High Margins Help in Economic Lull

Smaller orders coming from regular customers? Here's how to make more profit on smaller jobs.
March 1, 2009

Dunbrooke's Meteor Polo (style 3364) is a 5-oz. double-mercerized, jacquard-patterned polo, and a good example of higher-margin garments that can boost profits on smaller orders.

By Pat Williams, Contributing Writer

Keeping a positive attitude is the key to maintaining high-end sales in these uncertain times. If you go into your customer's office to show him products while you are bemoaning the economic crisis, you will convince him that he can't afford to buy anything.

Most of your customers aren't really going to stop buying even if times are tough. They will, however, look to get more value per dollar. It is up to you to provide this value. Don't automatically assume that value means the lowest price. Price is just one part of the equation. Buyers will justify spending a bit more money to avoid wasting money on an inferior product.

One method to generate sales in this market is to run a loss leader in an advertising campaign. The idea is to make up in volume what you lose in markup. But remember that in the embroidery business, volume means more labor and labor costs, so while you want to set your price low, you don't want to set it too low. If you are losing money on sewing a particular garment, selling a large number of those will put you under for sure. Research the going price for the garment you are sewing and set a price with a reasonable markup. Then it is up to you to explain to your customer how doing business with you will provide a better value.

Be careful about not dropping the price too much on your higher-end items. As the economic situation reverses itself, you will want to be able to maintain the proper markup on these garments. If you drop the price too low, you won't be able to convert your customers back to the normal prices. You also will diminish the perceived value of these high-margin garments. There are customers who have the means to purchase high-priced goods and you do not want to appear to have cheapened them.

One solution to this scenario is to offer more products than you used to, with a wider price range. For example, I live in Arizona and have most often sold 100% cotton shirts. I've played down the polyester/cotton blend as being too hot to wear in our environment. Knowing that the restaurant business is currently down about 40%, I wanted to offer my restaurant client a good value while keeping his staff in embroidered shirts. To do this I explained that we should switch his staff to poly/blend shirts as they cost $6 less. I also informed him that they would come out of the dryer nicely — a plus since most of the staff members didn't iron their shirts anyway. So my profit margins were maintained, the price of the embroidery didn't go down, and the customer was happy to save $6 a shirt.

Add New Services
Another solution is to expand the number of services you offer to your customers. If possible, consider adding heat presses, direct garment printing and screen printing to your embroidery company. This will allow you to offer less-expensive alternatives to your customer to fulfill his logoed apparel needs while maintaining your profit margins. If you can't make the leap to adding new equipment at this time, explore subcontracting to other companies that provide these services.

Keeping your good customers, while helping them through the economic crisis, is critical. Now is the time to get to know your customer and his operations better so you can offer alternative products to him without cutting your profit margins.

Also, when prospecting for new customers, be more selective as to where you spend your marketing dollars. Focus on a few strong prospective customers with a micro-marketing effort that includes finding out more about them and the products they wear. This may produce greater results than mass mailings to a larger number of businesses.

Cutting costs while maintaining service levels is critical to all of us at this time. One way to do this is to evaluate your customers' designs and offer less-costly solutions. An embroidery design that has heavily bordered lettering may look just as nice without the borders. Removing the borders can save thousands of stitches — thereby letting you embroider the garments at less cost to your customer.

Digitize Efficiently
How a design is digitized can have a great impact on the cost of actually sewing it out.

Excess trims in a design — particularly between small letters — are very costly to the embroiderer. One Arizona Society design we evaluated for a customer had 33 trims between small letters that were almost touching each other. By removing the trims, we reduced the running time of this design by 29%. That saves one third of operating costs every time the design runs. Aside from the design sewing in less time, it also looked better after we removed all the unnecessary tie-down and tie-off stitches for the letters. Fewer knots on the back of the shirt also generated a more comfortable design to wear.

Removing excess trims also eliminates the possibility of threads pulling out of the needles, often perceived as thread breaks. A thread break generally costs you one minute in sewing time. You should be able to sew all day with only one or two thread breaks. If you have more, you need to evaluate the quality of your designs to save you this valuable production time.

