By Debbie Leon
Top-end fashion and high-quality clothing businesses have always relied on external influences and variables to be innovative. But, when factors outside their control occur daily, how does this impact on the business? Fashionizer, a high-end designer of luxury uniforms explains what these outside influences are and how they manage them to remain profitable and in business. Fashionizer is an award-winning designer and manufacturer of high-quality staff uniforms for luxury hotels, spas and resorts. Founded by Debbie Leon and based in West London, they have been running for 25 years and have an impressive client list worldwide and a comprehensive European supply chain. Fifty per cent of the company’s sales are exported to 40 countries, of which a third are in the EU.
In the wake of September’s London Fashion Week, the BFC’s Positive Fashion initiative has been ringing in our ears. “Positive Fashion” champions the long-term sustainability of the fashion sector by encouraging future business decisions that create positive change. There are three guiding principles - SUSTAINABILITY, EQUALITY & DIVERSITY and CRAFTSMANSHIP & COMMUNITY.
Small and medium-sized enterprises (SME’s) are essential to the fashion industry and the UK economy as a whole, contributing £32.3 billion to the UK GDP and providing 890,000 jobs, the majority of employees are women. Although Fashionizer is a B2B supplier to the hospitality industry, our supply chain imitates that of luxury fashion and our ethics and sustainable agenda reflect the Positive Fashion principles, so we are also suffering the frustrations and challenges of the industry first hand, so why is little heard about the challenges SME’s face?
One hears about large high street giants floundering, but not of the impact of this on the many smaller business in their supply chain. Founded in 1993, Fashionizer has witnessed significant change that we have embraced and so far we have successfully managed to navigate the events happening around us. Technological developments, a London location, business rate rises, crippling rent increases, currency fluctuations and of course the big “B” – Brexit, is a perfect storm that leaves UK’s SMEs like us with a basket of challenges:
Fashion is a collaborative business and requires staff to work together from the same location, so remote working is not a viable option for most of the team. Fashion companies have a physical product and need room to execute their business. The shortage of affordable housing in the capital means rents are high and living costs are constantly increasing. As a result, how do we address the justifiable requests for annual salary increases and remain profitable?
In 2017 Fashionizer was a tenant of one of the capitals largest commercial landlords, who delivered a significant blow: a rent rise of 90% without warning or notice period. Finding an additional £40,000 for rent within a carefully controlled overhead would be a challenge for any of the UK’s 5.7 million SMEs. In response to the rent increase, we had to think smartly and swiftly so we moved to smaller premises and fought the unfair rate increase which resulted in a 25% rebate. Since then Fashionizer has been calling for firmer legislation for SME commercial lease contracts to include statutory notice of rent increases and reasonable break clauses supported by our local chamber of commerce and MP.
Lack of access to working capital from traditional banks has meant that finding working capital is more expensive and complex, coupled with the decreasing value of the sterling after Brexit was announced, we have now seen an increase of oncosts of sales. Finally, the continued uncertainty about what Brexit will involve and how much it will cost, makes any form of business planning and prevention of disaster impossible.
Since the referendum in June 2016, currency fluctuations have become a huge burden and as a business that trades within Europe, the exchange rate has had an impact on our pricing. Due to our high-quality products and excellent customer service it has meant that, so far none of our customers have left us, but we need to be mindful of their tightening budgets. When the credit crunch hit the bank cancelled part of our overdraft. Fortunately, this coincided with the launch of the government-supported Funding Circle which was set up in 2010 to facilitate lending to SMEs. Fashionizer was the first company to benefit from the government investment scheme. The overall burden of tax administration, compliance, national insurance and pension costs have increased over the last five years. To counteract these costs some of our staff work part-time and freelance, and we are compelled to control salaries which we find challenging as we believe that our staff should be rewarded for their hard work and contribution to our success.
Doorman’s Coat
The challenges do not end there, insufficient broadband and constant strikes and tube delays are also having an impact on us. However, advances in digital over the past decade have empowered us to use e-commerce as a global opportunity. We are conscious that this new world of instant gratification means customers expect instant results, innovative communication channels and top-quality online shopping experience, which is tough, but in response to this, we implemented a new integrated company’s websites to ensure a fully responsive, user-friendly experience.
For Fashionizer, we believe that this looming storm could threaten our future, but we are powerless to prevent it. We are finding that these challenges are not internal or known in advance, instead, the day to day running of our business is being jeopardised by the external occurrences and variables brewing outside of our control. However, we have developed coping mechanisms, and work closely as a team to overcome the challenges that come our way and continue to focus on what we are good at – making luxury uniforms that delight our customers and suit their specific needs.
