Direct sellers TAKE Diverse APPROACHES

Bobbin, June, 2000 by Jules Abend

From the municipal sector to the school market, uniform producers of all sizes and shapes are gaining ground with unique products and services.

As the uniform industry has expanded during the past decade, its two camps -- rental and direct sales -- have gained considerable strength in the U.S. apparel market. In recent years, the rental segment of the business has tried to muscle in on or absorb direct-sell uniform suppliers, but this niche of the business still has its share of large and healthy companies, as well as small players that have devised strategies to stay in the game and new companies that continue to enter the fray.

Part one of this report, which appeared in the May 2000 issue of Bobbin, examined the dynamics of the market and profiled several major players in the rental end of the business. This month, Bobbin turns the focus to direct sales with snapshot profiles of Superior Uniform Group, Lebanon Apparel Co. and Intex Corp., and looks at the opportunities and challenges of supplying the school uniform market through an interview with Royal Park Uniform.

Direct Sell Strategies: One Size Doesn't Fit All

One major contender in the direct sales channel is Seminole, FL-based Superior Uniform Group, a $162-million company with seven plants in Arkansas, Louisiana, Mississippi, Central America and South America, as well as some joint ventures in Asia. In describing the business, co-president Michael Benstock says: "We are probably the largest manufacturer of uniforms in the [United States], covering all marketplaces."

The company doesn't launder or lease. It sells to retailers and catalogs and through distributors, particularly in the health care business. Until about 20 years ago, Superior's roots were in the health care field. The company then started expanding into employee identification uniforms for supermarkets, fast-food chains, airlines, hotels and other channels adopting image apparel. Superior now also has a public safety division that provides police, fire and security uniforms.

Although the company doesn't own a laundry, it does sell to commercial and industrial laundries and uniform leasing companies, which in some ways compete with the direct sales side of the business. Even as he emphasizes that Superior is, "probably one of the niche's most healthy players, making what we consider a very respectable profit," Benstock calls the uniform industry "a very tough business."

For one thing, he notes that it's a deflationary sector, saying, "A product that we sold for $10 ten years ago is probably selling for $6 or $7 now. And it's not necessarily that we're working on less gross margin from a percentage standpoint because we're sourcing [products more cost effectively]. But from a dollar standpoint, we're certainly working on less gross margin."

Benstock believes that as the market becomes less manufacturing oriented and more marketing focused, one of the biggest challenges will come from many more non-uniform makers entering the arena. As an example, he notes that ad specialty companies are now going into traditional uniform accounts and taking business by undercutting for pennies. Additionally, as a result of the growing popularity of casual-look uniforms, traditional apparel makers and mills are trying to make inroads. "However," the executive asserts, "in some cases during the last year we've seen [the mills] back off. They realized it's a lot different to distribute uniforms than it is to distribute piece goods."

Benstock also reports that changing customer demands can be daunting for direct-sale uniform firms. Illustrating this point, he says that distribution challenges become "very great" when a supermarket chain, for example, decides that it doesn't want uniforms shipped to three central distribution points any longer, but rather to 500 stores. And it can move even further down the supply channel. As he puts it: "Then the chain decides to put the monkey on the backs of its workers and asks you to ship individually to 20,000 employees, and then track their social security numbers and their purchase allowances.

However, he reflects, "It's worth it, if you do it right, and we have figured out how to do it. Our strength has always been in knowing how to make money [in this business]. But we're on the same path as everybody else -- trying to figure out how to do it better."

In addition to the mega-companies in the uniform industry, smaller producers, which have the vision to change, also are managing to maintain a position in the market. One example is 31-year-old Lebanon, VA-based Lebanon Apparel Co. The $6million to $8-million supplier of health care, fast-food and airlines uniforms, with two plants and 400 employees, has been focusing on ways to improve its business, says Dan Vipperman, president.

Faced with the reality of more import competition, Vipperman started a quick response program about seven years ago. As he explains, it has paid off because lead times for offshore production cannot accommodate his customers' needs. As a result, he believes that Lebanon's role in the future will be to continue to remain flexible and handle short-turn orders. In this regard, Vipperman recently invested about $100,000 in automatic equipment to make banded collar shirts. He emphasizes, "The reason for our success is that we're capable of making just about anything."