The first instalment of nzherald's Business Summer series about resilient SMEs.
KEY POINTS:
Getting a business off the ground can be difficult but when fashion is thrown into the mix, it becomes a venture not fit for the faint hearted.
Just ask Bob Nelson, founder of long standing New Zealand-based menswear brand, Satori.
Over the past three decades, the specialised label known for its Italian products had to tweak its model to suit the changing faces of business and fashion in New Zealand and staying afloat has become an achievement in itself, according to the Wellington-born accountant turned designer.
"The highlight has really been making Satori a viable concept in New Zealand," said Mr Nelson, who recently marked the 10-year anniversary of Satori's retail chain.
"It was a long shot. A lot of people wouldn't go there because it was too risky."
For one, men were harder to sell products to than women so this made it doubly hard for Satori, which offers specialised menswear, Mr Nelson said.
"Men aren't suckers for fashion like women are."
"Women will buy it if they love it. Men will only buy it if they can afford it."
Before entering the fashion industry, Mr Nelson was an accountant and he even moved to London to further his career in this field but was "repelled" by the formality of the London scene and later gave it all up.
These days, the avid collector of watches and designer products from the 1950s and 1960s is still passionate as ever about the fashion industry.
So what's been the key to Satori's longevity in New Zealand?
In a nutshell, flexibility.
"If you can anticipate where the roll is going to go or where the punch is going to come from, that's the difference between staying on your feet or being on the canvas."
Satori was a manufacturer and distributor of fashion accessories when it started out in the 1970s, and its clients were small, independent retailers in Australasia.
It was a business model that suited Satori because the import restrictions of the Muldoon era protected local businesses from overseas competition. But the easing of these importation barriers during the 'Rogernomics' period that followed, opened the floodgates to offshore goods, making it harder for many local manufacturers to compete and stay afloat.
Because of this, Satori was forced to shift its emphasis from being a wholesaler to a retailer as well.
Rogernomics " undermined our manufacture base but it also opened up our importation base, so rather than importing finished goods in our traditional wholesale area we decided to go into menswear."
"It opened the way for niche operators like us to bring product that had never come in before."
Increased competition and fragmentation of the market, as a result of the new tariff rules, prompted Satori to alter its supply chain from its traditional independent accounts to larger chains, Mr Nelson says.
"It is better to supply large chains because there's much bigger orders."
"The margins are lower but we get paid on time. These small shops don't pay you for three months."
Today, Satori's retail division makes up about half of the overall business, Mr Nelson says.
But transition for Satori - a term that means heightened sense of awareness - wasn't always smooth sailing.
In years that followed Satori ventured into Australian retail, a move that Mr Nelson described as a "failed" attempt and the "low" in his business career.
As Satori quickly discovered after entering Australia, there wasn't really a market for its line of clothing. Compounding matters over there was the fact Satori didn't have enough money to boost its footprint across the Tasman.
"It's more of a price driven market than here and it tends to follow the American market model of very little room between the top and the bottom" of the menswear market.
And "we should have opened six but we couldn't afford it at the time."
Satori has no intention of re-entering Australian retail any time soon but it is still pushing ahead with expansion at home, says Mr Nelson, who is also eyeing some Asian markets.
One of the main challenges for Mr Nelson's business is the labour market and he blames the incumbent government for its present state.
"Employment relations in this country are lazy."
"At the moment the labour laws have been tilted in favour of employees."
New Zealand's wealth gap is also a concern for Satori, which sells that are near the top end of the market.
"We know good [quality] from bad but our ability to afford is escaping."
"We have to be careful about affordability."
Mr Nelson believes New Zealand's government is helping business sentiment and says an overhaul is due.
"I've been a Labour supporter all my life but I've had enough."
"We need to bring back export subsidies, we need to have a higher awareness of design and added value on products coming out of New Zealand."
Despite the various hurdles, Mr Nelson is pushing ahead with a succession plan for his company which these days generates between $5-$10 million in turnover a year.
"My hope and dream is that the brand survives me."
"My focus is to keep the brand up there, to expand where possible and to hand the reigns over to the next generation."
