35 Years of Success - NYGARD Corporate site

Transcription

WWDMilestones
DECEMBER 2002/SECTION II
35
nygard
PHOTO BY DONATO SARDELLA
at
Thirty-five years have passed since the
Saturday morning Peter Nygård went on
an interview at a Winnipeg, Manitoba,
dress firm he would eventually own. He’s
turned it into a state-of-the-art maker of
branded and private label sportswear,
with operations around the globe and
nearly $500 million in revenue.
WWD, WEDNESDAY, DECEMBER 11, 2002
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WWDMILESTONES
inside
6
12
An interview with Peter Nygård on how he
built his corporation over the past 35 years,
his strategies and philosophies.
16
Vcom, short for Visual Communication,
Nygård’s real-time system that tracks
garments from design to delivery,
resembles the arrivals and departures board
at the airport.
A look at ARTS2, the company’s Automatic
Reorder to Sales replenishment program
that links the manufacturing process to all
Nygård stores and major retail accounts.
18
22
A retrospective of fashions from various
lines under the Nygård umbrella.
30
Apparel manufacturers in Canada are
facing big changes in international trade
and are counting on free trade with the
U.S. and Mexico to help maintain their
competitive edge.
42
Peter Nygård knows how to throw a
good party and throughout the years, has
met celebrities from Robert DeNiro and
Sidney Poitier to Cybill Shepherd and Fabio.
With some 1,600 employees at the head
office and two production facilities, Nygård
is one of the largest private-sector
employers in Winnipeg.
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WWDMILESTONES
the nygard philosophy
Continued from page 6
York to knock things off. I didn’t know any of that kind
of stuff,” he said. “This whole industry in Canada was
in Montreal and we were located in a place called
Winnipeg. I was completely out of the loop. I was
there by myself. I had nobody to consult with.”
So, with little profits, one factory and about 100
employees, Nygård looked at his new business, which
was making two-piece wool suits, and realized he
needed to make some changes.
“At that moment, we were making products that
were too old for what [consumers] wanted,” he said,
“not new, fresh stuff.”
He decided to start making casual double-knit
wool suits that came with a jacket, a skirt and a pair
of pants.
“A key issue in the skirts was how long it would
be,” he said, adding that common wisdom held:
“They would not buy the skirt if it was below the
knee. You had to have it at, like, 18 inches. I did my
research, I did my hangtags with questions on them
and I found the most common complaint was that
[consumers] can’t find a long skirt.”
But like many freshly minted executives before
and since, Nygård learned one of the frustrating
truths of the business world — sometimes the establishment won’t listen to contrarian thinking, even if it
is right. Faced with the problem, Nygård saw only
one solution.
“I did a very [gutsy] thing. I did tell the customer,
my retailers, this [skirt] is going to be shipped at 21
inches,” he said. “And I stood there and lied. I
shipped it at 23-1/2 inches. I did it because of the
market research, not because of what the buyers in
the showrooms were trying to tell me.”
But even before the days when retail consolidation gave merchants the power to demand markdown
money, buyers didn’t take kindly to deception.
“They were going to ship it back,” Nygård continued. “They were never going to buy from me again. And
I said, ‘Please, leave it in the stores for two weeks.’”
Nygård’s lie worked out to his advantage.
“They called me back two weeks later and said, ‘You
were right,’” he said. “My product flew out of the stores.”
Having found a niche in the market, Nygård decided he needed to diversify the company’s assortment and production base.
In 1968, he boarded a plane to Japan, to see what
the Asian industry was like. In his memory of the
trip, “I found myself on the back of ox carts going to
the factories.”
On account of the visit, he moved fledgling blouse
and sweater production operations out of the
Winnipeg factory to plants in Hong Kong, Taiwan and
South Korea, and began buying fabric for garments
made in Asia from Japanese suppliers.
Nygård admitted that it took him some time to fit in
with the culture of the Japanese trading companies that
were then the primary gateway to that country’s mills.
“It was cap-in-hand,” he explained. “You were a
good boy and relationships were ever ything.
Connections were everything. The protocol was entirely different. You talked differently — the language was different than New York. It was a polite
language...you negotiated differently. The mannerisms were different, and the dealings were absolute.
“The way it was is you were lucky to be doing business with them,” he said. “It’s not like today, where
they are knocking on the door. You’d have to watch
very carefully.”
It also took him some time to learn how cultures
varied within Asia.
“The Japanese almost spoiled you. They did spoil
you. They were so good and so dependable and so accurate and so honest, and when they said something,
it was absolute,” he continued. “Then, when you
started dealing with some other cultures, it shocked
you. What you had learned to rely on all of a sudden
didn’t become reliable any more.”
Everything was up for grabs, he realized.
“We got hit many times, just by bad production
and bad quality,” he said. “The mistakes in the beginning were serious mistakes, quality-wise.
“The most serious issues were dealing with the
word ‘fit.’ Necks: You’d get 10,000 garments with the
necks that were so tight that they’d make your eyes
bulge when you tried to get it over your head. Those
were total disasters. Then, when you washed it, it
shrunk to the point that you couldn’t get it off the person. You had to make sure you had your own inspec-
Bianca Nygård
Aliå Nygård
tors over there.”
That’s a rule Nygård continues to apply today:
“Every single country where we operate we have our
own office, inspectors and quality control.”
The company, now known as Nygård (it dropped
the word “International” from its name last week and
does not use a corporate suffix), today owns only two
factories, both in Winnipeg. It also has exclusive relationships with most of its foreign suppliers. It requires its key suppliers to dedicate particular factories solely to Nygård production. In return, it invests
in equipment for the factory and provides close management oversight.
The company has five joint-venture factories
around Shanghai, China; three in Indonesia; three in
Sri Lanka, and smaller investments in Taiwan and
Macau. It also has offices in Hong Kong.
Its joint-venture factories tend to average 100,000
square feet in size.
“We have not taken the garment and held it up and
said, ‘Who can offer the lowest price for it?’” Nygård
explained. “We have gone ahead and figured out how
to make that at the lowest price possible in our factories. We’re very much about long-term commitment.”
The company produces about 60 percent of the
garments it sells in Asia, with the balance split evenly between Canada and Mexico.
The initial Jacob facility in Winnipeg has since
closed — the company has closed five Canadian factories in the last five years — but Nygård still employs 650 people in the city. One plant, about 60,000
square feet, employs about 300 and is dedicated to
quick-turn production on two styles of pants. It offers
24-hour fulfillment on orders.
The other facility, about 50,000 square feet with
about 350 workers, serves as a sample factory and
also produces quick-response turnaround on some
fashion goods.
In Mexico, the company operates two joint-venture
factories, in Pueblo and Actopan. Through his
Bahamas-based investment vehicle Emerald Point Inc.,
Nygård has also taken a 6.4 percent stake in Tarrant
Apparel Group, which has operations in Mexico.
After years of growth following the creation of the
NAFTA trade bloc in 1994, Mexico’s exports of textiles and apparel to the U.S. have started to decline,
largely as a result of Chinese competition. China is
giving Mexico a run for its money for the spot of top
supplier of apparel and textiles to the U.S.
For the year ended Sept. 30, imports of those products from Mexico to the U.S. were down 9.5 percent
to $8.49 billion, according to U.S. government trade
data. Over that period, Chinese imports rose 22.6 percent, to $7.97 billion.
Nygård said he believes Mexico will continue to
play an important role in the North American supply
chain, but he acknowledged that the nation’s apparel
industry has some tough years ahead of it‚ particularly 2005, when quotas on textiles and apparel will be
dropped among the 144 World Trade Organization
nations. That will make Mexico’s NAFTA membership less advantageous, though it will continue to
enjoy duty-free status.
“Mexico, as in any other way the USA does business, enjoyed the big bubble that’s customary in the
USA business world anyway. And now the bubble will
burst somewhat,” Nygård said. “Mexico became the
number one supplier to North America in the last
years. That won’t be the case in 2005.”
For a man with significant investments in Mexican
factories, Nygård offered a blunt assessment of
Mexico’s problems as a manufacturing location.
