Latvian fashion industry gets make-over

Nov 29, 2001
TBT staff

Dubbing the new concept "fast fashion," Baltika is looking to increase profits and decrease quantities of unsold, unwanted stock - the bane of the clothing retail sector.

From next year Baltika will renew all stock in its 52 shops, which span the Baltic states, Poland, Ukraine, Russia and Sweden, every two weeks.

"People want fast fashion, they don't want to wait half a year for the clothes to reach the stores," said Baltika's marketing director Maarika Liivamagi.

If all goes to plan Baltika's designs will make it from the cat walk to customer's hands in two weeks.

Baltika is the first to follow the Spanish trend to locate production and sales in the same region, rather than outsourcing production to cheaper facilities in Asia.

With the system up and running Baltika predicts its clothes, which range from 300 kroons ($17) for a T-shirt to 4,000 kroons for a suit, will fly off the shelves and move it ahead of the regional competition.

The Spanish company Inditex, which has stores in 34 countries and 24 manufacturing plants, originally led the way.

While local production costs may be higher, Baltika is hoping the strategy that shot Inditex ahead of its larger and previously better known rivals - Gap, H and M and Benetton - will work magic for them too.

The idea is that fewer pieces will be produced in a wider variety of designs which will reach stores quicker - meaning Baltika can kill unpopular lines before unwanted clothes pile up.

Most clothing retailers by contrast concentrate so heavily on finding the cheapest place to manufacture that they end up buying fabric in one region, coloring it in another and piece the clothing together in a third, all of which takes precious time.

Advising Baltika is the U.S.-based consulting company Retail Planning Associates, which initiated a similar rethink at such high-profile companies as Calvin Klein, Donna Karan, Adidas and Levi Strauss and Company.

But Estonian companies Klementi and Sangar are not far behind Baltika in the business of working out what customers want.

"We get a lot of direct feedback from our clients that is very important in product development," said Jaan Kallas, chairman of Sangar, which manufactures men's and women's clothes.

In an bid to keep customers interested Tallinna Kaubamaja and the AG chain - the main outlets for Sangar's clothes - are turning stock around faster, he said.

Although Baltika is opening shops every month, it functioned solely as a manufacturing company from 1928 to 1991 when it was privatized and opened its first store in Parnu.

Meanwhile fast fashion isn't the only change in the pipeline at the company.

Three of its current trademarks - CHR, MasCara and Herold - are to be renamed, although the long-standing Baltman label will stay and Respect, Evermen and PlusB products will only be available from the company's eight factory stores.

But despite all the changes Baltika may not see big profit increases anytime soon.

"The company has invested a lot in expansion in the retail chain, so we don't expect any rise in profits, although sales will increase by about 70 million kroons," said Urmas Riiel, analyst at Hansabank Markets.

Last year the clothing manufacturer made a 14 million kroon profit on a 340 million kroon turnover. Exports to seven different markets account for 73 percent of the company's turnover.

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