Tales Of A Fourth Generation Textile Executive: A Letter From The President…..Of Studioe

Dear Customers, Fans, Employees, Sales Reps, Consumers, Suppliers, Family & Friends,

 

This is the perfect time for me to express my thanks to each and every one of you for a great year and for everything that you do for our companies.  We try our best, year after year, to try to improve and grow. This certainly isn’t as easy as it sounds, but we do try.  We all work very hard in a challenging business, but continue to push on year after year and come in to the office everyday with a smile. 

 

On top of the managerial type business challenges, there is the fact that the fabric business and fabric are not perfect.  Fabric is unique.  Unlike soup or soda that comes in a certain number of ounce bottle, fabric piece sizes vary greatly.  The printing doesn’t always come out perfect.  The double and rolling doesn’t always result in perfectly aligned selvedges.  The greige goods aren’t always perfectly woven.  The fabric sometimes is dirty or has holes.  Sometimes there are overages and sometimes there are shortages.  Other times, the fabric is perfect. 

 

Unfortunately, those are some of the pitfalls that we deal with in fabric and the biggest culprit is that so many people are touching the fabric before it gets to the end consumer.  Needless to say, we do our best to work around all these issues, especially making sure that our customers and the ultimate consumer is happy because we know that a happy customer and consumer keeps coming back for more.  We know the business isn’t perfect and we work diligently to resolve any issues like those mentioned above.  We stand by our fabric 1000% because that is something that we can control.  That being said, if you are not satisfied with something pertaining to my companies, contact me directly….I am easy to find.  It is my business to make sure we don’t lose any customers because those are the most important assets we have.

 

Another important aspect of the fabric business is that our products have many appealing aspects.  Fabric projects (quilts in particular) could be considered art.  They could be charity for those in need of a warm blanket.  They could be calming for the creator.  They could be educational for the student.  They could be support to those in need of support or a crutch.  They could be our way of showing patriotism to our troops.  I can go on and on, but I think you get the idea.  We aren’t selling soup or soda, we are selling inspiration, dreams and imagination.  Therefore, I think fabric has earned the ability to be unique in all its own ways.

 

I am not sure if I got off on a tangent or my message is clear, but the long and the short of it is that we are in an amazing industry.  Fabric is awesome.  Fabric is fun.  Fabric is our lives.   

 

Thanks for being a customer, a fan, an employee, a sales rep, a consumer, a supplier, a family member, or like one, and most importantly thanks for being a friend.  I love you all and want to wish all of you a Happy New Year!  May 2015 be filled with lots of life, love, happiness and of course some perfect FABRIC!

 

Studioe President

Scott Fortunoff

End Of The Year Pearle Giveaway

 

Congratulations Vicki Hill for winning the Pirouette giveaway! This is our last giveaway of 2014 and we wanted to do something special. So this week we decided to giveaway TWO 18″ x 21″ quarter cut bundle of our Pearle line. To enter to win, all you have to do is comment this post.  You can also comment any link of this post on our Facebook page for an extra entry.  

*Contest ends January 2, 8:00 am EST.  Open to US residents only.*

 

Pearle giveaway

 

 

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Tales Of A Fourth Generation Textile Executive: The Difference Between Good Execution And Bad Execution

Last week I had two work holiday parties.  One was in Greenville, S.C. for Fabric Editions and the other was in New York City for all the other companies.  Both parties were a lot of fun and all of our loyal employees earned a day to just chill out. 

 

As my avid followers know, I am not so keen on public speaking, but it is just part of the job.  In any case, I reluctantly made speeches at both parties.  After the usual holiday speech monologue, I went on to tell employees that we expect them to work hard, value our customers, focus on details, question things that don’t make sense, be innovative, think outside the box and to execute properly among other things.  Then I went on to tell a story about the difference between good execution and bad execution and how things could really go awry with a bad execution.

 

So here goes.  Last year I went with my wife and kids to one of these lodges upstate that are geared toward kids with tons of indoor and outdoor activities.  On the way there, we stopped at a pizza place to eat dinner.  The second we got to the pizza place, my older son had to go to the potty.  After taking care of his business, he gets himself redressed and starts to lift his right leg up to flush with his foot.  I asked him, “What are you doing?”  He said,  “This is what mommy taught me so I don’t touch the germs on the toilet handle.”  I said, “Great thinking!”  The only problem was that the toilet handle was on the left, so he had to lift his right foot all the way across his body and the toilet bowl to complete the foot flush.  Lo and behold, he had an awful execution and his dismount resulted in him putting his entire foot in the toilet.  I won’t bore you with what happened next, but the major point here is that the difference between a good execution and a bad execution is critical.  In this case, my son would have been better off flushing with his hands and getting germs than putting his entire foot in the toilet.  Or, if he just used his left foot, all would have been well and good.   Hope you enjoyed my little story.  Happy holidays from our family to yours!