“Mexico’s biggest dilemma is that they are a very
bad source. They are a very poor supplier,” he said.
“They are going through the issues that we went
through with China 25 years ago. When you compare
China production with Mexico, China is absolutely
right on. China is Japan today — when they say they
are going to do it, they do it absolutely right.”
The problem, he contended, is this: “Mexico is
only running, in my opinion, at about 30 percent efficiency right now. They have twice as many people
working on every product. We may have five people
in our cutting room [in Canada] and they have 25
doing the same work. It’s downright silly.”
Still, he insisted that he believes Mexican manufacturers will evolve and compete successfully.
“Mexico is going to do what any country does when
it gets to these serious issues. It’s going to have to
sharpen up. It’s going to sharpen up. It’s going to have a
shakeout, the better people are going to stay,” he said.
“Mexico in the next five years is going to get sharp and
it’s going to increase productivity and it’s going to stay
in there because of its productivity increase. There’s a
lot of great equipment in there, a lot of great potential
and a lot of issues are going to be resolved.”
Expressing a belief common among sourcing executives, Nygård contended that the biggest question in
2005 will be how quickly China’s exports to the U.S.
grow and whether the U.S. takes advantage of the
legal tools at its disposal to limit Chinese exports. As
part of the terms of its entry into the WTO, China
agreed to allow the U.S. and other importing nations
to impose temporary duties or quotas onto its imports to limit market disruption.
Still, Nygård emphasized that it’s important for
manufacturers in all countries to not underestimate
the threat that Chinese manufacturers pose.
“The scariest thing about China is that they’re so
good. That’s the thing,” he said. “Never mind the fact
that they have different policies, but they’re so good.
“The fact is that China could produce enough garments for the world. We don’t need any other countries, so the issue of how China is going to control or
deal with its garment industry is going to be the key
factor. How the USA will temper it themselves is
going to be a key factor. These are going to be issues
Continued on page 23
Congratulations Peter Nygård
35 years
MITSUBISHI RAYON TEXTILE CO, LTD.
MITSUI & CO., LTD.
SECTION II
WWDMILESTONES
Computerized cutting equipment
helps reduce fabric waste.
PHOTOS BY JOHN BARTELINGS
10
sewing it all up
By Brian Dunn
T
he first thing you notice upon entering the
60,000-square-foot Nygård pants manufacturing facility on Notre Dame Avenue
here is that none of the sewers are sitting
down. They’re all on their feet. The second is that the plant looks more like a mini car-assembly line than a regular sewing operation.
It’s all part of the unique modular manufacturing
process called ARTS2 that sets Nygård apart from
the competition.
ARTS2, the company’s Automatic Reorder to
Sales continuous replenishing program, links the
manufacturing process to a network that’s tied to all
Nygård stores and major retail accounts to keep customers fully stocked at all times.
For example, when a store like a Dillard’s sells a
Nygård product, the model, size and color are trans-
mitted to the ARTS2 facility, which automatically reorders fabric and begins manufacturing a replacement that is shipped the same day.
The company is prepared for any contingencies
such as a shipment of fabric that arrives late. Above
the stockroom a sign reads: “Go to stock when the
truck gets hit by a moose,” in reference to a common
“We try to use 100 percent of
the fabric by inputting
information into a computer
which picks out the best
pattern before it gets cut.”
— Ernie Chaves, Nygård
excuse by truck drivers when they arrive late. But
Nygård is prepared with a large inventory of stock.
The way products are made at ARTS2 is also
unique. Computerized spreaders roll the giant bolts
of fabric back and forth along a long table according
to the order size.
“We try to use 100 percent of the fabric by inputting information into a computer which picks out
the best pattern before it gets cut,” said Ernie
Chaves, director of logistics and 26-year company
employee. “It used to take two weeks to cut for a purchase order. The computer does it in seconds.”
The Gerber cutting table is tied into Nygård’s IBM
AS/400, which downloads purchase order information such as the number of units in the order and the
elements required for each garment.
The entire process is designed to eliminate inventory and speed up the manufacturing process, explained
Thank you Peter Nygård
for 35 years of inspiration, vision and leadership.
Without you, we wouldn’t have a thing to wear.
Put a little Sears in your life
NE123G702
© 2002. Sears Canada Inc.
SECTION II
WWDMILESTONES
departure terminal
PHOTOS BY DONATO SARDELLA
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Vcom keeps track of
how long employees
have to get goods out.
By Kristin Young
A
wall of eight monitors resembling an airline arrival and departure board lights up
the entry to Nygård International’s U.S.
distribution center here.
Numbers fly by in hues of red, green, yellow and
blue, with moving figures at the bottom of each
screen resembling a stock ticker tape.
This is Vcom, short for Visual Communication, a
real-time system that tracks garments along each step
in the manufacturing process from design to delivery
at retail distribution cites.
Nygård, the Canadian manufacturing powerhouse
doing some $500 million in sales, about 50 percent of
which is generated in the U.S. market, has just invested an estimated $5 million in this system, fully implemented in three, 100,000-square-foot facilities here
on Aug. 15, with a grand opening gala.
The center was physically renovated at that time
as well. Nygård operates three distribution centers in
Canada, two in Winnipeg, Manitoba, and one in
Vancouver, British Columbia, to be up and running by
Jan. 1. The volume of goods the Gardena distribution
center can ship is staggering — up to 400,000 garments
per week of Nygård’s 11 lines: the bridge-priced Peter
Nygård Signature, the better Nygård Collection,
Nygård Sport, the better-priced Bianca Nygård, the
moderate Tan Jay and Aliå lines and Aliå Sport.
The center also ships Dillard’s private labels
Allison Daley, Preston York, Westbound and
Investments, and services retailers such as Sears,
Roebuck & Co., J.C. Penney Co., Kohl’s Corp., May
Department Stores Co., Belk Department Stores,
Beall’s Department Stores and Elder-Beerman Stores,
as well as numerous specialty stores in the U.S.
Vcom was developed in-house by chairman Peter
Nygård, after a search for a written software program
that would fit his company’s needs proved fruitless.
Nearly seven years ago, he began dreaming of a system
that could essentially act as a technological watchdog,
one that would keep tabs on where goods are, protect
against manufacturing mistakes and help distribution
centers anticipate inventory swells. With a team of 50
computer designers and architects in tow, he accelerated an effort in the last three years and produced Vcom.
For what it is capable of doing, one expects Vcom to
look like a Seventies-style computer room filled with
winding tapes, switches and levers. In fact, its inspiration comes from rather humble, everyday sights.
“I always marveled how well Fedex tracked their
parcels,” Nygård said. “I walk by an airport and see
all those screens, this huge system that tells people
where they should be and at what time. I look at the
stock market ticker tapes, can order a piece of a stock
and see it actually happening before my eyes. That’s
what I wanted. With Vcom, everything we do is at the
speed of thought.”
This is how Vcom works: Highly detailed design
information is entered into the system from designers
in Winnipeg and Los Angeles, then beamed directly to
sewing facilities as far away as China, Indonesia and
SECTION II
WWDMILESTONES
Peter
Nygård
Collection’s
ruffled
blouse
and
pleated
skirt for
spring
2003.
Tan Jay’s
ruffled
blouse
and
cropped
pants.
Bianca
Nygård’s
polyester
and wool
suit.
Belted silk top
and printed
skirt from the
Nygård
Collection.
knowing nygard
W
hen Peter Nygård joined, and subsequently
took over, Nathan Jacobs’ Winnipeg-based
suit company in the late Sixties, he knew next
to nothing about designing clothes; he was a
businessman, after all. But he was up to the challenge: The
company faced bankruptcy and its stodgy styles didn’t
work with the changing fashion landscape of the time.
Fast-forward 35 years, and he’s sitting on top of a $500million Canadian fashion empire.
While Nygård opts for a larger-than-life showmanship in
his personal life, he keeps it simple when it comes to
clothes. “I am not into avant-garde fashion,” he said in a
1993 interview. “I am creating commercial product
catering to businesswomen between the ages of 25 and 45.”
