BUSINESS WATCH

Adventures in the shade trade

Peter C. Newman July 11 1988
BUSINESS WATCH

Adventures in the shade trade

Peter C. Newman July 11 1988

Adventures in the shade trade

BUSINESS WATCH

Peter C. Newman

Survival, according to Charles Darwin, was meant to be the prerogative of the fittest. In retailing these days, it is often that of the fastest. Flash response to consumers’ fickle tastes can make or break the leader of the pack: flexibility in management decisions, the creative application of modern technology and an unerring sense of where one’s clientele wants to gallop next—that is the winning combination.

The most sophisticated example of the trend is Italy’s huge textile conglomerate The Benetton Group, which dyes to order individual batches of the 43 million garments it produces annually. The hues are determined by sales demand at each of the chain’s 4,500 locations. A turnaround time of just a week from order to shipment means that overhead and unsold inventory—the twin burdens that kill most retailing operations —are minimal.

One of the few Canadian chains that has attempted to simulate the Benetton formula, although on an infinitesimally smaller scale, is a Vancouver-based outfit called Contour Blind & Shade (Canada) Ltd. The company is doubling its volume every year and has expanded at a rate of as many as three new outlets a month. It can furnish and open a new store in 48 hours.

Although Contour suffered a temporary setback during the first quarter of 1988 by not being able to recruit enough experienced staff to keep pace with its swift expansion, the company is now back on its critical path. At first sniff, it hardly seems to be a glamor business, but Canada’s window-covering sales potential is estimated at a surprising $450 million a year. The industry has been especially busy during the recent upswing in housing starts (245,986 in 1987 and an expected 200,750 in 1988).

The blind-and-shade trade has traditionally been dominated by department stores (honest but slow, and hampered by clerks’ minimal expertise) and by the independent retailers (who care about their customers, but who lack the advantage of quantity discounts and who tend to charge higher prices). Injecting a high-turnover, specialized chain into the merchandising vacuum between those alternatives was the merchandising inspiration of 35-year-old John Simmons. A graduate of the University of Western Ontario’s School of Business Administration, Simmons spent five years working for John Deere Ltd. at various Cana-

dian locations before moving to Alberta and Vancouver, where he sold energysaving equipment. “I recognized the window-covering business as a classic specialty retail environment that had been overlooked,” he told me. “It was an absolute parallel to household paints before Color Your World came along. Just about every industry had gone through a similar metamorphosis during the past two decades, but—because selling blinds and curtains isn’t exactly sexy—nobody

thought the trade deserved to be modernized. That meant consumers weren’t getting the best deals.”

Simmons added: “When we decided to open a number of outlets, we had designed what we call ‘a store in a box,’ which is a lie because it’s really three boxes. But we can furnish with prefab shelving and stock an empty shell of a store and have it fully operational within two days. It’s quick, efficient, and means that we can move even into remote locations

with some consistency and economy.” The company, which now has 57 stores with an expected 1988 turnover of $30 million, sells only custom-made products, so that inventory of fabric and Venetian blind samples is kept low. At the moment, there is an equal mix between company-owned and franchise outlets, but Simmons plans eventually to have 85 per cent of the stores operated by individual owners. Contour went public in late 1985, raising nearly $1 million on the Vancouver Stock Exchange. Some private placements followed, and the company now has capitalization of about $5 million, with the founders owning 30 per cent of the stock.

Despite some tempting offers, Contour has resisted applying its formula to other types of merchandise or trying to integrate vertically by manufacturing the window coverings themselves. “We want to be market-driven,” said Simmons, “not in the position of trying to sell what happens to be in our inventory. If we were into manufacturing, our stores would exist for the sole reason of finding a home for our production rather than reacting to the demand of our customers. If people decide that they want to hang chain mail over their windows, we want to be able to move quickly and supply it from the most appropriate source.” Simmons is seriously examining expansion to Australia. He has just returned from Down Under, where he is in the process of setting up a partnership with a junior public company—specifically to import applicable North American franchising ideas. “Both sides came away very excited about future prospects,” he reported, adding that plans are going ahead to establish the first two outlets in Sydney and Melbourne. But the United States is his immediate target: window coverings there are a $5-billion market. He plans to open 250 American stores, has three test outlets already operating in Seattle and says that their number will expand to 11 by the end of this year. Declared Simmons: “We’re going to involve local American entrepreneurs and get them to invest their money and expertise—getting them to teach us about the cultural differences.” He added: “The American market scares some Canadians, but not me. That market is ripe, and we’re the right company to fill the demand.”

John Simmons is well aware that American streets are littered with Canadian retailers who made the wrong assumptions. But he clearly does not intend to be one of them.