside, also argued that such models detract from the buyer’s in-depth knowledge of the customer, which is built up over many years.
Loomba concedes the model is not perfect. “With PartnerShop, buyers can’t edit the products we deliver. They are being asked to allocate space to Viz-a-Viz and we provide rolling stock to maximise sales from that area.
“If we get it wrong we know the relationship won’t last, so we are motivated to design the best products to generate maximum sales. The concept definitely takes some adjusting to, but our PartnerShops still order edited ranges from other brands, so it’s just part of the store that is run on this model.”
The counter-argument is that being given product introduces garments buyers might not otherwise have selected. Mary Grogan, buyer and merchandiser at department store John Sanders in Ruislip, northwest London, agrees items she would not normally have bought, such as a blue and white crossover mid-calf dress (£50 retail), unexpectedly performed well.
Participating retailers are asked to give feedback on popular styles via a survey, which feeds directly into the design process. “Before, the information on what was selling did not always reach the brand,” says Loomba. “We designed a collection based on what we’d sold well in previous seasons, which didn’t necessarily mean it sold through well for our stockists. Now we are seeing directly from weekly sales which styles are winners and which are not. As a result, the design process is constantly improving.”
There are four regional managers who regularly visit retailers to gather data, train staff and deal with any problems. This connection on the ground is intended to help retailers engage with the brand.
Brand building is the aim for Loomba, who became chief executive of Rinku Group in 2002. After graduating from the London School of Economics in 1992, he joined the family business first established as a women’s clothing market stall in Widnes, Cheshire, by his parents Lord Rajinder Loomba and Lady Veena Loomba in 1964.
Lord Loomba was made a Liberal Democrat life peer in January 2011. He is also founder of the Loomba Foundation, which promotes the welfare and economic empowerment of disadvantaged widows and their children. Lord Loomba was inspired to establish the charity in 1998 by his own experiences of growing up in India as one of seven children to a mother widowed at the age of 37.
Naming their fashion company after their son, the husband and wife team built a flourishing wholesale business, which in 1981 acquired mature women’s leisure brand Tigi-Wear (now known as Tigi) as a stock house, cash-and-carry operation.
Early on, Rinku Loomba saw the limitations of the stock house model, which meant buying product and selling it in season, as opposed to forward order. “This was not a steady way to build a business, because you buy in lots of stock and you don’t know if you will sell it all. You have no real control over the distribution or ultimate retail price,” he says.
In 1994, the decision was made to introduce Viz-a-Viz as an aspirational forward-order brand for over-40s women. Sold through a nationwide team of agents, the number of independent stockists grew to 500 by 1998.
In the same year, Rinku Group turned Tigi into a concession brand, which now sells through 270 garden centres and independent department stores. Tigi turned over £8.2m in the year to June 30, 2014, up from £7.89m the year before. Viz-a-Viz’s turnover is expected to hit £4m this year, up 40% on 2013.
Being brought up in independent retail gave Loomba a real passion for the sector. He does, however, acknowledge the challenges for businesses in maintaining footfall in the face of competition from etailers, value chains and the endless discounting of high street department stores. The PartnerShop model depends on the fortunes of independent retail, which is a source of concern.
“I believe more independents should embrace opportunities with social media and online. You don’t need to close your doors and set up an online shop, but you should have an online shop to support your bricks-and-mortar business. It has to be a multichannel operation,” he argues.
“Specialisation, supported by technology, is really making a difference. Those stores that do well are the ones who focus on certain brands and market them to their customers using all possible channels.”
For Loomba, the long-term success of independent retail is based on a division of labour between retailer and brand, with each managing the risk and playing to their strengths.