This means well-tailored clothes for every aspect of a
career woman’s hectic life, delivered in seven collections:
Peter Nygård Signature, the bridge line; Bianca Nygård,
the better offering, and the moderate lines Nygård Sport,
Nygård Collection, Tan Jay, Aliå and Aliå Sport.
Recently, Nygård has focused on fabric technology. What
good, he figures, is a beautiful silk dress or suede skirt if it
only takes one mishandled glass of red wine to ruin it? So,
from his sophisticated eveningwear to cozy cotton
streetwear, Nygård’s looks come in stain-resistant, wrinklefree materials. And further pushing the tech card, the
entire design process itself is done via computers.
A peasant
top and
jeans from
Nygård
Sport.
ARCHIVE PHOTOS COURTESY OF NYGARD; SPRING 2003 PHOTOS BY JOHN AQUINO; MODEL: VIVIANE MARTINS/CODE; HAIR AND MAKEUP BY NANCY SPRAGUE/WARREN TRICOMI
16
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WWDMILESTONES
Bianca Nygård
black vest and
pants, fall
2001.
A Tan Jay look
from 1977.
Helena
Christiansen
wears Peter
Nygård
Signature,
fall 1996.
A Nygård Sport
suede jacket,
fall 2001.
knowing nygard
A nautical
look from
Deck Mates, a
division of
Nygård
International,
circa 1985.
Four
sporty
looks
from Tan
Jay, fall
1975.
Beverly Johnson
in fall 2001’s
Peter Nygård
Signature
tuxedo suit.
SECTION II
WWDMILESTONES
PHOTOS BY JOHN BARTELINGS
20
The Tan Jay boutique.
northern outposts
By Brian Dunn
W
innipeg, Manitoba, a city of 600,000 inhabitants, has three major dubious
claims to fame: It is the coldest city in Canada — a bone-chilling -20 F on Dec.
2 — it is the home of singer Burton Cummings of the Guess Who, and it is the
head office of Nygård International, now that the Jets of the National Hockey
League have since left town.
The place was buzzing during the first week of December when one of the three production and development committee meetings held each year was taking place, bringing together
all key personnel throughout the company.
With some 1,600 employees at head office and two production facilities, Nygård is one of the
largest private sector employers in the region. That fact is driven home and around town by the omnipresence of Peter Nygård’s black and white image on the sides of the company’s transport trucks.
The private company launched by Nygård 35 years ago has estimated annual sales approaching $500 million. An important component of that amount is generated through the
company’s 210 dedicated retail outlets in all Canadian provinces except Quebec, which is
about to change. It also has about 1,000 independent Canadian accounts.
“The whole issue of having to translate everything into French and going into a completely different market initially prevented us from opening stores in that province,” said Art
Pemberton, president and chief executive officer of Nygård Co. “But between this spring and
next fall, we plan to open 20 stores in Quebec.”
Pemberton is one of three presidents or divisional heads at Nygård International. He’s primarily responsible for the company’s Canadian retail or dedicated stores. The others are Jim
The Aliå brand is named for one of Nygård’s daughters.
Congratulations to
Mr. Peter Nygård's 35 years
in the Fashion/Technology business
Throughout these years, you have applied your assiduity and
thoughtful direction, based on your extensive experience, to
bring your company to its present significant position.
We wish to express our congratulations and also wish you
further success in your business.
23
about how the report card is, that you owe me a milthat are politically driven and somewhat economical- lion dollars or something. This is a weekly, day-to-day
kind of thing.
ly driven by those two countries.
“With our communication systems, which are so
“Within a formula, the Mexicos of this world and
the Indonesias of this world and even the Canadas of sophisticated now, we are very active ourselves in
this world are going to live. But the formula is going preventing the wrong product from even being in the
to change dramatically. We don’t have any illusions store,” he said. “Never mind this piling it in and sort
about the fact that things are going to be considerably of bluffing that people do, and playing the blame
different.” The potential for Chinese garment exports game after.”
The company’s been selling to U.S. customers for
to disrupt economies around the world has attracted
the attention of the U.S. government. As reported, the the past 20 years, out of offices in New York and Los
State Department is preparing a report assessing Angeles, but for the past five years, it has focused
what effect the 2005 quota phaseout will have on de- more attention on this country, where it sees greater
veloping nations that rely on their apparel exports as growth potential.
As reported, earlier this year the company built a
a key source of foreign exchange.
Still, Nygård said that over the long term, China will 280,000-square-foot distribution center in Gardenia,
face competition, particularly as it continues to privatize Calif., to serve this market.
The firm’s business model in Canada is quite difits industry and allow for more capitalistic practices.
“They can’t keep their costs down forever. China ferent. It sells a large chunk of its wares north of the
will get into the world business community. The fact border through its chain of 200 retail stores that bear
that they joined the WTO, they’re going to start play- the company’s brand names.
But Nygård said that’s not a strategy he plans to
ing the game. They’re expected to play the game in
the same way,” he said. “It will have a way of leveling bring to the U.S.
“We take the retail approach in Canada simply to
itself out. You’ve got other countries. You’ve got India,
you’ve got Pakistan. India’s got 1 billion people. protect our market share. It’s a necessity. When you
That’s quite a few people.”
China’s population is 1.28 billion.
While China’s potential dominance in 2005 is a key issue on
sourcing executives’ minds, for apparel executives on the sales side, a
more immediate problem is department-store hegemony and the tyranny of chargebacks.
As he looks to build the company’s U.S. sales — Nygård wants to
build the firm’s $250 million U.S.
sales to $400 million over the next
few years — the power of the department stores is something with
which his company has to contend.
The firm’s Canadian sales are
also around $250 million. One way
Nygård’s been skirting the chargeback issue has been concentrating
its sales in the U.S. on private label
merchandise, which now represent
about two-thirds of its volume. The
balance is branded goods, including
Peter Nygård signature; Bianca
Nygård, named for his 25-year-old
daughter — the oldest of his seven
children — who works in the company’s public relations area; Alia,
named for his 22-year-old daughter,
who works in the design department; Tan Jay and Nygård
Collection. (He also has four sons,
Kai, 19; Mika, 15; Jassar, 14, and Xar,
2, and another daughter, Scarlet, 6.)
“We’re developing in-house nationThe Nygård family: Father
al brands [for retailers] and trying to
Eli, Peter, sister Liisa,
dominate that business,” Nygård said.
mother Hilkka.
“We probably do about two-thirds private brands and one-third national. It
see the department stores [in Canada], Eaton’s went
was the other way around a few years ago.”
One of the reasons for that focus is to avoid out of business…we’re concerned about our distribution channels,” he said. “We’re really not retail interchargebacks.
“The Canadian retailer-supplier relationship is dif- ested [in the U.S.]. We’re more supply interested.”
Only by significantly growing sales in the U.S. is
ferent,” explained Nygård. “It has not had the kind of
guarantees attached to it. It has been more strategy the company likely to meet one of Nygård’s ambitious
based. Here, you have your gross margin guarantees. goals: “To really now get to the magic number, double
Canada didn’t really have that…in coming to the USA, the size and hit a billion-dollar number.”
He said he believed the company could achieve that
that was a bit of a shocker for us, to deal in those terms.”
To handle that surprise, he continued: “About five in five years, if it can maintain a growth rate of $100 milyears ago, we took the position that we would only lion a year. The company expects to hit that growth rate
give our customers exclusive product. I just couldn’t this year, which will bring its revenues to $500 million.
Last year, sales were flat, which Nygård attributed
see the staying power of the way retail was going, particularly the department stores. The whole issue that to a slowdown in business following the Sept. 11 tereverybody piles on the same product the same way rorist attacks in New York and Washington, D.C.
Nygård, who owns the company, declined to proand then holds the price wars with each other...in the
long run, it didn’t make any sense to me and we didn’t vide specific figures on the company’s profits, but
claimed that margins are in line with those at Liz
buy into it.”
The company’s key retail accounts in the U.S. in- Claiborne Inc. and Jones Apparel Group, two of the
clude Dillard’s Inc., Kohl’s Corp., J.C. Penney Co. and more profitable companies in the industry. That
would suggest Nygård has an annual profit margin of
Belk Inc., according to Nygård.
