CAREER FASHIONS (A)
In late February of 1987, Cheryl Roche suddenly faced a situation that threatened the very survival of her business. After fourteen months of operating Career Fashions, Cheryl's business partner, Carolyn Knox, had decided to leave the company and pursue other interests. Cheryl wondered how she should deal with losing the only expertise the business had in design and production, which were crucial to the success of Career Fashions.
Company Background
In late 1985, Cheryl Roche had been managing her own used furniture and antique store in Montague, Prince Edward Island. Prior to that she had studied Business at Holland College in Charlottetown. Because the used furniture and antique business is seasonal, Cheryl found herself with a great deal of time on her hands.
As she puts it:
I really had too much free time and found it boring to wait in my store for customers during the off-season. I looked around and decided to study the market for clothing, so I constructed a little survey and administered it myself. When I look at that survey now, I'm amazed at how simplistic it seems to me, but it identifies uniforms as a market and I went with the results.
That wasn't the only reason I decided to start the new business. I wanted to use my skills, and knew the opportunities would be limited if I worked for someone else. Also, I wouldn't have the opportunity to make as much money if I worked for another company, and let's face it, the number of jobs in Montague are limited. But don't get the wrong idea; personal satisfaction was my driving force.
The questionnaire was constructed by Cheryl using information from one of her business courses; it was quite short and very basic. The questionnaire identified the respondents' age and income groups and whether or not they were employed. It then asked about the type of clothing respondents bought and where they purchased it. One question asked if there were any problems with clothing available on the market. Cheryl administered the questionnaire
This case was prepared by Professor Niels A Nielsen, formerly at University of Prince Edward Island now at Mount Allison University for the Atlantic Entrepreneurial Institute as a basis for classroom discussion, and is not meant to illustrate either effective or ineffective management.
Copyright 1990, the Atlantic Entrepreneurial Institute. Reproduction of this case is allowed without permission for educational purposes, but all such reproductions must acknowledge the copyright. This permission does not include publication.
by telephone to women who worked in nursing homes and hospitals. An interesting piece of information Cheryl obtained was that many women who wore uniforms on the job were dissatisfied with the design, comfort, and availability. The same point was made by nurses, waitresses and nursing home workers. Based on that data, Cheryl decided to manufacture and market uniforms for women in the service industries.
Cheryl asked her sister, Carolyn, to join her in the new company. Carolyn had a background in fashion technique design and, therefore, would be a valuable person who could design the clothing and run the production line. Carolyn agreed to join, and the two women, who were very close, formed Career Fashions in December of 1986.
The start up of Career Fashions had proven to be surprisingly easy. The production area was obtained by moving the used furniture and antique business to an upper floor in its former building and using the cleared lower floor for the new company. Sturdy and serviceable second hand equipment was found with little difficulty. Three women were hired from the local area. Since they required training, Career Fashions was eligible for aid from a government program. This program was administered through the Canadian Employment and Immigration Commission (CEIC) and helped keep costs down for Career Fashions by paying part of the new employees' wages for the first year of operation. Career Fashions, which was formed as a partnership, was financed by a combination of personal capital, bank loans and assistance from government programs. By December of 1986, Career Fashions produced its first uniforms.
Right from the start, Cheryl and Carolyn specialised in different areas. Cheryl was the marketer who pushed the product on the road and took orders in the factory. She spent at least one day of every week on the road visiting nursing homes, hotels and other places on Prince Edward Island where uniforms were used. Cheryl would show the Career Fashions lines and take orders. As she said later "It was the personal touch that paid off; the other companies weren't on the Island and didn't use the approach we did." A retail outlet was opened at the factory and proved to be a success. Demand for uniforms increased to such an extent that the sewers couldn't keep up with demand even though Cheryl had visited fewer than half the institutions on Prince Edward Island. Based on her experience, Cheryl estimated yearly uniform demand to be slightly higher than 2,600 uniforms in the province.
Career Fashions was located in Montague, a picturesque town of approximately 2,000 people located on the extreme easterly part of Prince Edward Island. Montague was a twenty minute drive from a ferry which ran to Pictou, Nova Scotia between May and November. Near Pictou was the largest manufacturer of uniforms in the Maritime Provinces. Montague was also approximately ninety minutes by car from a second ferry which ran between Cape Tormentine, New Brunswick and Prince Edward Island. This ferry operated year around. Major population centres were close to both mainland ferry terminals.
Because of Carolyn's training and background, she was in charge of production and design. Most of the designs the company produced were developed by her. Her designs were similar to street wear clothing and were very comfortable. The uniforms were easy to care for and less formal than the more traditional "stiff" uniforms. Carolyn's designs proved to be very popular and were very versatile. With minor modifications, one pattern could produce several designs. The small production facility also proved to be a plus because large runs of one style were not required due to the small size of the average order. Because individual orders could be rapidly accommodated, the small production facility and small order size actually helped Career Fashions be more responsive to their customers. With Carolyn working in production and thus able to supervise the seamstresses, potential problems were kept to a minimum. Quality control was also assured because if a problem arose, Carolyn was on the spot and made the necessary modifications.
Production
When fabric came to the shop it went to the fabric roller where it was cut into the proper shapes and sizes for a particular pattern. The pieces then went to the thread serger for a finished edge. This process is called serging. The next steps involved sewing pockets onto the main pieces, then sewing the side seams, the skirt bottoms and tops together. Collars were then sewn onto the uniforms, and any other required touches added to the garments. Next, the Career Fashions label was placed on the garment, and finally the button holes were made and buttons put on.
