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A story about starting small in the garments business

These garments entrepreneurs kept their startup costs at manageable levels.
By Reinerio A. Alba |

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In 1997, seeing the strong growth of the country’s garments market, Grace Perez and Cecile Benabese decided to go into garments trading and formed Gra-cel Fashion Haus. Their objective was to supply the big market for garments in the shopping malls and department stores that had begun to mushroom all over the country. They were not entirely newcomers in business, for when they started their partnership, Benabese was already running a leather goods business and Perez, a T-shirt business.

After initially investing P500,000 in their new venture, the partners realized that they could shave off much of their capitalization requirements if they did away with putting up a factory. For this reason, they provided working capital only for the first orders that they got for their garments, rolling it over every time they had collected their receivables from the trade. In this way, they recovered their initial capital not long after.

“We chose not to put up a factory as a business strategy because aside from not having to put up a large investment, we wanted to be flexible in the products that we would carry,” explains Perez, who looks at the business as a “home-based” venture. Indeed, since Gra-cel Fashion Haus started almost 10 years ago, the partners only had four administrative staff to help them run it.

Expanding lines

Gra-cel initially distributed RTWs along with imported bags, jewelry, and decorative and gift items. Since then, however, its product lines have expanded to locally produced women’s knitted and crocheted clothes and to men’s and children’s garments lines.

Benabese recalls that she and Perez would wear the clothes that they were selling, and that friends and relatives who liked what they saw became their first customers. She says that in 1997, a friend who was impressed by their clothing selections referred her to a leading high-end department store. She then applied for accreditation as a supplier, starting a long-term relationship with the store that remains to this day.

Perez says that initially, the volume of orders for their garments was in the five figures but that it had gone up to six figures over the years. She adds that sometimes, if the volume of the order is big enough, they would go for it even if the profit margin is on the low side.

Says Perez: “The main issue in servicing large volumes of orders is how to finance the production, especially because we sell on credit and we have to pay our subcontractors in advance. When our internal funds happen to be limited, we seek external funding, borrowing either from the bank or from friends.”

On the other hand, Benabese says that good product sampling and competitive pricing are the secrets to their marketing success. She explains: “Since we carry different items for different age brackets and population segments, we price our products to ensure that we could recover all costs—that of the item itself, the import costs, the packaging costs, the trucking and delivery costs, the commissions, the administrative expenses such as salaries and utilities, the taxes, and the cost of borrowed funds. We then add some profit for ourselves.”

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Growing business

In terms of sales volume, the partners say their business is now 10 times bigger than when they started in 1997. Currently, Gra-cel Fashion Haus is concentrating on supplying garments to two big local clients. Apart from this, the company has graduated into creating designs specifically for its clients.

The partners say that despite the current adverse business conditions, they still manage to earn a decent profit and provide a source of livelihood for some 200 families. In 2007, in particular, they say they achieved a 216% growth in sales compared to that of 2006.

The partners believe that there is no substitute for hard work, and they look forward to coming up with even more product lines, such as bags, swimwear, and home items. They also intend to aggressively tap other leading local department stores and the international market as well. “The only thing we are not exploring at the moment is outer space,” Perez says, smiling.


CONTACT DETAILS
GRA-CEL FASHION HAUS
Guadalupe, Makati City
Mobile: 0920-2383982;
0917.648.6070
E-mail: gracelfashionhaus@yahoo.com

 

*This article was originally published on November 6, 2011. Updates were done by the editor.

 

Photos from Flickr (ILO in Asia and the Pacific) and Wikimedia Commons. 

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