But the biggest innovation was creating a vertically integrated company. No one had done that before. Companies like Sportsgirl have a manufacturing arm but the buyer can pick up items from elsewhere, like China, where they can get it cheaper, he says.
“The fundamental difference was that when I set up the factory, I made it compulsory to buy from our factory, even if it was cheaper somewhere else. The difference is Kookai has a dedicated customer for its manufacturing arm, come rain hail or sunshine. They know they are going to get orders and Sportsgirl didn’t have that.
Cromb says the factory is efficient despite its guaranteed custom. And, it has another advantage.
“What it forced my manufacturing arm to do was to really evolve. The longer we were in business, the more complicated the demands were on our manufacturing. That’s what allowed us… our point of difference, which is a level of craft within the business.”
While other clothing makers might think they are gaining revenue by selling wholesale to other companies, he says making it compulsory to sell only to Kookai minimises risk. “[Not doing this would increase risk] because then your guys say I have 20 orders ahead of you so you have to wait. Then there is no point in investing in your own factory.”
He says as a result of working with raw materials, the people in his factory become craftsmen which gives Kookai that edge. “Once you are working with the raw material, you become more of an artist and when you’re forcing your manufacturing arm to develop new concepts and designs and you’re pushing them as far as the design concepts are going, they develop the skills accordingly.
“Those skills are valuable in the business today. They have had no choice but to evolve that skill level, and today having access to that very flexible and high-end skill level has allowed us to be very competitive, not only in terms of cost but in terms of our ability to produce a more sophisticated garment than some of our competitors. It’s not just that we make our own clothes but it’s the level of skills that resides within [our] workers.”
An example is Kookai’s woollen T-shirts, a hot-selling item.
Australian wool was primarily developed for school uniforms: it was low micron wool with short coarse hair that felt uncomfortable when worn straight on skin. So Cromb developed finer micron wool for T-shirts that didn’t irritate bare skin. Similarly, Kookai has developed nylons that don’t attract heat. “We always look at the specific benefits of each yarn,” he says.
Quick turnaround times are another advantage of Kookai’s model. Buyers work closely with the retail arm, watching closely what items are selling well and what items need to be recalled and replaced, a model similar to that used by Spanish retailer Zara to gain world markets. “We can actually change the ensuring orders by telling the factory,’’ Cromb says. Most retailers have to put orders 10 weeks in advance.
“We make a change within the first week, generally speaking, if we change an order, the maximum will be two weeks in the factory. So within two weeks, we’ll get a change in the product coming through and each week we will adjust accordingly.”
Kookai is focused on its niche. “If you ask a girl what she loves about Kookai and she’ll say the fashion but our core business is our basics. We make sure we don’t lose focus on that core part of our business.
There is absolutely no prospect, he says, of Kookai diversifying its offering to a different age-group or into mens or kids wear for example.
“As tempting as it is to expand the product base and as tempting as it is to expand beyond the 22-year old, we very much stick to our niche and focus on our core customer.”
“I think that’s an unnecessary distraction. You’ve got to become really good at what you do, otherwise there is no place in the market for you and doing children’s wear and doing men’s wear is only going to be a distraction to your core business and once you have those distractions, you lose focus. You lose focus, you lose money.”
With international chains like Zara targeting Australia, the market here will become more crowded. Retailers will have to specialise if they want to survive, he says. “You can’t be good at everything because you’ll never be able to compete with those international players. But what you can do is become very good in your specific space.”
And the same applies for the internet. “We have a product you can’t buy anywhere else because we produce it exclusively for ourselves. We don’t even wholesale it, so to be quite frank with you, we haven’t felt the impact of the internet on us.”
The French brand sells its gear online through the web clothing retailer Asos. Cromb’s business is not involved in that.
However, his company is now going through the process of setting up a web site for online sales which will probably start next year. Kookai Australia and New Zealand is moving online, another reinvention for an empire that started out as a hobby business.
Still, Cromb says the internet is not going to be the answer for everything. “There are certain things that the consumer will be looking for so the retailer will have to turn around and say, ‘What can I provide that the internet can’t? How much smarter can I be than the internet?’
“The internet is just a two dimensional thing, it’s a picture and it’s a price. It can’t provide a service and service is a thing a lot of retailers don’t factor into their business.”
And the other important part, he says, is to stay close to your customers. “They say women shoppers are really fickle but they’re really not. Once they find a good supply for a particular item they will stay with that supplier, provided you stay on your game.”
This article first appeared on Business Spectator.
Andrew Sadauskas is a former journalist at SmartCompany and a former editor of TechCompany.
