A Shop Grows In Brooklyn

By SmallBusinessComputing Staff | Posted February 01, 2001
by Amy H. Blankstein

Most Manhattanites won't cross the Brooklyn Bridge without a good reason, but Smith Street, located in the Brooklyn neighborhood of Carroll Gardens, has become a destination for the island's adventurers. They are lured by a rapidly multiplying number of restaurants and retail shops that mix style with a homegrown-neighborhood feel. For Stacy Johnson, owner of Stacia New York, the foot traffic is proof positive that the career chances she's taken have paid off.

Just over two years ago, Johnson left her job as a design assistant at women's clothing designer Cynthia Rowley to open her own clothing line and retail shop. An army of young designers tries to make it in New York City every year, and many fail. But Johnson knows her stuff -- not just the art of good design, but the craft of running a retail business. Using lessons learned at the Parsons School of Design and in the field working for the likes of J.Crew, Calvin Klein, and Rowley, Johnson has steadily developed her business, attracting a local and national following along the way.

These days, the message to businesses of all stripes and sizes is that unless they're outfitted from head to toe in the latest technology, they'll lose the competition. But Johnson doesn't have an unlimited budget or limitless staff to implement customized, integrated technology solutions -- she does what she can. She has a state-of-the-art e-commerce site, but relies on off-the-shelf programs to keep track of accounting and inventory. Despite this patchwork approach, but company revenues grew 75 percent in the past year alone.

Location, Location, Location
When some designers start out, they concentrate on manufacturing a clothing line and hope retail outlets will pick up their designs. Others open their own retail stores and risk a lease commitment in order to create a direct relationship with customers and the immediate feedback that relationship affords. "The problem with manufacturing is that when you produce a collection -- say a dress in sizes 8 to 18 in a variety of colors -- you don't know what's going to sell," says Leonard Bess, full-time faculty member at the Fashion Institute of Technology in New York City. "You have to wait for the retailer to get back to you with that information. In your own shop, you get a hands-on sense of what's moving, day by day. There's a great advantage to doing business in this way." If, of course, one can find an affordable space available in a location that draws enough crowds to pay the rent, as Johnson did.

Smith Street hasn't always enjoyed fortune's favors. Once a bustling main street in a predominantly Italian neighborhood, it suffered from the aftermath of blackouts, riots, and city neglect, like much of New York City in the 1970s and 80s. But after the city finished a renovation of the corridor in 1996, the economic landscape began to change. Restaurateurs and retailers slowly began to move in, attracted by low rents, proximity to the subway, and surrounding neighborhoods filling with young professionals.

"When I first opened, sometimes I wouldn't see a soul during the day," Johnson says. "Now traffic has picked up, especially on weekends when everybody is roaming the neighborhood, having brunch at the restaurants, and then stopping in."

Now Johnson is already experiencing growing pains. "I need to hire more sewers and cutters to keep up with the demand, but I can't hire any more employees because I don't have anywhere to put them," Johnson says. "My girls work 40 hours a week and I'm constantly recutting pieces that I sold over the weekend." As soon as she finds a bigger production space in the neighborhood, Johnson plans to use her current studio space for immediate alterations and inventory storage.

The atmosphere in the shop evokes the sense of hanging out at a friend's house to borrow clothes. Johnson's sweaters and knits lay folded on top of desks, low tables, and a vintage sewing station. Shirts, pants, and dresses hang from wrought iron racks in the center of the store. Vintage photos of family members and an old Brooklyn school dot exposed brick walls. While Johnson works on new designs at the long wooden cutting table at the back of the store, retail assistant Tamara Bechara helps shoppers by putting together outfits and offering advice and opinions. In the shop's adjacent studio space, the cutters and sewers scramble to assemble items that sold out over the last several days.