 

 

Scott The Execution Expert

December Pirouette Giveaway

 

Congratulations to Diana Ross for winning last week’s giveaway of our Watermark line!  Today we are giving away a 18 x 21 quarter cuts bundle of our Pirouette line.  To enter to win, all you have to do is comment this post.  You can also comment on any link of this post on our Facebook page for an extra entry.  

 

*Contest ends December 26th at 8:00 am EST. Open to US residents only.*

 

Pirouette giveaway

 

 

If you aren’t already, be sure to follow us on all our social media outlets for the latest updates an all things Studioe.

 

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Tales Of A Fourth Generation Textile Executive: Fabric Licensing

Lately I have been approached by a variety of people about licensing for fabrics so I thought this would be a great time to discuss and explain fabric licensing to you.  This is one of the few times that I could say that my law degree paid off as I am in charge of all the licensing contracts for our companies.   In my mind there are two types of licenses:  1.  Big time chain store types of licenses like Frozen, Sponge Bob, Dora, Angry Birds, NFL, NBA, NHL, MLB, etc.   2.  Quilt Shop types like Pepper Cory, Jodi Barrows of Square In A Square, Buggy Barn, Kim Diehl, etc

Fabric Licensing

When I first joined the family business, my main role was with A.E. Nathan, one of our divisions that sells mainly to the chains.  At that time, I had the opportunity to work on a lot of the chain type licenses and the related contracts.  We had Sponge Bob, Dora, Smurfs, Looney Tunes, Cabbage Patch Kids, Land Of Milk & Honey, Suzy’s Zoo, Pez and Wow Wow Wubbzy to name a few.  Unfortunately, we have no big licenses now, but could sure use some.

The biggest part of the licensing process is the contract and its terms.  These are some of the key terms and issues that need to be negotiated.  With respect to the big name chain type licenses, the royalty rate, advance and guarantees are usually the biggest issues.  Basically, these are the money issues.  As far as the royalty rate goes, these chain type licenses could require a rate anywhere from 3% to nearly 20% for the really good ones.  I would have to imagine that Frozen and many of the major professional sports are near the high point.  So that means the licensor (owner of the license) gets a percent of every yard sold.

So for example if Frozen cotton fabric sells for $3 a yard to a chain, 20% or 60 cents per yard goes to the licensor and the licensee (fabric company) gets the other $2.40.  It is extremely advantageous to have the top licenses as they are highly profitable.  Not only that, but the chains need to have the hottest licenses so they have no choice but to pay for it especially because there is nowhere else to get it and all the other chains are going to have it.  On the other hand, the quilt shop type licenses are more in the 3% to 6% royalty rate.  Please note that quilt shops can also buy the chain store type licensed fabrics despite the way I categorized the 2 types of licenses.  That being said, the chain stores cannot always buy the quilt shop licenses as many of those licenses are for quilt shops only.

The next major negotiated term is the advance.  This is essentially the buy in price to attain the license for the term of the contract.  For a license like Frozen, the advance could be in the tens of thousands of dollars.  This is a non-refundable advance and therefore if the fabric company does not come to market with fabric for said license, the fabric company loses the money.  So there is a big incentive to bring the fabric to market, to say the least.  That being said, there are rare times when no chain will purchase the license and the fabric company is in deep trouble.

Assuming the fabric is brought to market, the first royalties are used to reduce the advance until the advance is zero.  Thereafter, the fabric company needs to pay out the royalties.  In other words, using Frozen, if the advance is $50,000, the first $50,000 in royalties do not need to be paid out because the licensor has the first $50,000 already in the bank.  After that, the fabric company has to pay licensor regular royalties on a quarterly basis.  With quilt shop licenses, advances are rarely used.  For me, the biggest problem with paying advances on quilt shop lines is that it takes so long to bring the fabric to market that the advance doesn’t make sense. For example, if I sign a new license today, it may not be before the end of 2015 or later until I see a return on my investment.  Therefore, if the licensor is my partner, they should have to wait it out like we do.  Patience is a virtue!  Alternatively, if the licensor is under a financial hardship, I can be more flexible as I am not an unreasonable person.

Last, but not least is the guarantee and that is just what it sounds like.  The fabric company guarantees to the licensor that no matter what happens, licensor will get to keep the agreed upon royalty guarantee.  With quilt shop licenses, there is rarely a guarantee.   I have never seen one.

