SELF-DETERMINED
By Arthur Friedman
Every day is Independence Day for Bud Konheim. The outspoken co-founder
and chief executive officer of Nicole Miller Ltd. has stuck to the
plan that he and designer Nicole Miller came up with 25 years ago
when they started their firm: They did it their way — taking
risks and rarely conforming to the conventional wisdom or norms
of Seventh Avenue.
Konheim and Miller had worked together for seven years at dress
firm P.J. Walsh — he was in sales and she was the designer—before
they decided to go into business together.
Since 1982, they have frequently gone against the grain, mostly
led by Konheim's often unorthodox way of running the firm, opening
their own stores at a time when few designers were doing so, and
refusing to play along with the markdown and chargeback mania that
struck department stores during the Nineties.
"When I think about the last 25 years, it's not about how
big we've become. It's whether there's anything the industry can
learn about what we've done," said Konheim, who has spent his
entire 50-year career in the apparel industry. "For instance,
people have asked me over the years how we get away with not giving
chargebacks. It goes back to the basic philosophy between Nicole
and myself. I told her from Day One that we're going to run a business
that's totally independent and rests on your ability to design clothes.
I told her, 'You design for yourself and we'll find enough people
United States that share your aesthetic and your idea of clothes,
and we'll make a business out of it.'"
Konheim said he told Miller it would be his job, "no matter
how small or big we become," to make the business profitable.
In order to make a profit, Konheim has relied mostly on his instinct
as a fourth-generation clothing entrepreneur, what he calls Miller's
"incredible antenna" not just for figuring out and designing
the next hot trend, but also turning something she simply found interesting
into a viable commercial product, and, admittedly, "a little
bit of luck." Interviewed in his offices at 525 Seventh Avenue,
which are filled with family photos, magazines and assorted mementos,
he reflected on the first style that was a hit for spring 1982:
a hip-smock dress. Everybody said that no woman was going to wear
smocking at the hip because it's not flattering, but when the model
put it on, it looked sexy in a dignified way, Konheim said.
"We managed to get a cutting — 300 pieces — sold,"
he recalled. "The end of the story is that we sold over half
a million of the dresses. Jane Pauley was wearing it on the "Today
Show." The dress was copied by everybody; it ran for 10 years.
It was unbelievable. The point is that it was very risky to make
the dress when everybody said don't do it. It was the first independent
thing that we did together and it rested totally on Nicole's ability
to design a new idea."
Another example Konheim gave of why his partnership with Miller
has endured came in 1986. Miller decided that the popular long dress
lengths had seen their run and designed what Konheim called a "cheek-high"
mini. The stores balked at it and the company went from 1500 accounts
down to 50.
"That was the closest we ever came to being in serious danger
of going out of business," Konheim said.
Among the 50 accounts, Tootsies in Houston, Gazebo in Dallas and
the Nicole Miller store in Manhattan were checking the short dress.
"We went down to almost $8 million in volume that year,"
he said. "We would stay until 9 o'clock at night to call the
West Coast to sell two pieces. The whole company was committed to
staying alive. Then, one night, buyers from Neiman Marcus walked in
— I can remember it like it was yesterday, Neeva Hall was the
merchandise manager, Becky Sharp was her boss and Terry Ozer was the
buyer. I asked them what they were doing here because I wasn't selling
Neiman's at the time — Allen Questrom was the president, and
he had charged me back for a freight allowance, so I told him, 'Sorry,
that's your overhead and we can't do business.'
"They said they wanted to buy the dress because at a cocktail
party in Dallas, everybody was wearing that dress that they had
bought at Gazebo. They ended up ordering 1,000 pieces at a time.
All of a sudden, we were the kings and queens of the little black
dress.
Then there's the luck: Miller had made a dress out of a theater
ticket print that bombed, so she suggested making scarves out of
the fabric. Konheim thought of making ties out of it as well, since
he had never made anything for himself. So they had about 60 ties
made. Konheim took one for himself and the rest were sent to the
Madison Avenue store. A security guard at the store also worked
at the Metropolitan Opera gift shop. He brought a tie to the gift
shop manager because one of the tickets in the print was for the
Met. She bought the ties from the store, put them out for $90 and
sold them out in three days. She wanted to reorder them and had
a difficult time doing so, but finally reached Konheim and bought
300 ties for the gift shop.
That led to other "conversational" prints, including the
popular "stuff that's at the bottom of your purse" theme.
These were made into scarves and men's ties to be sold at women's
stores as gifts. Selma Weiser, founder of the now defunct Charivari,
a hip apparel retailer, put them in her store, which led to Barneys
New York, Saks Fifth Avenue and Bloomingdale's buying them without
solicitation.
"Within a year and a half, we had a $12.5 million tie business,"
said the dapper executive, who often sports the print ties. "It
was lucky, but you also have to give luck a chance to happen by
being open and creative. Everybody in the company is encouraged
to be creative, from the production manager to the head of sales.
Everybody here goes beyond their main function."
As for the aversion to markdowns and chargebacks, Konheim said,
"Someone asked me how we get away with it and I said, 'Just
say no.' It doesn't make sense because the money has to come from
somewhere, so if you raise the prices in order to pay back, you're
encouraging the markdown. It's a silly game and I refuse to play
it. That's why we couldn't do business with May Co., which was risky,
but we were successful without them and I didn't have to give in
to something I knew wasn't right. Unless you sell the clothes, all
the guarantees are worthless."