When Johnson or Bechara ring up a customer in the shop, they do it by hand. What happens next to that sales information can be best described as a hybrid approach: part shoebox, part outsource. Johnson collects the handwritten sales receipts and manually records the information each week. She sends the information to her accountant, who inputs it into an off-the-shelf Quickbooks program on a bi-monthly basis. "We'd like to get it to a point where the sale just goes right into the computer, but we're not quite there yet," Johnson explains.

Time-strapped businesses often outsource accounting tasks, and Johnson didn't have to go very far afield. Janet Johnson plays a dual role as Stacia New York's accountant and the owner's mother. She handles these duties in between doing the books for Johnson's Tire Service, the four-location business she owns with her husband in Alaska.

On The Cutting Edge
Johnson doesn't rely on foot traffic alone to keep her boutique in business, however. Vintage furniture and a near-manual accounting system may rule the shop, but Johnson took to the Internet almost immediately. Like a handful of young designers, she's using her Web site, www.stacianewyork.com, to market and sell her designs to an audience far beyond Smith Street. The site debuted in July 1999.

"It's an inexpensive way for me to extend my brand outside of the New York area until I can afford to open up other stores," Johnson says. "I'm primarily a retailer and a manufacturer -- I'm not interested in doing wholesale. Until I can open other Stacia New York stores, the Web site is my only way of reaching those people."

FIT's Bess believes smaller companies have the most to gain from using the Web as a marketing medium. In the past, a green designer's best hope was to catch the eye of the fashion press to catapult them into the public's conscious -- the cost of traditional advertising was prohibitive. The Web is far cheaper.

"You won't find small designers advertising in magazines or catalogs, but they can reach a large market through the Internet," Bess says. "They can manage that within their budget. It's just a matter of setting up the Web site and paying a hosting fee. I liken it to guerrilla or grassroots marketing. They're bypassing the traditional methods in order to get their message out into the market."

In addition to posting photos and descriptions of her pieces, Johnson includes information on the store, a brief biography, and press clippings. The site also generates some press coverage, which is an unexpected bonus. Johnson also includes a link to her e-mail address so she can field customer inquiries.

Although the site's primary job is to drive attention to the Stacia New York brand, it pays for itself. Stacianewyork.com included a shopping cart from the beginning, and brings in approximately 2 percent of Johnson's annual earnings. "I am breaking even," Johnson says. "I'm not spending millions to produce it, nor am I making millions. Whatever I spend, I make back."

Johnson updates the site several times a year. She makes major revisions when she launches her spring/summer and fall/winter lines, and then makes minor adjustments when she announces a sale or updates press clippings. Sweden Unlimited, a Manhattan-based Web design firm whose clients include other fledgling clothing designers such as BuiltbyWendy and Pixie Yates, designs and updates the site.

Johnson has also taken advantage of customer suggestions to make changes. Johnson uses many unique fabrics, but customers complained that the images of fabric swatches on the site were too small. With this fall's redesign, Sweden Unlimited added a zoom feature so customers can really see the colors and textures.

For her next update, Johnson hopes to add an e-mail service to the site so clients can get opinions from friends and family on their picks or alert them to items with strong gift potential. Clients could send an e-mail with embedded images of clothing items. Recipients who click on the links would be brought to the site, where they could purchase the item.

Behind The Curtain
Sweden Unlimited co-owner Leja Kress uses Internet service provider Verio to host her clients' sites and e-commerce solutions provider CCNow to handle credit card transactions. In addition to providing a ready-built shopping cart, CCNow processes credit card transactions, then alerts the e-tailer when they have been accepted. The company takes a 9 percent commission on all sales instead of charging a monthly fee. Johnson did use CCNow, but with this fall's makeover, brought online credit card processing in-house. "A lot of the designers we do sites for don't have a merchant account because they don't own their own store," Kress says. "They sell retail through other stores, so it works out well for them. But for someone like Stacy who has her own shop, it's better to do it herself."

Johnson now runs both online and offline sales using a merchant account through First Merchant Bank Service. The change gives her more control over her cash flow. Proceeds from sales she made through CCNow were held in an interest-bearing account in case of returns. If she shipped $1,000 worth of merchandise, she wouldn't see the full amount (minus the commission) until several months later.

