Classic Knitwear and Guardian: A Perfect Fit?

[pic 1]

Institute of Management, Christ University

Kengeri Campus

Bengaluru

Summary Report on:

Classic Knitwear and Guardian: A Perfect Fit?

Submitted for the partial fulfilment of process related to

Class Assignment

Submitted by:

Madhurima Acharjee (1727049)

Aswathy Venugopal (1727244)

Tej Kumar (1727234)

Abhirup Poddar (1727002)

Tony (1727136)

Suchayan(1727035)

Syam (1727036)

Lean Operations and Systems (LOS)

Introduction

Classics knitwear Inc headquartered in Miami, Florida is a manufacturer and distributor of unbranded casual knit apparel. The company operated in the non-fashion casual knitwear sector and had good revenues of about $550 million in 2005 alone and this is mainly in US.

They mainly concentrated on wholesalers and they gave about 75% of sales. They concentrated in this area rather than retail sector as they found there is a faster growth potential in that field. Classic knitwear was considered to be the top 2nd player in the non-fashion segment with about 16.5% market share. The rest 25% of the income is coming from the huge retail sector and this constitutes to the main customers like Walmart and Dollar General which gave about 57% revenue to this segment.

They tried to reduce the production house by having offshore production hub in Dominican Republic where they tried to explore the idea of high massive production volume which can reduce the cost of production on a whole. Many big brands have tried to replicate the same strategy and shifted the production oversees but failed due to many difficulties.

Non-Fashion Knitwear Industry and the Competitive Context

This sector consist of casual wears and undergarments, in which T-Shirts represented 13$ billion. In the Branded sector there is indirect competition from 3 companies (the big 3) – James Brands, Flower Knit and Greenville Corporation and in Screen print sector there is direct competition from B&B active wear (which is the market leader with 23.6 market share). Classic is more focused in the Screen print sector especially in the T-shirts.

In retail Business almost 90% of the total sales were done through mixed retailers and clothing specialist retailers and the remaining where through online retailers, direct selling etc. and it has remained more or less the same throughout the years. They competed for retail business using attractive price, varieties, prompt delivery, additional discounts and co-op advertising support.

It is seen that the manufacturers of branded knitwear earn more margin in retail prices (50%) than the private label knitwear and 45% of unbranded knitwear was sold at discounted price.  So, private label knitwear earns less margin than the branded ones.

In order to promote the private label, price promotion is generally applied by the retailers which is more effective in Back to School and Christmas promotional periods, and bundling items. The pricing policy of Classic was determined by Chong and Miller which brought increased manufacturing efficiencies.

When it comes to the Guardian Project, Miller started researching about product innovations which made e-mail invitations as a pathway of creating survey responses. Seeing the rsults he could predict that 60% of the respondents would definitely try the product within 2 years and at least 50% of them will buy an additional shirt.

In January 2007, Classic will launch ‘Guardian Apparel’ rather than ‘Classic Knitwear’ with four shirt styles in the product line.

It was good for them if they launch the products by the end of the winter, so that the sale may got high.