Adding an edge walk with a short stitch length can eliminate the need for using a topping on most piqué fabrics. This does add stitches to the design, but the cost of sewing out these stitches is much less than the cost of the topping and the time required to remove it.

Proper digitizing techniques also can reduce the backing costs associated with embroidery. Embroiderers often use multiple layers of backing to try to correct registration problems and puckering issues. Obviously, using two layers of backing will double your costs, and three layers will triple it.

All designs should be able to run with just one layer of backing. If one won't, the problem lies in the digitizing. Puckering problems should be solved with density adjustments (usually lightening up density) and a change in stitch direction. Registration issues are solved with increases in pull compensation and adjusting fill areas for push.

Many people will omit underlay in an attempt to save stitches in a design. Unfortunately this is a misconception. Underlay stabilizes the fabric and prepares the garment to accept the top layer of stitches. This allows for less density and decreases puckering in the design. Proper underlay minimizes the push-and-pull effect the stitches have on the fabric.

Appliqué is another way to save stitches in a design. Many fabrics are available today to make appliqués, and some remarkably resemble stitches. If you are sewing large jacket back designs or even police badges with large fills areas, consider the use of appliqué fabrics to cut down running time on those high-stitch designs.

Don't Scrimp On Thread
Additionally, in your effort to cut costs, don't be lured into using cheaper threads. Inexpensive rayon threads will break more often, costing you valuable running time on your machines. If you have to back up your machine several times to cover areas where the thread broke, the quality of the design will suffer. Cheap poly threads no longer mimic the sheen of rayon thread. They often look like they are covered in cheap plastic. Keep in mind that even if you are sewing on cost-saving garments, you still need to maintain the perceived higher value of embroidery.

While on the topic of lower priced items, keep backings in mind. Less-expensive shirts are often thinner than higher-priced garments. We use special backings such as poly-mesh or no-show backings on higher-priced garments since these backings are more comfortable to wear and don't show through the garment. They produce a nicer looking shirt. Lower-cost shirts deserve the same treatment. Since it is more likely that your backing will show through shirts, use the poly-mesh backings to raise your customer's perception of the value of these garments.

Your customers' perceptions of product value is of prime importance in maintaining your relationships. Don't shave costs in the presentation of the finished product. A neatly folded shirt presented in a plastic bag will always look like it is worth more than garments flat folded by the dozens or half dozens.

Be prepared to be flexible; offer more and different types of garments; take time to understand your customers and learn what is important to them; cut unnecessary costs; and keep a positive attitude. This will help you maintain higher margins in low-margin times.

Pat Williams of Image Embroidery in Sierra Vista, Ariz., is an award-winning digitizer and embroiderer. For more information or to comment, contact Pat through imageemb.com.

Tips for Training Embroidery Operators
Does your shop have a training program? Even if you are a one-person shop, there will likely come a day when you will need to train a helper, salesperson or machine operator. Start keeping notes now about what your employees need to know and how you want to teach them.
September 14, 2009

How Fabric Color Impacts Contract Digitizing
A common frustration for contract digitizers is when the sew-out of their file tests perfectly but turns out horrible on the customer's machine. The file is sent back and the digitizers are then trying to fix an already perfectly digitized file and can only guess where the problem may lie.
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Off the Cuff: Selling to Religious Organizations: Part 1 of 2
In our industry we decorate a massive assortment of items by a broad variety of technologies. Then we distribute what we produce to virtually every economic sector in every nook and cranny of society.
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Diversifying Your Customer Base  
Learn to evaluate and adjust your mix of clientele for optimum profitability and stability.
While the economic lows that many American markets have been experiencing for the past year are certainly painful, they’re also nothing new. Historically, the tide of business success continually ebbs and flows, with one market experiencing a rush of good fortune while another watches its revenue all but dry up. This cyclical nature of business is precisely why decorators must have a diverse customer base that allows them to weather slowdowns — or even meltdowns — in parts of the economy.
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Jacket Sales Stay Warm 
Styles and price points may change, but thankfully, jacket sales won’t cool off anytime soon.
When the going gets tough, the tough keep going — and they keep wearing jackets. That’s the positive message from numerous industry suppliers, who say that even as the economy continues to sag, sales for jackets remain robust — albeit often at lower price points and in different styles.
September 01, 2009