In addition, the arrangement interfered with Johnson's relationship with her customers. "I'd often get a customer buying on line who lived in Manhattan and would want to return or exchange a piece at the store," Johnson says. "And I couldn't do it because CCNow processed the credit card, so I didn't even have the credit card number." Now Johnson can accommodate returns and exchanges between Web site and storefront, and also feels she can better protect her customers. She's now upgraded with Verio, so her site is on its own secure server. "This way I get an e-mail in a secure area where I can read the customer's card number and process it through the machine here in the store."

Johnson believes that her customers will be more comfortable buying off her site now. Previously a customer would click on an item and be transported to CCNow's Web site, because CCNow doesn't provide a customized shopping-cart template. "I think a lot of people get freaked out buying something on line when they're suddenly taken to another site," Kress says. Now they'll stay in one place the whole time, and Kress has customized the shopping-cart template to match Stacia New York's design format.

By taking control over the shopping cart, Johnson has solved another problem. Last season she tried to offer an electronic gift certificate, but the same processing issues that interfered with returns and exchanges gummed up the process. Now that she's able to process credit cards through her own merchant account, Johnson reintroduced the gift certificate.

Future Forecast
Johnson's online savvy is beginning to spill over into her Smith Street shop. FIT's Bess says that a strong grasp on new technologies will become vital for success in the fashion industry. "When I work with my students, more than 50 percent are Internet-savvy, and we do a lot of communicating that way," Bess says. "So for those that are going into the business now, it's a comfortable medium to use." But Bess believes just as strongly that relying on the Internet alone isn't enough. Designers will need to use design and productivity software to keep up as well.

For Johnson, technology decisions take place in between the more immediate tasks of designing and producing clothes and catering to her customer's needs; she's far from the ideal user that application designers have in mind when they cook up their products. (Sometimes, she's even used programs meant for one purpose for many other functions they weren't designed for.) She concedes it hasn't been the ideal approach, until recently she hasn't had much of a choice. "I just don't have time to learn new programs," she says. "Everything I've learned on the computer has been for a specific project I was trying to accomplish."

But now that the business is on solid ground, Johnson has hired more employees, and that means more manpower to work on new projects to support the store's growth. Her staff consists of a retail assistant, three full-time sewers and cutters, and a design assistant she hired last summer. She is now creating an inventory database using Excel. For this, Johnson chose an off-the-shelf package that will be tweaked to fit the store's limited needs. "I'm not at a level where we need to have a computer consultant come in and build software," Johnson explains. "Maybe after my 10th store."

To date, Johnson's system for keeping track was to pay attention to what items got sold in a given day. "I want to know what sizes and colors are selling," Johnson says. "Now when I cut specific groups and sizes, I'm just guessing. I'll cut a 2, 4, 6, 8, 10, but maybe I should cut more 10s or 2s or 6s. I'd just like to have some sort of information on the percentage of what's selling, so that the next time around I can have a better idea of how much to cut."

From there, she will be looking to improve in other ways, as well. In addition to the inventory, the database will house preferred-customer and press-contact information. "If I have information about what size a customer wears and what she likes, we can give her a heads up -- and provide a more intimate shopping experience." Johnson says. "Customers will feel like they're getting special treatment they wouldn't find elsewhere. You don't get service like that at a department store or a boutique unless you spend $10,000."

After the database project, Johnson will have plenty more work to keep her occupied. A visit to one of the neighborhood stores prompted her to begin considering a point of sale system. "Right away it takes care of the inventory, counts the sale, and registers it in the system," she says -- in other words, it makes their offline sales as easy as her online ones. "I'd love to be at that point," she says.

Perhaps it's about time for that integrated system. Although she's occupied with the coming season's designs and grappling with current production tensions, Johnson is already looking beyond both her Smith Street storefront and its virtual counterpart. Within the next two years, Johnson plans to open a second brick-and-mortar location on the West Coast.

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