Daniel Vosovic, Juliana Cho Share Small-Biz Strategies at New York Fashion Week

New York City's Hudson Street today is a mini retail destination in its own right, boasting an array of high-end shops from the Tracy Reese Boutique to the delicious delicacies featured at Jacques Torres Chocolate, but when designer Juliana Cho opened Annelore in 2002, it was the first women's fashion boutique on the West Village thoroughfare.

After working for other designers for nine years following her graduation from FIT and sinking savings meant for her first apartment with her husband instead into a 400-square-foot retail space, Cho's lifetime goal of running her own label and store finally came to fruition. "Coming from an immigrant family, I always wanted a brick-and-mortar store," Cho explains. "I saw my dad do it, and I said, ‘I can do this, it's the American dream!'"

Speaking on an American Express U.S. Small Merchants' Group panel during New York Fashion Week, Cho encouraged emerging designers to follow their own path in the business world. Opening a fashion boutique in the West Village in the immediate wake of 9/11 was "a little scary," she says, but it meant the retail rent wasn't nearly as exorbitant as it is today. Twelve years later, Cho's 100-percent Made in New York Annelore line is so successful that she was able to move her design studio from the Garment District into a larger second boutique, showroom and atelier in TriBeCa. 

Cho became committed to the idea of manufacturing exclusively in New York City while working for other designers who would produce samples locally and then manufacture overseas. "I saw the difference," she explains. "Something would come back with one short sleeve and one long sleeve. I was mortified, and they would say, ‘just ship it.'"

Taking all of this into account, Cho decided to dedicate a bigger margin toward local manufacturing, accepting that perhaps her business would not initially make as much of a profit. "It's nice that Made in New York is becoming cool to do. We have very talented artisans from tailors to trim makers to pattern makers to hand knitters that basically are being overlooked here," adds Cho, who sources her hand-knit sweaters from a "knitting bee of grandmas in their 80s" in Brooklyn. "We think this whole wave of making things in New York City is going to be such a great turn for the city. It brings in a lot of revenue but the quality of workmanship here surpasses even Italy. I truly believe making things here and overseeing quality on a day-to-day basis makes a huge difference."

Despite the commitment to domestic manufacturing, Cho still sources her fabrics from overseas due to the lack of quality mills in the U.S. "All the best mills are in Italy, France and Japan — which is becoming a powerhouse now," she says. "Buying those fabrics, import duties, shipping — thats where the bulk of our money goes as a small designer."

Although e-commerce has become an important part of her business, Cho admits it took her a decade to launch a web store, citing concerns over recreating the high-end, high-touch in-store experience online. "Now we can reach our customers in London or Hong Kong who used to live near our boutique but moved halfway across the world," she says.

From reality TV to business owner
As a finalist on the second season of "Project Runway," designer Daniel Vosovic made some savvy moves following such high-profile exposure. "I was on Project Runway four days after I graduated from college — it was my first job," says the CDFA Fashion Incubator member, who also manufactures exclusively in New York City. "I was in a unique position because no one really knew what the show was at the time, but now I had now millions of people around the world who knew me and knew my clothes but had no access to get them, and I had no business structure in place to supply them."

And so despite the "noise that surrounds a moment like that," Vosovic hunkered down for five years and landed a number of behind-the-scenes industry gigs, from glamorous creative director roles to lowly second assistantships. Most important, however, he began to assemble a core team of trusted advisors — including an attorney and a financial advisor — who would make all the difference when he decided to "push the go button" and launch his eponymous line in 2009, landing three investors within his first six months. 

Vosovic says his e-commerce site has been "mobile-friendly" from the start, citing digital technology and social media as an essential part of "how we live today."

"The fact that I'm a small ship allows me to shift and navigate a lot faster than big labels — it can make me more vulnerable, but it also has kept me alive in a recession," explains Vosovic. E-commerce insights can have a real-world retail impact, too; he can see, for example, if there's a group of customers in the Atlanta suburbs who regularly patronize his site and use that hard data when initiating wholesale discussions with a boutique in that metro area — perhaps throwing in an exclusive dress to cement the relationship with the end customer. "It's a way of parlaying the old world with the new world so that no one feels alienated," he adds.

Indeed, the power is shifting, both in the brick-and-mortar and digital retail worlds and from the brand and retailer to the consumer. "Where the digital meets the physical is where the magic happens now," says Milk Studios co-founder Mazdack Rassi. "At our fashion shows, it used to be that all the big retailers would be in the front row, and now it's the e-comm players, although the traditional retailers are still there, too."

What's more, emerging designers today have far more potential influence and paths to success than in previous years. Young designers, eager to get their lines picked up by a large department store, used to have to cater to the retailer's demands for new styles, colors and more. But if the retailer was wrong about demand for that product, says Rassi, it would send everything back, with the financial burden of the misstep falling largely on the designer.

Under that business model, "every six months you risk your company going bankrupt," Rassi explains. "Every six months you have to come up with a new line, and it's very difficult. Today, as a small business, you can instantly — through information — know what skirt sells and what doesn't. I think that's really healthy for the business."

And it's healthy for the consumer, too, especially for the small business-loving Generation Y, which "spends without worrying about how the economy is doing," according to American Express senior vice president, U.S. small merchants, Ed Jay. Indeed, the young, digitally savvy demographic's purchases with small fashion businesses grew a robust 29 percent year-over-year in the second quarter of 2013. Growth at smaller fashion merchants (5 percent) is slightly outpacing larger companies (3 percent), for the third consecutive quarter, according to American Express data.

Despite Gen Y's desire and propensity to spend, Rassi says the young consumer can be fickle and hard to please. "I have so many young friends who won't watch TV because they don't understand why [the network] tells them this show is on at 8 p.m. They want to watch whenever they want," explains Rassi. "They're a very ‘on-demand community.' With clothes and fashion, it's the same sort of trends."

To build a digital community, brand owners must constantly feed their fans a steady supply of content to keep them interested and around, Rassi adds. While creating compelling editorial content can be a resource-draining challenge for small designers, Vosovic says he uses his garments as content, which fans can "curate" as they interact with his designs on sites such as Pinterest, Instagram and Facebook. And instead of using social media platforms to urge his followers to buy his latest products, he discovered that simply posting a brief, heartfelt "letter from the designer" has a greater impact with "trigger-happy" fans who are "ready to click away from your site as soon as they sense content that's contrived," Vosovic says. 

Cho shared some advice for hopefuls new to the fashion business, emphasizing the critical need to believe and invest in the product above all else. "I would definitely advise young designers to go for that expensive fabric instead of putting on some sort of glitzy party," she says. "At the end of the day, yes, you'll get some press on that party, but the consumer is not going to buy that dress if it's made poorly."

"Because the consumer is not at that party," added Rassi.
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