“We’re working way better up front so we don’t around 10 percent.
Asked whether he had any plans to take the comneed to have that disaster after the fact,” Nygård
said. “We deal with the problems immediately, in real pany public, Nygård said: “We’ve been thinking about
time. That’s the most important thing. We’re dealing it for a long, long time and been ready to do it and
with the issues weekly now. We’re not dealing with it haven’t really had a reason to do it.
“Maybe it’s because we haven’t been in New York,
at the end of the year or in January, where you talk
maybe it’s because we’ve been country boys out in
Canada somewhere and haven’t been influenced differently,” he mused during the interview at the company’s Manhattan showroom. “I wonder what we
would have done had we started here.”
While Nygård toys with the idea of selling a stake in
his company to the public, he doesn’t appear to need to
cash out any time soon. Canadian Business magazine
last year ranked him the 59th-richest person in Canada
and estimated his personal fortune at $490 million, a
figure that Nygård did not contest or confirm.
That ranking put him three places ahead of former
Tommy Hilfiger Corp. co-chairman Lawrence Stroll.
Neither ranking could be independently verified.
Nygård acknowledged he has other “passive” investments in businesses and real estate, which have contributed to his fortune. Among the more obvious symbols of the wealth he embraces is the vintage, opentopped, white Excaliber sportscar he drives, which, according to neighbors in Winnipeg, really stands out
when he’s in town, and Nygård Cay — the peninsula in
the Bahamas that he’s been building for the past 14
years, which he calls home for six months of the year.
The compound, with follies ranging from a shark
pool to a rock-climbing wall, is the site of an annual
New Year’s Eve party he throws for a crowd of about 800
that includes celebrities, industry luminaries and political figures. He’s hosted notables including the former
President Bush and Robert DeNiro at that home.
Nygård also hosts the “Night of 100 Stars” party on
Oscar night, which has attracted the likes of Milton
Berle and Sid Caesar.
His oft-repeated thinking on money goes like this:
“In this world, you have to learn three things. You
have to learn how to make money and I’ve learned
that. You have to learn to keep it, which I’m doing,
and you have to learn how to spend it.”
The peninsula palace, he said, “is the spending part.”
One fellow Winnipeg resident said Nygård’s affinity
for showiness wasn’t always welcome in the quiet central Canadian city. Still, the resident acknowledged that
his decision to keep a high profile and seek the media’s
eye through entertaining celebrities and supporting
charities helped keep the company’s profile high.
The perks and occasional annoyances of wealth
aside, Nygård, like many entrepreneurs, contended
that for him, business is about more than just the numerical goals.
“Even the billion-dollar number is not that much
different to us than when we were $100 million,” he
said. “It’s just the next level. The number itself is not
so magical.”
the nygard philosophy
24
SECTION II
WWDMILESTONES
northern outposts
Art Pemberton
ings,” Pemberton said.
The dedicated store concept started about 25 years
ago when Nygård approached some of the major department stores about putting a store within a store
and was rebuffed.
“But our dedicated stores demonstrate how independents should operate their own businesses in terms
of setting up software accounts,” Pemberton said.
Plus, increased efficiencies translate into lower
prices which are passed on to customers, said
Pemberton.
Nygård stores have been totally paperless for the
past nine years. At the end of each week, records of
the best-selling items go to the distribution centers
and replacements are picked and packed and
shipped out on Mondays and Thursdays.
There is no special trick to merchandising the
stores, according to the division head.
“The presentation is very
simple with the newest
products in the front,” he
said. “We want the fashion
to stand out, not the displays. We put a lot of emphasis on customer service
and client building. For example, we’ll give our best
clients advance notice of
upcoming sales through
mailings, e-mail and even
by phone.”
Nygård stores are heavily
into community service
through fashion shows at senior-citizen homes and sponsorship for breast cancer research. Personal dedication is
also not uncommon.
Pemberton cited the example of one customer who
was interested in a particular item that wasn’t available
in her color or size and the
manager drove to another
company store to find it.
“There are three things a
store has to offer,” he said.
“It has to be presentable to
a customer, it has to offer
customer service and aftersales ser vice or follow
through. Regrettably in
Canada, retail is not seen as
a profession and we’re trying to change that.”
To generate traffic during slow periods, Nygård
outlets will hold in-store
fashion shows where customers model the fashions
or hold one- on- one wardrobe sessions.
“Sometimes we’ll offer
coffee and cookies or open
early for mall walkers or
hold product-knowledge
sessions,” he noted.
Despite a sluggish economy, Pemberton expects
Christmas sales to be 5 to 6
percent ahead of last year.
Until three months ago, the
company was enjoying double-digit growth.
While Nygård is known
for its suitings and coordinates, its print blouse business is being overshadowed
by sweaters, which Pemberton predicts will be even
stronger next year.
Nygård expects to eventually open dedicated stores in
the U.S., but not until Canada
has been fully tapped out
and after the American
wholesale business has
more time to develop.
Pemberton added, “We
are trying to create a balance
between our dedicated stores
and wholesale customer.”
26
SECTION II
WWDMILESTONES
servicing the
customer
O
ver the last 35 years, Peter Nygård has developed
a strong reputation in North American retailing
and established himself as a force in women’s
moderate fashion.
Retailers in Canada and the U.S., many of
which have carried the Nygård brands since their inception,
look to the consistency and focus of the lines to appeal to their
customers. Part of what sets Nygård apart is not only the sophistication of its manufacturing operations, but also the company’s willingness to listen to its accounts and tweak and develop apparel in ways that benefit both parties.
Edward Matier, group vice president of merchandising, apparel and accessories at Sears Canada, said he has worked
with Nygård for nearly 20 years.
“It’s a great company,” Matier said. “I’ve worked with them
as everything from a buyer to a business manager to a vice president. They are a very product-focused and customer-focused
company and quite unique in the industry.
“The key to Nygård is the consistency in that focus since I’ve
known them. They know who their customer is, they are focused on the value of their products and their product is
priced appropriately for their niche in the marketplace.”
One of the benefits of such a long-standing relationship, in
Matier’s view, is the back-and-forth nature of their business
dealings.
“We’ve been able to develop a strategic alliance and have
open conversations about their products,” he said. “It’s a
strong private label company and the product is very differentiated. We also have a very good working relationship with
them up front, preseason.”
Sears Canada carries the misses’ and contemporary lines of
The Bay carries Nygård lines in Canada.
28
WWD SECTION II
WWDMILESTONES
servicing the customer
Nygård under the Tan Jay and Alia labels.
“The Canadian customer knows the brand — it is the
premier moderate women’s brand in Canada,” said
Matier. “It’s moderately priced and the quality of
Nygård is excellence. They spend a lot of time focused
on that and on new pieces that the customer will accept, so that year after year it’s not same old, same old.”
According to Matier, the Nygård company keeps
its eye on the mark by analyzing its competitors, what
they are selling, how they can update their bestsellers and also any additional information they can
glean from the marketplace.
“Peter’s had a vision for the company and he’s been
very good at keeping and modifying that focus when
needed,” Matier said. “Also, the management team has
been on board and consistent with that and they’ve
been in place for a significant number of years. For us
as a retailer, there is great consistency there. They listen to what we say because there are things we insist
on and they will adapt it into the line.”
Another Canadian retailer, The Bay, a division of
Hudson’s Bay Co., has carried Nygård brands for years.
“I’ve personally known Peter Nygård for 30 years,”
said George Heller, president and chief executive officer at Hudson’s Bay Co. “The Bay division of stores
has carried various Nygård brands for as long as I can
remember. They’re a Canadian company and so are
we. We probably carry 90 to 95 percent of his lines.
“He’s done a good job with the brand matrix in
that it sort of covers every piece of the waterfront in
terms of customer segments. We talk about ladies’
wear like it’s one homogenous woman, but there is
lifestyle, price point and fashionability to consider,
and Nygård does a good job with the overall positioning of the Nygård group of brands.”
J.C. Penney Co. is among Nygård’s U.S. customers.