There you have it, a brief synopsis of the critical aspects of contract licensing.  In addition to those issues discussed above, here are some other important aspects:
1.  Term of the contract i.e. How long it will last.  What it entails to re-sign and continue the contract after the term is up.
2.  Legal matters like what happens if the contract is breached or what if there is a copyright infringement.
3.  Packaging details i.e. what the selvedge and packaging say.
4.  Advertising and marketing parameters.
5.  The design approval process.
6.  How much free fabric licensor gets (sample yardage) and how they could buy more fabric if they want

That sums it up.  Hope you found this blog to be informative and interesting.  If you know anyone that is interested in licensing for fabric, please have them contact me as we are always looking.   Thanks!  Let me know if you have questions and of course I always welcome comments

Happy Holidays!
Licensing Scott

December Dark Watermark Giveaway

 

Congratulations to Donna Simpson for winning the Watermark giveaway! Today we’re giving away a second set of the 18″ x 21″ quarter cuts bundle of our Watermark line. This bundle will be of the darker colorway.  You can view the entire line on our website here.  To enter to win, all you have to do is comment this post.  You can also comment on any link of this post on our Facebook page for an extra entry.  

 

As always, follow us on social media for surprise extra chances to win!

*Contest ends December 19th at 8:00 am EST. Open to US residents only.*

 

 

 

Watermark Giveaway

 

If you aren’t already, be sure to follow us on all our social media outlets for the latest updates on all things Studioe.

 

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Tales Of A Fourth Generation Textile Executive: The First Loss Is Your Best Loss: The Cancellation Of A Line Before Printing

Recently we had to ask our sales reps to stop selling some lines due to poor sales.  This is problematic on many levels and I will briefly discuss how it affects customers, sales reps and our company.  In spite of all the problems, one of our (my family’s) mantras is that the first loss is the best loss…in business and in life.  I can think of many occasions when I relied on this mantra and looking back it saved me further damage and stress.  Cancelling the printing of a line is definitely a situation where the first loss is the best loss as continuing to sell the line and trying to make it work only exacerbates the problem.  In other words, we need to stop the bleeding and refocus on what is working for us, our customers and our reps.  Fabric lines should not have to be forced.

 

  

For our customers, when we decide not to print a line it is unfortunate for them as they relied on us printing the line.  They may have spent time planning an event around this line or had other plans in mind.  One saving grace, however, is that we sell on paper and the cancelled lines are intended for the future i.e. months from now. Therefore, there is no immediate shock like OMG I needed this for my shop hop next week.  That gives the shop time to recover and hopefully they could mitigate the damages if any.  We make sure to contact each customer that ordered the cancelled line.  Typically this communication is appreciated as opposed to a real surprise when the goods don’t show up at all.  Another silver lining would be that since the line sold so badly for us, maybe we are saving the shops from having a line that would end up being a dog for them.  It just is what it is and everyone has to realize that every line can’t be a homerun.  We try to handle this bad situation the best we can and I believe our customers appreciate the communication and honesty.  I have called several shops myself to advise them of the cancellation of a line and they all have taken it very well.

         

When we recently cancelled lines, I got emails from reps about being disappointed.  To be honest, I am not sure what their biggest disappointment was…maybe embarrassment, maybe surprise, maybe losing the sale, maybe having to face an angry customer or maybe something else.  To me, I think it is more annoying, but we are fully aware of how badly said line sold and we are saving the reps from selling a loser to their valued customers.  That is why we try to make these cancellation decisions asap and try to take the first loss for us and them.  These are business decisions and we need to be able to make those decisions without worrying about emotions as emotions get in the way of logical thinking sometimes.  Since this is a fairly new occurrence for us, I will make sure to talk this through with the reps so that they understand where we are coming from and they can explain to their customers.  In the end, I think everyone will agree with us and see what we see.  Most importantly, I think everyone will benefit from our hard decision to cancel. 

 

The truth is that the biggest problems are ours and they are mostly financial.  At the point where we decide to cancel a line, we have already printed the selling swatchcards, shipped the selling cards, created free projects, started the engraving process, promoted & marketed the line, spent a lot of time designing and redesigning the line, posted the line on our website, etc.  The selling swatchcards are obviously a big expense, but the other big expense is that we had these lines engraved and now have to compensate the mills for the unused engraving.  Aside from these financial problems, the real crux of the problem is that we need to meet minimum order quantities set by the mill….typically 1000 yards of a sku.  Regarding the lines that we are cancelling, there may not have been a sku that sold over 200 yards.  Therefore, if we printed this line, we would have to worry about and carry the other 800 yards of this pattern and the majority of that would be a closeout sold out at loss.  So for example if a line has 15 skus and we have 800 yards extra that would be 12,000 yards of closeouts and that is a significant amount.  Closeouts are negative energy for everyone and a big waste of time.  Moreover, it takes away from selling full priced lines.  When it is all said and done, we just want to sell good lines and not closeouts. 