One area in which Konheim has struggled to find the right balance
is in product and store licensing. The firm's first license was
in signature stores, the first opening in Mexico City in 1991. It
was the second unit after the company-owned Madison Avenue shop.
"We ended up with about 30 stores in the U.S.," Konheim
said. The company currently operates 17 stores worldwide. "Then
we got into licensing manufactured products," including handbags,
fragrance, jewelry, shoes, bed and bath goods.
Some troubles arose, however.
"The second you let the control out of your own hands, you're
in danger of someone making something that's ugly and of bad quality
and calling it Nicole Miller," he said. "Then you're dead."
Konheim said the key to licensing was finding the right partner
and drafting the right licensing documents to protect the brand
name, and "making the partner understand that it's not what
the store or the licensee wants, it's what Nicole designs and thinks
the product should be. We've lowered the financial bar for our licensees,
so that sales minimums are not the main point of the license,"
Konheim said. "It's understanding the aesthetic and then figuring
out how to sell it."
Konheim told WWD a few years back that advertising was "like
shouting in a noisy room — it's very hard to be heard."
He also thought runway shows were an expensive waste of money and
bad for business. He has softened on both issues.
"Nicole and I had a 'discussion' from 1982 to 1990 about having
a runway show. I said a runway show is an absolute waste of money
because you're being judged by people who have no stake in whether
your product sells or not. By 1990, I changed my mind because it
became a merchandising tool for us. Nicole had to edit a lot of
the line because there's a limit to what can be shown, and she didn't
put anything on the runway that wasn't wearable or salable. It let
Nicole make her mark and create a signature."
Konheim also feels that Miller set the pace for using actresses
and celebrities on the runway — for free — when in 1996
she had the likes of Gretchen Mol, Jill Hennessy and Minnie Driver
on her catwalk augmenting the traditional hot models.
"People didn't really understand why we did it," Konheim
said. "They thought we did it to save money, which is always
a good idea. They didn't understand that this was the wave of the
future." As for the ad campaigns, he stated, "The desire
to advertise comes from something I call status anxiety."
While he still feels that the best advertising is "people
wearing your clothes," the company has embarked on a new venture.
After many years of doing print ads in-house consisting of "nice"
product shots, the firm has hired its first ad agency, Paris-based
Assouline, which also works with Tag Heuer and Cartier, but primarily
publishes high-end coffee-table books, in October.
"After seeing 24 agencies, they showed us three photos that
absolutely blew us away," Konheim said.
Starting next month, a $2 million ad campaign featuring images
with a cinematic feel will begin appearing in magazines as two-page
spreads and on outdoor venues.
Also new is the company's revamped Web site (nicolemiller.com),
which now features video clips of Nicole working with a a crew of
young designers, as well as backstage clips.
"The idea is to show that even though we've been around 25
years, we're a young company," Konheim said. "What you
see on the Internet now will seem like kids' play in five or 10
years, and we've got to keep up with that."
This was an astute observation from a man whose great-grandparents
started selling clothes from a pushcart on New York's Lower East
Side in the late 1800's.
"The big thrill was when they actually rented a place indoors,
which was risky," he said. "When things got slow, they would
show movies in the alley behind the store." Konheim was born
in Manhattan in 1935. He graduated from Dartmouth University in
1957 with a business degree and went into his family's dress manufacturing
business.
"At Dartmouth everybody was interviewing for bank jobs and
stock jobs and at giant corporations, and they would come back to
the fraternity after their interviews and talk about the retirement
plans these companies had," he recalled. "I used to think
to myself, 'They're 22 years old. What are they going to do until
they retire?' So I thought then and still think this is the most
exciting industry to be in. I can say that in 50 years in the business,
I've never had an uninteresting day."
The ceo also says he never intends to retire, although he is an
avid golfer, often leaving for long weekends in Florida to play
several rounds.
"My golfing friends often ask me why I don't retire,"
he said. "I tell them if you had my office to come to every
day with all the young women who make me feel young, you wouldn't
retire, either."
Konheim has seen the industry change a lot over the years. He remembers
a time when people couldn’t walk on the sidewalks of Seventh
Avenue because there were so many rolling racks of clothes. But
most of all, he said, what has been lost is "spontaneity."
"The manufacturing and designing were all in one place,"
he said. "If an item was hot, you could get it into the stores
in a matter of days. Then companies started going off-shore to manufacture,
and once they did that, things changed dramatically. Now, most of
the companies in the Garment Center aren't even in the (fashion) industry."
Rattling of a list of names — Bonwit Teller, B. Altman, Franklin
Simon, Gimbels, E.J. Korvette and Ohrbach's — Konheim said
he's seen " a lot of incredible retail businesses disappear
in the last 25 years."
"How does it happen?" he asked rhetorically. "You
have management that doesn't pay attention, doesn't know what to
do. For the sake of being big, you leverage yourself beyond the
ability to do business. What it does, however, is open up opportunities
for entrepreneurs to come in and offer consumers something they
want in a smart way."
While Konheim and Miller have built their firm into an $82 million
company and feel they've' made their mark, there's a lesson to be
learned.
"The biggest companies in our industry are marginal,"
he added. "That's why you always have to be alert and flexible,
because you can lose what you have in a very short time."
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