“We talk about ladies’ wear
like it’s one homogenous
woman, but there is lifestyle,
price point and fashionability
to consider.”
— George Heller, Hudson’s Bay Co.
Heller noted that Nygård has always been technologically ahead of the game in terms of manufacturing, inventory levels and product flow. From a fashion standpoint, the firm’s strength lies in careerwear,
according to Heller.
“In sportswear, it’s a good quality product — the
firm manufactures a lot of its own,” he said. “Even if
he sources outside of his own manufacturing, he’s got
really good quality control. You don’t find problems
with his products. It’s almost seamless, whether he
manufactures or outsources the manufacturing. It’s a
consistent product over time.
“The brand is extremely well known in Canada. It
has been around for an awfully long time. He’s developed this sort of stable of brands and, by the way he’s
a character, too,” he continued.
J.C. Penney Co. also carries Nygård products and
counts its high-quality standards, efficiency and
market reads as important components to the company’s strengths.
“Nygård is known throughout the industry as a
very professional, well-run company,” said Ken
Mangone, vice president and divisional merchandise
manager for careerwear and contemporary sportswear at Penney’s, in a statement.
“Peter Nygård and his team set a high standard of
service and back it up with their ability to react quickly to changes in the market and the needs of our customers. They have an efficient replenishment system
that enables them to quickly adjust to sales trends.”
For years you been looking ahead,
now it’s time to take a quick glimpse back.
Congratulations Peter for 35 years in fashion.
HUDSON’S BAY COMPANY (Hbc) FAMILY OF STORES
SECTION II
WWDMILESTONES
canada: nafta’s winner
By Joanna Ramey
A
pparel manufacturers in Canada are facing big changes in their international trade road map and many are counting on free trade with the
U.S. and Mexico to help maintain their competitive edge.
Like in the U.S. and Europe, one of the biggest events facing
Canadian apparel makers will arrive Jan. 1, 2005. That’s when the
World Trade Organization’s 144 members drop their apparel and textile quotas,
which, for more than three decades, have limited the number of low-priced garments poor countries can ship to developed countries.
But Canadian apparel makers, who still domestically produce 40 percent of the garments sold in their country, face a more imminent change: Jan. 1, 2003. That’s when the
Canadian government is scheduled to drop all quotas, as well as duties, on garment imports from 48 of the poorest nations, known as lesser developed countries or LDCs.
“We are already watching a steady decline in the prices Canadian retailers will
pay [for garments],” said David Howell, vice president of NPD Apparel Tracking,
based in Toronto.
As the domestic Canadian market shrinks in the face of increased low-cost import competition, domestic manufacturers — there are 2,000 employing 100,000
workers — are expected to join in and increase their imports to maintain business
with profit-hungry retailers, Howell said.
“We’re also seeing an increase in interest among Canadian manufacturers to sell
in the U.S., particularly with the lack of strength with our [Canadian] dollar,” he said.
The U.S. is already Canada’s largest apparel export market, established since
the inception eight years ago of NAFTA. Almost half of Canadian-made apparel is
exported to the U.S., the country’s principal export market.
“NAFTA was hugely important for the Canadian apparel industry,” said Bob
Kirke, executive director of the Canadian Apparel Federation. “As we’ve lost domestic share, we’ve picked it up in the States. Truly, our industry is a North American industry. Some of our members sell 90 percent in the States. Some don’t do anything.”
U.S. retailers and specialty stores comprise 70 percent of business for jeans and
cotton-trouser producer Western Glove Works Ltd., one of Canada’s leading apparel makers, according to Bob Silver, president. Canada’s share of Silver’s business
Vancouver is one of the key ports
from which imports arrive.
“NAFTA opened our eyes to the world and
we can’t close them again.”
— Bob Silver, Western Glove Works Ltd.
Congratulations to
Mr. Peter Nygård
on
the 35th Anniversary
of your company
PHOTOS BY GUNTER MARX PHOTOGRAPHY AND MICHAEL S. YAMASHITA/CORBIS
30
32
SECTION II
WWDMILESTONES
canada: nafta’s winner
is about 25 percent. About 5 percent is shared between Europe and Japan, with
much of the rest attributed to Internet sales.
“We could certainly grow in the United States and we do see growth in other
parts of the world,” said Silver, whose Silver label jeans and private label jeans can
be found in U.S. specialty stores and department stores like Nordstrom and Macy’s.
Without NAFTA-generated sales — there are no duties charged on garments
when North American textiles are used — Western Glove would likely be much
smaller or out of business, Silver said.
“NAFTA opened our eyes to the world and we can’t close them again,” said
Silver, whose firm imports 40 percent of its fabric from the U.S., the largest foreign supplier of textiles to Canada.
Silver’s company also has planted roots in the U.S., as owner of Los Angeles
swimsuit-maker Beach Patrol.
About 50 percent of Western Glove’s jean and trouser production still occurs
in its Winnipeg headquarters, employing 1,000. The balance is produced by contractors in Mexico, China, Guatemala and Macau. Under the evolving trade landscape giving third-world countries more access to Canada’s market, foreign contractors will get more of Silver’s business, but how much remains to be seen.
“We try and maximize the use of our domestic facilities by producing quickly
with incredible quality,” said Silver, noting that his company’s strength is its specialty products like its Silver brand jeans. “We are not in the long run going to be
a supplier of commodity-type products.”
At Nygård, also based in Winnipeg, NAFTA has been key to increasing sales of
its own lines, along with private label business. Canada, followed by the U.S., are
Nygård’s main markets, with a smattering of sales in Europe. The company is targeting the U.S. to increase sales.
“Canadian sales have been good, but we can’t expect the kind of growth we’ve
seen in the U.S.,” said Pat Chapdelaine, the firm’s vice president of operations
and technical design.
The company began selling to the U.S. in earnest four years ago as part of its
push to cultivate new generations of consumers as its Canadian customer base
grows older, Chapdelaine said.
Nygård has over 500 design and production workers in Canada. About 30 percent of its apparel is produced in Canada or Mexico, using fabric from either
country or the U.S., she said.
Textiles from the Far East are also used in Canadian- or Mexican-made
Nygård apparel when they’re given duty and quota-free treatment as part of special NAFTA exceptions or Tariff Preference Levels.
Nygård hopes to boost production in Mexico, using Mexican fabric, and is
The Roberts Bank
superport on the
Strait of Georgia
in Vancouver.
working with factories to be so-called “full-package” suppliers of garments.
Chapdelaine said she’s also studying the Canadian government’s LDC apparel
and textile duty-dropping plan to see where other sourcing operations may loom.
As for Nygård’s domestic production, Chapdelaine said maintaining its small
Canadian manufacturing presence will remain key.
“It’s for replenishment, fast turnaround, test orders, a new product,” she said.
Not all Canadian apparel companies are pursuing global strategies to maintain a competitive edge with an increase of imports considered a certainty.
“I did buy from other countries and I was never satisfied with the quality and
service and reliability of the relationship,” said Jack Kivenko, owner of Jack
Spratt Manufacturing Co., makers of jeans and cotton trousers produced only in
its Quebec factory and just for the Canadian market.
However, Kivenko’s private company relies on benefits of NAFTA to buy a
“significant” amount of textiles from the U.S.
“Our commitment is to make garments in Canada of primarily Canadian and
American textiles,” said Kivenko.
Kivenko said the company is investing substantially in new information technology.
“I think we offer a wonderful package,” said Kivenko, ticking off various pluses, like offering retailers one-week order replenishment and direct deliveries.
Kivenko said he has a negative outlook for Canadian producers manufacturing
only for the domestic market.
“We still do our fair share with a number of good customers,” Kivenko said. “If
one day we have to fold our tent, then I will learn how to fold a tent.”
36
SECTION II
WWDMILESTONES
views from the top
A
DENIS LAPOINTE
s president and
chief executive officer of Nygård’s moderately priced Tan
Jay and åliå division, Denis LaPointe spends
much of his 20 weeks a year on
the road in New York at the company’s design and showroom offices and to attend market weeks
for the division’s separates and
coordinates. He also travels to
Mexico to oversee factories.
