September 13, 1999
Small Business Adviser
Casual attire might be more common in the workplace now than a decade ago, but Lee Allison’s tie company posted its first profit in 1998, its fourth year of operation.
By Barbara B. Buchholz
Dress for Success
More than a decade ago, MBA candidate Lee Allison might have considered it merely an interesting challenge to predict how tie manufacturers would cope with men’s increasingly casual work attire.
Yet, after graduating from Harvard Business School in 1988 and working for five years at Chicago ad agency Leo Burnett Co., Mr. Allison, 39, has found himself facing that very issue.
Four years ago, he founded his Chicago tie company, Lee Allison Co.-just before the advent of casual workdays sent sales of men’s suits, dress shirts and ties into fashion limbo.
Just how did Mr. Allison end up in such a predicament? As an economics major at Williams College in Massachusetts, he had taken art classes and always thought he should have gone on to design school. Once at Burnett, the desire to change be came more acute.
"When I looked ahead of me and saw what the people were doing, it seemed creative but not creative enough, since most decisions were dictated down," he says.
Instead of heeding what he learned at Harvard--to research a field thoroughly before pursuing it--he decided the tie industry offered what he sought. "Ties represented elegant conversation pieces," he says.
He began working as a free-lance copywriter to support his interest, networking with "anyone who would talk to me" and looking for resources. He found silk mills that manufactured quality products at the right price in England, Italy and Switzerland.
Before he knew it, his Old Town apartment was filled with ties. Time to move to bigger quarters, he decided, so he found a 5,000-square-foot Bucktown loft where he could live and work.
Much to his delight, he has found that, to paraphrase Mark Twain, reports of the neckwear industry’s demise have been greatly exaggerated.
According to NPD Group, a market research firm in Port Washington, N.Y., consumers will purchase an estimated 105 million ties this year, at a retail value of $1.6 billion, up slightly from $1.5 billion the previous year. And Mr. Allison’s company expects to post revenues of $500,000 this year, up 43% from last year. He started to see a profit for the first time last year.
Industry trends are just one issue he says he faces. "Lots of people say, ‘Everything goes in cycles.’ But I don’t believe that," he says, "particularly when you look at how people dressed 100 or 200 years ago. I don’t think there’s any way the clock is going to turn back. But I also think men will always wear ties." He just needs to persuade them to buy his. Other challenges include:
Attracting individual shoppers.
Even though dollar volume in the industry keeps increasing, those benefiting the most are upper-end companies such as Paris-based Hermes International S.A. In part, it’s because they have a larger markup (Hermes charges $125 per tie), but their ties also have become status symbols.
In contrast, a Lee Allison tie sells for around $85-still much more than the $30 average, according to Gerald Andersen, president of the New York-based Neckwear Association of America.
A bigger problem for a small player is fashioning an easy-to-identify look. Loyal Allison wearers such as Chicago lawyer Fitz Dunne describe the ties as "whimsical." Many feature multiple images of motifs such as martini glasses, olives, fedoras, flamingos, fly fishing rods and golf club bags. But such symbols and the way Mr. Allison portrays them may not be distinctive enough.
Some of the lack of recognition stems from the fabrics Mr. Allison uses. Though he still designs a majority of his ties, he also buys about 40% of his stock from other mills, since it’s cheaper and less time-consuming. It may not be cheap enough in the long run, though, if he can’t fashion a unique look.
Gaining sales trough newer distribution channels.
Most of his sales come through approximately 150 retail stores such as Barneys. He or his one employee contacts them. They tried using independent reps, but had mixed results because of the company’s small line-85 designs. They make new introductions twice a year.
"We’re last out of the bag. If a buyer has a short attention span, they focus on bigger, better names," Mr. Allison says.
He is working on a new catalog that he says will have a more traditional format than his first one-a large, folded poster that received compliments for its visuals and displayed all his ties, but was unwieldy and served more as a promotional item than a selling piece.
Mr. Allison knows that he also should try to get his ties into more well-known catalogs, buy lists from successful merchandisers and sell more aggressively from his Web site (www.leeallison.com).
Sounding like every other small entrepreneur, he says, “I don’t have the time and don’t have the staff. I’ve had a Web site since a year ago but it’s never been finished.”
But he also knows e-commerce may be his most promising route. “Because ties are a one-size-fits-all purchase, they don’t need to be tried. They’re also light weight for mailing.”
Advertising his product. Despite his previous advertising career, he has spent nothing on ads, mainly because he doesn’t have the money for a large campaign and doesn’t think a small effort would be worth the investment.
However, he also has failed to advertise in fairly inexpensive ways-giving away ties or selling them in bulk to a restaurant chain or hotel to snare attention (though he has sold his ties to two local restaurants for their employees to wear).
“It’s all about having time to promote,” he says.
Extending his line.
In the past, Mr. Allison tinkered with related purchases, such as bow ties, vests, cummerbunds and even a line of home pillows. But he found that the production of such different items was too taxing for a small entrepreneur.
Industry trends seem to confirm his caution. “What always inhibited bow tie sales, in spite of periodic rumblings of a comeback,” Mr. Allison says, “is that few know how to tie them well, and the clip-ons don’t look as chic.”
Managing the business better.
Mr. Allison knows the basics of smart business from graduate school and previous experience, but he has found that putting everything together and making it work is another matter.
“I’ve made dumb moves. I overbought inventory in the beginning, and I went in too deep on the cigar craze and was stuck with fabric,” he says.
To date, the only business plan he’s written was a brief one when he started. Once again, his rationale: not time.
“I chucked a lucrative career to follow a dream, but I’ve never regretted my decision,” he says. “I’m being creative. I just need to create a better infrastructure.”