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On the surface, Peerless Clothing Inc. is the poster child for Montreal’s longstanding, thriving apparel business. The company has, after all, been making men’s tailored clothing and suits in the city for 100 years.
So why does Elliot Lifson, the company’s vice-chairman, describe a veteran garment company – which manufactures 10 million suits annually – as “really a high-tech operation that [happens to have] men’s tailored clothing in the pipeline”?
Because, says Mr. Lifson, strategic investment in information technology has been the key factor in turning Peerless into what he calls “a truly North American operation.”
Peerless largely confined its business to Canada until the 1990s, when the North American Free Trade Agreement helped it expand its operations stateside. The next watershed moment happened in 2001, when the company invested $20-million into its enterprise resource planning software and the IT system to support it. They’ve grown their technology capability each year since. Mr. Lifson estimates overall IT investment, to date, to be around $35-million.
The company now produces, distributes and sells its clothing across the continent, including Mexico, and has management teams on the ground in Canada and the U.S. The company is now in the middle of the fourth expansion of its Vermont distribution centre.
“A lot of companies now see themselves not just as the maker of a product, but as an innovation company,” says Dan Leslie, Senior Vice President at HSBC Bank Canada.
With the proliferation of data, and the increased ability to extract meaningful insights from it, Mr. Leslie says many businesses are becoming “less and less about the immediate product or good – and more about looking into the future to understand their customers better, and understanding what the demand drivers may be. There’s so much information, and so much more agility in the supply chain and the distribution channel that you can make decisions faster about your business.”
Over the past decade, Eric Fisch, SVP and National Sector Head, Retail & Apparel for HSBC Bank USA N.A, says there’s been huge growth in fashion consumers browsing, buying, and returning product online. “This has impacted the way retailers approach physical store growth, and the way new brands seek to build scale,” he says. “This new model comes with its own set of risks. Social media advertising, for example, now requires large marketing investments that are not sustainable if the consumer isn’t coming back for repeat purchases.”
Peerless’ increased technology capacity allows the firm to be faster and more flexible in helping its clients manage inventory turnover, Mr. Lifson says. Peerless supplies clothing to major U.S. department and specialty stores and manufactures brands such as Lauren by Ralph Lauren, Calvin Klein, Tommy Hilfiger, DKNY and Michael Kors – but it also provides the e-commerce back-end for many of its clients, including the capability for the logistics procedure known as “cross-docking.”
“The retailer today only wants to have a distribution centre, they don’t want to have a warehouse,” says Mr. Lifson. “They want to have something delivered in one door and, 24 hours max, it goes out the other door.”
Cross-docking was popularized by Walmart, which used the technique to leapfrog ahead of its close rival, Kmart, during the 1990s.
“In a lot of respects, Walmart’s triumph was a triumph of information technology,” says Prof. Thomas McCormick, who teaches operations and logistics at UBC’s Sauder School of Business. “The key to properly doing cross-docking is having good information flow. It’s an intricate ballet between the suppliers who are shipping goods to your distribution centre, operations at your distribution centre, and your stores, which are pulling goods out of the distribution centre.
“You need to have the incoming trucks from the suppliers arrive at precisely the same time that the empty outgoing trucks arrive. The people inside the distribution centre need to know what goods to expect, and the packing list for the outgoing trucks, so they can expeditiously get the goods across the dock.”
Not all products lend themselves equally well to cross-docking; Prof. McCormick suggests a company pay particular attention to product characteristics such as seasonal demand or perishability before investing in the IT needed to support cross-docking.
HSBC’s Dan Leslie agrees, stressing the importance of getting expert advice before diving into a major new innovation. Mr. Leslie works closely with his clients to understand their overall long-term strategy and goals, not just their immediate capital needs.
“We thrive on helping customers solve problems that they didn’t even know they had,” he says. “It’s not necessarily always about lending. It’s a deeper discussion than just ‘I have $20-million of inventory, how am I going to finance it?’ ” Mr. Leslie works with his clients to explore all aspects of their supply chain, and identify opportunities that could be leveraged to their advantage.
“Retail and apparel is a unique and complex sector,” adds Mr. Fisch. “It’s important to work with a financial partner that has been through prior economic cycles in the industry, and understands the risks involved, and just as importantly, is willing to support strong healthy businesses and help them capitalize on the opportunities created by disruption.”
CONTENT PRODUCED BY THE GLOBE CONTENT STUDIO. THE GLOBE’S EDITORIAL DEPARTMENT WAS NOT INVOLVED.