“We use two major Mexican facilities on a consistent basis and
two others during peak periods,”
said the 29-year company employee. “We have key production and
engineering people working in
those factories to improve efficiencies and quality control.”
The factories are plugged
into Nygård’s information technology systems and are logged
on to the company’s systems to
book production.
“We send them all our cutting
orders and spec sheets electronically,” he said. “During peak periods, the Mexican facilities are
pumping out 450,000 units a
month, primarily career and casual pants. We treat Mexico like
our own plants.”
Mexico accounts for roughly
20 percent of all Nygård production, with the Far East account-
Denis LaPointe
ing for 60 percent. The rest is
done in Winnipeg at two plants.
LaPointe expects the biggest
growth will come from existing
accounts, as each one is looking
for more fashionable and more
modern assortments. He said the
biggest pressure for company accounts is to grow their separates
business to compete against the
likes of Wal-Mart Stores without
increasing prices.
“We’re targeting the consumer
35 to 55 who doesn’t have the income to buy big brand names,” he
said. “Our opening [retail] price
point for pants and skirts is $20
and the highest price point is $68
to $78 for novelty sweaters and
jackets. But the bulk of our products are in the $25 to $35 range.”
Returning to growth, LaPointe
noted that Charlotte, N.C.-based
Belk Inc., which has been carrying Alia for six years, will be selling an exclusive brand next fall
developed by Nygård. The line
will primarily feature pants and
skirts as well as tops and shells
priced between $20 and $38.
While the New York office is
responsible for design, trends,
color direction for the division,
all separate brands and technical
aspects and pre-production is
handled in Winnipeg.
— Brian Dunn
Thank you for making us
part of your business.
At Scotiabank Commercial Banking, we’ve
always believed that strong relationships
are the key to business success. Over
the years, you’ve helped us prove it. You’ve
invited us to share your vision, test your
assumptions, contribute our ideas and
celebrate your accomplishments.
So, to everyone at Nygard International,
we say congratulations. And thank you.
Congratulations
Mr. Nygard
on 35 years of excellence, leading
the industry in cutting edge
fashion and technology.
Commercial Banking
Winnipeg Commercial Banking Centre
200 Portage Avenue
Winnipeg, Manitoba
R3C 2R7
WR Display & Packaging
Tel: 204-985-3091
Fax: 204-985-3106
www.scotiabank.com
Plastic Bags • Boxes • Paper Shoppers • Zipper Suit Bags
Tissue Paper • Fixtures • Barcode Labels & Equipment
1•800•665•8447 • www.wrdisplay.ca
CONTACT: Janice Lazaruk, Account Executive - [email protected]
™ Trademark of The Bank of Nova Scotia.
39
L
LEN NICOLAS
en Nicolas holds up a software box signed
by Microsoft’s Bill Gates to illustrate how
advanced the company is in information
technology. Nygård beat 15 other competitors in a contest called Ready Set Dot.Net
held in Anaheim, Calif. in mid-November and cosponsored by sof tware developers Epicor and
Microsoft. The contest was for anyone using Epicor
software in conjunction with Microsoft’s Dot.Net
technology. Nicolas, Nygård’s chief operating and
technology officer, predicted beforehand that his firm
would win.
“There are only so many companies that do their
own software development and we’re that much further ahead and our applications are more companywide,” he said in an interview in his Winnipeg office.
Nygård’s winning entry was for its Electronic
Purchase Order program, an electronic order book
that ties together what the company calls its four pillars of business: selling, buying, the control of money
and product development.
EPO replaced PO97, an earlier application that
couldn’t do any systems integration.
“EPO connects to our financial systems and it
won’t require an invoice,” Nicolas said. “We’ll pay on
receipts and on advanced shipping notices. EPO will
also replace paper-based filing.”
The selling is done through Retail Fashion Expert,
a virtual showroom displaying the entire product line
with product information where accounts can order
online once by submitting orders directly to the manufacturing system.
In fact, the spring 2003 look book will be the last
printed on paper, Nicolas said. All displays and orders will be done on the RFX’s digital look book, beginning in fall 2003. It is currently being used by
about 300 independent accounts.
Calling up a computer screen, Nicolas points to
some accounts in green and the others in red. The
green means their orders came into the system before
3 p.m. and they will be shipped by 4 p.m. The red orders arrived past the 3 p.m. deadline or are on credit
Len Nicolas
hold and if cleared, will go out the next day at 9 a.m.
The company’s Internet Commerce for Suppliers
program is a Web-based application, which provides
Nygård’s manufacturers accurate product specifications and bills of material at the cut and style level.
Under the system, manufacturers connect to
Nygård’s Web site and download all relevant information needed for the two parties to work together. The
manufacturers are also required to scan the garments
as they are loaded into containers, giving Nygård accurate information about the shipments. The system
also allows Nygård longer lead times.
“Some people call me a supply chain manager,”
Nicolas said. “We use RFX to sell product while ICS
is a buying tool.”
Several years ago, when companies were leaning towards electronic data interchange, Nygård
held back because it considered EDI too expensive
and too complicated. Instead, it began writing its
own programs.
“It had to be inexpensive for makers, had to be in
real time and have more content than just ordering
quantity,” Nicolas said.
Keeping a tight lid on the money is done through
Financial Control System, an Internet application
managing and controlling the purchases and quality
of goods and services. It also manages the payroll,
travel and the bottom line with budgeting.
The fourth pillar of the system is Product
Development Management, which calculates the cost
of a garment before it goes into production and has
added millions of dollars to the bottom line by accurately projecting gross margins.
— B.D.
40
SECTION II
WWDMILESTONES
departure terminal
Sri Lanka. Most of Nygård’s contractors
are fully hooked into the system, which
means they can download information to
their own automated cutters, translating
details as general as skirt length to something as specific as button hole widths.
“This program takes all the information
in the construction of a garment,” said Ernie
Chaves, director of logistics at Nygård. “It
takes it from our product development system and sends it through the Web directly to
the suppliers’ computer. There’s no paper
trail. There are no patterns.”
The Vcom system allows designers to
change details on a whim. In seconds, those
changes are communicated to contractors
who then immediately cut and sew goods exactly to the updated specifications.
After goods are sewn, affixed with
proper hangtags, hung on hangers and
bagged, they are scanned into the Vcom
system, allowing the computer to track
them as they are loaded into containers
and shipped to the California distribution
center. The system knows how long the
goods will be in transit as well as when
they will arrive.
Unforeseeable catastrophes such as a typhoon or a mechanically malfunctioning
ship shows up in the system as red, indicating goods are late. Blue indicates goods are
being transported by air. Yellow shows goods
are on time and green identifies certified
suppliers, those that have proven themselves
with Nygård and are fast-tracked through
the system with minimal inspections. On
pick-and-pack screens, blue indicates that
shipments will exceed employee capacity
and that personnel must be shifted to accommodate the workload.
“It is virtually like an air traffic controller knowing which containers are
coming in and which priorities we should
deal with based on the color of the
screens,” Chaves said.
Once at the distribution center, Vcom
lets employees know how much time they
have to scan the garments. It inspects their
quality: 65 percent of suppliers are certified and can bypass a quality audit but the
computer automatically triggers a sampling
on every 10th shipment or so, and guides
them on what and how many pieces should
be picked, packed and, finally, shipped.
Audits keep track of how fast goods are
wending their way through the system.
Workers are held to that schedule.
“If we are supposed to process 20,000
units in eight hours with six people and
they go over, meaning, it took eight people,
we’re running at 80 percent and that automatically affects their rate of pay for the
day,” Chaves explained.
A typical team is four to six people.
There are three teams at the Gardena facility at any one time but that number
could double in hectic shipping periods
such as fall (August through October) and
spring (February through April).
The ultimate goal, according to Chaves,
is having goods arrive on time, being able
to turn them around and ship to retailers
the same day they are received. Receiving
Workers checking the quality of merchandise.
41
Workers in Nygård’s distribution are paid by piece rate.
goods early is not favorable because
inventory builds up, he said.
Chaves said retailers’ orders are
guaranteed to be 100 percent accurate, a claim that is supported by
video surveillance of employees the
company keeps on tape for a period
of 30 days.