The completed uniforms were ironed and then placed in inventory. Cheryl and Carolyn tried to keep uniforms of each size and style in stock as they felt this would allow a short lead time when orders arrived. This proved difficult because the demand for uniforms was so great that production had difficulty keeping up with the orders. Because of the high demand for uniforms, there was no need to expand production to other clothing lines, although that was the original plan.
In April of 1987, the grand opening of the store was held and this was reported in a local paper (Exhibit 1). The partners felt that both the opening and the resultant publicity were a help in establishing Career Fashions. Sales grew as did the number of lines and styles Cheryl and Carolyn offered. This was possible because of the adaptability of the patterns; small changes in design created a different garment and the original pattern easily evolved into several styles. Additional original designs had also been created by Carolyn over the course of the year. The number of designs proved to be a strength as did the small production facility which enabled Career Fashions to have small, individualized production lines.
Both partners worked long hours to make the business a success. That's not to say there weren't problems, however. Cheryl and Carolyn had several minor arguments over production but these were cleared up quickly. As Cheryl later said, "It almost seems that sales and production sometimes work against one another no matter what the intention of the people involved." In December, financial statements were drawn up by a local chartered accountant and showed that Career Fashions had made a profit (Exhibits 2 and 3). In February, Carolyn decided to leave Career Fashions to pursue some of her other interests.
Personal factors may have played a role in Carolyn's decision to leave. While Cheryl was married and lived in the area, Carolyn was single. Cheryl still maintained the furniture and antique store, although it had become less important as Career Fashions developed. As time went on, Cheryl became more committed to the new business on a personal and professional level, while it appeared that Carolyn became less committed.
Cheryl now had to make some important decisions. As she put it, "Should I continue Career Fashions or should I close and go back to antiques? If I do continue, what lines of clothing do I handle? What markets do I serve -- only Prince Edward Island, or the mainland also? How do I handle production and sales by myself? After all, I have no training or background in production. Should I hire a sales person? Or a product manager? How do I develop new clothing styles?"
Questions
1. Outline Cheryl's choices. Summarize the strengths and weaknesses of each.
2. Are there any personal factors that will affect Cheryl's decision? Explain.
3. If you were Cheryl, what would you do? Why?
EXHIBIT 1
YOUNG FASHION BUSINESS GROWS QUICKLY
After only four months in business, Career Fashions of Montague is diversifying.
The company owned and run by Cheryl Roche and Carolyn Knox, which made only uniforms at first, will show off some of their new easy care fashions at a grand opening at the store April 3.
"We've had some unbelievable changes in a short space of time," Cheryl said. "Restaurants, supermarkets, and nursing homes have shown a lot of interest in our uniforms, and we're retailing more casual wear than we expected to for a year at least."
The women's most successful idea for promoting their wares is visiting places where uniforms are worn. They display the different styles available and take orders.
"I was surprised at how co-operative everyone has been in allowing us to come and set up our displays."
"With the wider variety of easy care clothes Career Fashions now has available", Carolyn added, "they look forward to supplying the staff with whatever type workwear they prefer."
"As we developed our retail sales, our variety of street and casual wear kind of went along with it. Many of our uniforms look more like street wear, they don't have that stiff, washed out look," said Carolyn.
Cheryl noted that the company is still mainly into uniforms, selling three to each street wear outfit. Street clothes cost more to make because the designs are more complicated, different materials are preferred and fewer of each kind are made.
Despite the overhead, they agree their prices are competitive with those of larger manufacturers.
"We can offer a wider variety than you can get out of a catalogue," Carolyn stressed, "because we make almost everything individually. We mainly have each seamstress make one outfit at a time, rather than production line style. It gives us a more relaxed atmosphere and better quality control."
The manufacturing end of the business provides jobs for three seamstresses, Janet MacKinnon, Debby Ryan and Gladys Hancock. The company received a subsidy while training them but now carries all of their wages.
The sisters will wing to Montreal April 8 to check cost and
availability of fabrics they hope to bring into their street wear operation.
At the opening April 3, the two intend to display more career and casual fashions than ever, award handcrafts to the first customers, provide refreshments and hold a draw in which the winner will receive her choice of a workwear outfit.
Carolyn is the operations' main creative person, bringing the training she received in UPEI's Home Economics program and a course in fashion technology and design at Holland College, Summerside Centre, to bear in designing the company's outfits.
Cheryl's main responsibility is the business end, putting the skills she developed in Holland College's Business Course and running Cheryl's Used Furniture and Country Collectibles to good use.
The furniture business is still in operation, having been moved upstairs in the same building to accommodate Career Fashions. Cheryl said the building is big enough to hold both businesses with no difficulty.
"They seem to complement each other well," she said. "People often come in to buy furniture and end up buying clothes, or vice versa. This place is a good size, and we'd have to expand our staff a lot before we needed to move to a larger building."
They agreed that the company has had a lot of support, not only from the area where they are located, but the rest of the Island as well.
"There are no other uniform manufacturing operations like ours on the Island," Carolyn said. "We've gotten a lot of inquiries and sales from Charlottetown, like the Queen Elizabeth Hospital," she added.
"It seems a lot of people on the Island would rather buy from us than from a mainland factory. People have been very supportive," Cheryl said.
Source: "Markets Expand", Eastern Graphic, April 7, 1987; Progress '87, pg. 3, Montague, Prince Edward Island.
EXHIBIT 2
Career Fashions
Statement of Income
For the Year Ended December 31, 1987.
1 Includes seamstress’ salaries; provision made for Cheryl and Carolyn.
2 Draws by Cheryl included.
Source: Company files.
EXHIBIT 3
Career Fashions
Balance Sheet
As of December 31, 1987.
Source: Company files.