 

I could discuss this in much more detail, but I am trying to stick to my blog criteria of keeping my blogs short.  I haven’t even done that here, but I tried.  In any case, thanks for listening.  As a customer, rep or consumer, what do you think of this?  Can you understand where we are coming from?  I want to hear from you.

 

Consider following our mantra…the first loss is the best loss!

 

Wishing you a great December!

Scott

       

 

 

December Watermark Giveaway

 

Congratulations to Marie Zarcone for winning the Cream and Sugar III giveaway! Today we’re giving away a 18″ x 21″ quarter cuts bundle of our Watermark line.  You can view the entire line on our website here.  To enter to win, all you have to do is comment this post.  You can also comment on any link of this post on our Facebook page for an extra entry.  

*Contest ends December 12th, 8:00 am EST.  Open to US residents only.*

 

As always, follow us on social media for surprise extra chances to win!

 

| Facebook | Twitter | Instagram | Pinterest |

 

Watermark Giveaway

 

Tales Of A Fourth Generation Textile Executive: A Beginner’s Guide To Swatchcards Part III

Happy Monday!  It’s not often that I look forward to Monday, but as much as I love my two kids, 5 days with them starts to wear on me.  Between the 2 hour ride to Thanksgiving lunch, the sleigh riding carrying my little one up and down the hill, the never ending cartoons (Peppa Pig is my nemesis), the birthday parties, the sports classes, the bowling, video games, junk food, temper tantrums, difficulty getting them to sleep and the list goes on.  So thanks for giving me Monday.  Hope your time off was more relaxing than mine.

 

This is my final installment about swatchcards which will tie up all the loose ends.  Believe it or not, a lot of our time is spent creating, making and checking these cards to make sure the end result is nothing short of an impressive presentation. Without a great presentation, customers will just say, “next” and we certainly don’t want that.  So the swatchcard provides that first impression which we all know is integral to success with fabric and in life.  As you may or may not know, we introduce lines 5 times per year (January, March, May, July & October), so we could be talking about anywhere from 40-70 lines per company in a year.  That is a whole lot of swatchcards and a whole lot of moolah as the cards can get expensive. 

 

Inks, fonts, paper quality and color matching are critical factors that need extra special attention.  But in addition to that, for our companies, it is essential that we have at least one free project with every line that we present.  Usually, we have more like 2 or 3, but sometimes we have up to 6.  This is our investment to help our quilt shop customers market and merchandise our fabrics.  All of our projects are free downloads on our websites and I am confident that this does help sell the fabric otherwise we would probably stop doing it and figure out something else to help our quilt shop customers sell our fabrics.  Unlike some of our competition, every project is unique and made specifically for the new line we are presenting.  As time goes on, we have been branching out in to different projects as opposed to just quilts.  Table runners, placemats, cat beds and bags are a few project ideas that come to mind. 

 

Swatchcards

 

In addition to the entire line that we are presenting, we also like to add other suggestions of basic prints that will “work” with the line being presented.  So for example, in addition to the 15 skus in the new line, we may have a range of the Peppered Cottons, Just Color!, Shadow Weave or Watermark that may also work with the line and they are presented on the card as well. This acts as an added sale for our rep, but it also gives the shop owner other ideas of how the line could be used and merchandised.  

 

If our reps sell an entire collection i.e. the 15 skus in the line, the customer has the option of buying the collection in 12 or 15 yard cuts.  This is an incentive for them to buy the whole line as a full collection and is our goal as a fabric company.  When counting the line, we do not include any of the basics we add to the card.  So usually somewhere on the card you will see that it says 15 skus.  Sometimes it even says what else is on the card i.e. 6 Peppered Cottons or 6 Just Colors!.  

 

The final thing that I could think of that you should know about our swatchcards is that you can usually find a lone number on the card which signifies the delivery date of this fabric line.  So for example on the back page of the card you may see a number 6 which signifies a June delivery.  This is helpful to the rep so he/she doesn’t have to refer to the pricelist when writing up his/her orders.        

 

In closing, I hope you have found this detailed three part synopsis helpful in understanding the swatchcard process for the Jaftex Companies.  Hopefully I didn’t miss anything, but if I did, please send me any other questions you may have.

 

Signing off,

Swatchcard Scott