Nygård executives concede there
has been a learning curve implementing the system. But it hasn’t
been bad, they said.
“Because of the color coding system, it’s almost intuitive and has reduced the curve in terms of interpreting the information,” said
Jackie Woloshen, director of
Nygård’s IT Applications Development department.
Employees, who had been drowning under a mountain of receipts,
sales slips, invoices, orders, journals
and ledgers, according to Woloshen,
laud the fact that the company is now
90 percent paperless. Nygård expects to be completely paperless by
the end of 2003.
Keeping a tight rein on goods,
most of which are produced offshore,
is of paramount economic importance to Nygård. About three-quarters of its production comes from
Asian contractors, while 25 percent
of its contractors are in Mexico. The
balance of its production is done in
company- owned
factories
in
Winnipeg.
“From a labor point of view, back
in the mid-Eighties, it cost us 45 cents
a unit to see, pick, pack and ship,”
Chaves noted. “In the late Nineties,
that cost dropped to 8 cents a unit.
Now we are going to drop that down
SECTION II
WWDMILESTONES
man
about
t0wn
Nygård with Joan Collins.
P
Cybill Shepherd
Peter Fonda
CThe
O N
F I D E N C E
Design of Fashion and the
Practice
T
E A of
MLaw
W both
O require
R K
Innovation, Creativity &
G R O W T H
Excellence
R E S U LT S
Congratulations to
A C T I V E
P RPeter
O T ENygård
CTIVE
A D V I S O R
for Thirty-Five Years of
Leadership in
Fashion, Technology,
Business & Philanthropy
COMMITTED
TO SUCCESS
ATLANTA BOSTON CHICAGO HOUSTON LOS ANGELES NEW YORK
SACRAMENTO SAN FRANCISCO WASHINGTON, DC BRUSSELS
www.seyfarth.com
42
eter Nygård is not just a sportswear aficionado. He also knows
how to throw a good party and
throughout the years, has met a
slew of celebrities, from Sidney
Poitier and Robert DeNiro to Cybill
Shepherd and Fabio.
Hollywood is almost a second home for
Nygård. Each year, he hosts the annual
Night of 100 Stars Academy Awards party,
which draws the Hollywood set to the
Beverly Hills Hotel and benefits Martin
Scorsese’s Film Foundation.
But that’s not the only place he gets to
schmooze with the glitterati. Nygård also entertains at his lavish 5-acre estate, the Xanadustyle Nygård Cay Bahamas Resort, which, in
the past, has played host to such figures as former President and First Lady Bush, DeNiro,
Michael Jackson, Sarah Ferguson, Prince
Andrew and Beverly Johnson.
“After seeing Nygård Cay, I am not living
large enough, I reckon,” said Oprah Winfrey
on her show last year.
Here, pictures from his personal
archives.
— Marc Karimzadeh
44
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WWDMILESTONES
protecting the brand
By Vicki M. Young
N
ygård Inc. may be
a privately held
company, but occasionally information about some of
its financial expenditures can
be gleaned from public sources.
That’s the case with a lawsuit filed by Nygård and its affiliated company, Nygård Ltd.,
last month against Haggar
Clothing Co. and its women’s
apparel division, Jerell Ltd.
The lawsuit, alleging trademark
infringement and unfair competition under both federal and
California state laws, was filed
in a Los Angeles federal district
court. Officials at Haggar
haven’t responded to requests
for comment on the action.
Although the parties had
been in discussions over allegations of infringement concerning Nygård’s “Comfort Fit”
mark, Nygård apparently became incensed over the defendants’ decision to file a lawsuit
in a Texas federal district court
seeking a declaratory judgment
over the issue. It was a move
Nygård referred to in its Los
Angeles lawsuit as an improper
“anticipatory filing.”
Nygård’s affiliate, known at
that time as Nygård International, is a Canadian firm
that is the licensee of the
Comfort Fit mark. At one point,
according to court papers,
Nygård Inc.’s predecessor-ininterest, Eddie Haggar Limited
Inc., was affiliated with one of
the defendants. That one-time
affiliation should be enough to
impute actual knowledge of
the firm said, is what the trade
and consumers are familiar
with and have associated with
Nygård’s Comfort Fit pants.
Financially, Nygård said in
court papers that Comfort Fit
has been a “very successful”
apparel mark for the firm.
“Nygård sells millions of
dollars in Comfort Fit pants annually in the United States, and
in 2002 has already sold over $6
million of Comfort Fit pants.
Nygård’s products bearing the
According to Nygård, it does
expend “substantial resources
in advertising and promotion
pants” under the Comfort Fit
mark. The firm also disclosed
in court documents that it employs a nationwide sales force
and funds cooperative advertising placed by its customers in
catalogs and national, regional
and local publications for
Comfort Fit pants.
According to Nygård’s lawsuit, the defendants allegedly
Nygård last month sued Hagger Clothing Co.
over the use of the “Comfort Fit” trademark.
Nygård’s rights to the mark,
court papers said. Eddie
Haggar held the original rights
to the name, and those rights
were transferred to Nygård Inc.
in May 1995, the lawsuit said.
The Comfort Fit trademark
has been used in women’s apparel, mostly for pants. Court
papers said that one of the
unique aspects of Nygård’s
Comfort Fit apparel is the
waistband design. That design,
Comfort Fit mark are sold in
and marketed to major retail
outlets throughout the United
States, [including] Dillard’s,
Kohl’s, J.C. Penney and Belk’s,”
the firm said in court papers.
Nygård was less verbose
about how much it’s actually
spent on advertising and marketing so far, but noted that such
“expenditures in advertising and
promoting Comfort Fit pants exceed $1 million annually.”
have been selling apparel labeled “Comfort Fit Pants” and
“Comfort Fit Waist Pants.”
Nygård said it sent a ceaseand-desist letter to the defendants on Oct. 7, 2002, over their
use of the mark. Four days
later, the defendants announced a nationwide advertising campaign for Haggar using
the alleged infringing mark. By
the end of October, the Texas
suit was filed, with Nygård re-
material. Nygård also wants
the Haggar defendants to turn
over all alleged infringing
products and packaging, as
well as an accounting of profits
gained from the manufacture
of its Comfort Fit pants.
To be sure, while Comfort Fit
pants were the subject of the lawsuit, they aren’t the only products
manufactured by Nygård.
As reported, Nygård produces under the labels Peter
Nygård Signature, Bianca
Nygård, Nygård Collection and
Lia. The company has been
looking to different avenues to
expand its manufacturing base.
In September, Peter Nygård,
acting independently of his role
as chairman and ceo of Nygård,
acquired 6.4 percent of the publicly held firm Tarrant Apparel
Group through his investment
vehicle Emerald Point Inc.,
which is based in the Bahamas.
Tarrant is based in Los Angeles.
At the time, the entrepreneur characterized the purchase as a “private investment
in a public company that’s indicative of my long-term commitment to Mexico.”
According to a Form 13-D
“There have been problems with
reliability out of Mexico, but it’s
here to stay and we want to be
involved in seeing that things
begin to work properly. To get it
done in Mexico, you have to be
directly involved.”
— Peter Nygård
sponding in kind with a lawsuit
of its own in Los Angeles.
Nygård’s beef concerning the
infringement, besides the fact
that it was “without Nygård’s
authority or consent,” was that
the alleged actions were “intended to and are likely to confuse consumers and members of
the trade as to the source of defendants’ ‘Comfort Fit’ pants
and waistbands, and falsely suggests a connection or association between Nygård and defendants,” the lawsuit said.
Nygård added that the alleged unlawful activities will
continue to result in irreparable harm and injury to the firm.
Among those injuries are the
deprivation of Nygård’s “absolute” right to determine the
manner in which its image is
presented to the public and a
false representation of sponsorship or association between
Nygård and the defendants.
Also mentioned, but with no
dollar amount specified, are
the financial implications from
the alleged infringing actions.
Nygård is seeking a preliminary injunction barring the defendants from either selling
any infringing product or using
the mark in any promotional
filed with the Securities and
Exchange
Commission,
Emerald Point acquired
1,019,093 shares of Tarrant, or
6.4 percent of its outstanding
common stock, for about $5.2
million during a six-month period ending June 4.
The investment in the
Mexican production facilities
was a move to compensate for
the scaling back of Nygårdowned plants in Canada to two
from seven several years ago.
The Nygård firm has a number
of exclusive arrangements and
controlling interests, including
joint ventures, in Mexican
plants.
Peter Nygård said at the
time of the Tarrant investment:
“There have been problems
with reliability out of Mexico,
but it’s here to stay and we
want to be involved in seeing
that things begin to work properly. To get it done in Mexico,
you have to be directly involved.”
So far, there haven’t been
any work orders through
Tarrant’s Mexican facilities,
and Gerard Guez, chairman
and ceo of Tarrant, told WWD
that his firm and Nygård had no
previous business relationship.
45
SECTION II
The ARTS2 factory focuses on replenishment orders.
sewing it all up
In 1986, Nygård’s pick, pack and shipping process cost 45 cents per unit. Today it
is down to 8 cents and the objective is to get it down to 4 cents.
The main distribution center is at the head office on Inkster Boulevard, about a 10
minute drive from the plant. Its holding capacity is 1 million garments and 150,000 are
shipped out each week. About 75 percent of the garments arrive on tiered hangers
from around the world, with four garments per hanger.
“Like FedEx, we know where the garment is in transit. But we go a step further because we know when the shipment will arrive, because we build in transit time based
on lead time,” Chaves said.
If the manufacturers have been certified and audited by Nygård, their goods are
fast-tracked through the distribution center. For others, if there are six or more defects per 80 units randomly selected out of a shipment of 1,000 units, the computer
sends a 30 percent charge to the supplier.
“It means the entire shipment must be checked, which compromises the promised
delivery date to the customer. And if we scan the order for the right quantity and the
variant is more than two per cent, we send another charge,” Chaves said.
The company guarantees 100 percent shipping accuracy with its electronic fail
safe system. Each order is picked by store, which is already in the computer system.
The computer looks for the UPC scan and will determine if the correct UPC has been
scanned against the order.
If the scan does not match the UPC, Nygård computers do not allow the shipping
label to be printed, which guarantees the 100 percent accuracy of the contents.
All pickers are equipped with walkie-talkies for quick response in case a problem
arises with an order. Each problem has to be resolved within a minute before a deduction is taken from an employee’s pay.
“We also videotape each order in case there is a dispute with a customer. The
order is put in a box and shipped to the retailer. We tell them not to count the contents manually because that’s when human errors tend to happen,” Chaves said.
There is also video surveillance at the loading stations to record which employee
did the loading at what time and on what truck as another way to guarantee accuracy. The system is so efficient that Nygård is exempt from charge backs from
Dillard’s, The Bay and Sears Canada.
About 25 percent of goods coming from the Far East are pre-packed by store by the
manufacturers. Chaves sees the day when most, if not all, distribution will be done by
the offshore manufacturers to improve lead times by one to two weeks.
“The process is backing up to the manufacturers,” he said. “We have the technology to enable the manufacturers to pick and pack for individual accounts and our dedicated stores, which would reduce our distribution costs by about 80 percent.”
WWDMILESTONES
46
SECTION II
WWDMILESTONES
departure terminal
to 4 cents a unit.”
Retailers have been pleased with Nygård’s performance.
“Their shipping is probably one of the best in the
industry,” noted Jack Wurzbacher, vice president and
general merchandise manager of misses, petites and
women’s dresses at Beall’s Department Stores Inc. in
Bradenton, Fla. “It’s made a difference in our business. We’re especially pleased with them on their replenishment of basic items. We used to reorder once
a month. Now we reorder once every two weeks, and
soon, we will reorder once a week.”
A spokeswoman for Elder-Beerman Stores Corp.
in Dayton, Ohio, said, “They have made more improvements in shipping more timely and it does
make them a more attractive vendor to us. If you
have to order too far out to guarantee shipments to
arrive on time, then you can miss a critical selling
window. And it is true that they have improved that.”
Nygård’s technology isn’t exactly breaking new
ground, according to some industry observers.
Emanuel Weintraub, president and chief executive
officer of Associates I.N.C. Management Consultants
in Fort Lee, N.J., said: “These technologies are out
there. They’ve been around for at least a decade, but
they’ve advanced and they can do a lot more.”
What sets Nygård apart, according to Weintraub,
is the manufacturer is actually taking advantage of
the technologies.
“They’re laying down a marker for other firms,”
he said. “Too many firms are not using technology because they can’t appreciate their use. They don’t
want to implement them. Once you do, it forces discipline on an industry that was largely undisciplined.”
Aside from Vcom, the distribution center itself has
gotten a new look. Buildings have a fresh coat of
paint, signage indicating what lines are processed
here blanket outside walls of each facility, and colorful banners of Nygård’s logo mark every few feet, giving the workplace an almost festive atmosphere.
Employee common areas have been spiffed up to
include a cafeteria built from a warm combination of
wood and stone. Outside seating areas in a grassy
lawn rival better Southern California cafes.
Inside each warehouse, there are renovated slick
rail systems on which garments literally flow, speeding from trucks through quality control and ending
up in shipment. The constant movement of goods
means the lacquered floors are never cluttered and
shipping areas remain neat and clean.
“Nothing is stocked,” said Chaves, noting company
executives would rather refer to the distribution center as a service center because of its efficiency.
“Nothing is transferred from a moving trolley to a
dead bar. That means we are not holding inventory.”
As for why a distribution center was set up in
California, the answer is simple. Los Angeles is the
first port of entry for Nygård’s goods. A facility anywhere else would require backtracking to Nygård’s
retail customers on the West Coast.
The next step, according to Chaves, is linking
Vcom to retailers’ distribution centers. That idea
strikes a chord with analyst Ellen Schlossberg of
William Blair & Co., who notes that one of the biggest
retail concerns is getting goods on time.
“If retailers had this on their desktop, it would
save a lot of back and forth maintenance calls and
give retailers a better feeling of control,” she said.
“Even now, they should certainly get some insight
into how long their goods are in transit and that
would be very beneficial. Also, it would help them
with their labor planning.”
Julie Eng, national buyer of moderate coordinates
at Hudson Bay Co., said the Toronto-based chain
does not use the California distribution center, but
has experienced some of the same technological advances at Nygård’s Winnipeg distribution centers.
Eng said Nygård has implemented numerous projects and tests that have helped the retailer facilitate
orders.
“Nygård’s purchase worksheet orders download
into our systems,” Eng explained. “I can literally go
through 40 or 50 in a working day, whereas another
buyer processing another vendor could probably do
four or five orders a day.”
Next spring, Nygård will do a test with Hudson
Bay called Orient Direct. Through Vcom, Nygård will
ship goods from its Far East sewers directly to the retailer’s distribution centers, shaving some two-tofour weeks off of normal shipping times.
“My ears popped when I heard this,” Eng said. “I
thought, ‘You’ve got to be kidding me.’ I said, ‘Why
can’t we test this now? Why wait for spring?’ It’s amazing what they can do with computers these days.”
Will Nygård soon go direct with U.S. retailers?
“Absolutely,” Chaves said. “Because of our technology, our suppliers’ accuracy is just as good as ours.
This has been tested over the last year-and-a-half. It’s
really eliminating warehouse distribution, maybe
even our service center in North America.”
A $5 million investment notwithstanding, that
would be OK with the boss.
“We’ve been plowing the money into that area,”
Nygård said. “There’s no question that what we really bring to the table is the technology issue. It’s our
biggest creative product today. I think this may be my
legacy, ironically. A long time ago, the company’s
watch words were ‘where fashion meets technology.’
I didn’t even know why I was using it. Now, it’s very
apparent to me.”
47
Nygård’s Gardena, Calif. distribution center handles up to 400,000 garments a week.
peter
nygard
your friends at dillard’s are grateful for our partnership &
your wonderful eye for fashion. here’s to a bright future.

35 Years of Success - NYGARD Corporate site

Transcription

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