“A good friend of mine gave me a wonderful piece of advice: ‘Your accountants should take care of yesterday, your operations people should take care of today and you should strategize to take care of tomorrow,’” says garment importing veteran Haresh Tharani, chairman of the Resource Club.

This mantra seems to have worked for Tharani, given the fact that his companies — The Resource Club, The Design and Source Holding Co. and The Prevue — have combined annual revenue in excess of $150 million. His entry into the garment importing business was quite by chance. Tharani was vacationing in the United States when his uncle offered him an opportunity to work with him in New York. He accepted and never went back to India.

Tharani has had a phenomenal rise since his entry into the business in 1982. But he still remains deeply involved with every aspect of his business.

“The time from when we design the garment to the time it goes into the retail stores, it’s almost like having a baby and sending it to college,” he says with passion.

Recently, he added another feather to his cap by becoming joint owner of Bill Blass Ltd., a company formerly owned by famous designer Bill Blass, known for his snazzy jeans. Because he was the largest licensee of the Bill Blass label, owning the label was the next logical step, Tharani says.

“The world we live in is a branded world,” Tharani says. “Everybody would like to buy a label, whether it be in shoes, sunglasses or hats, but especially jeans — it’s so American.”

Competition from Retailers

Tharani’s move may have been a timely one. Becoming branded is important, especially now that big names such as Liz Claiborne and others have been eating up smaller companies as the apparel industry consolidates. Bansi Lakhani, vice president of Krazy Kat Sportswear, explains that the competitive edge of Indian garment manufacturers and importers is threatened by big retailers such as Wal-Mart, Kmart, Macy’s and JCPenney, who are directly importing garments from countries with cheap labor. This has enabled them to keep their retail prices down, and employing greater resources they have successfully established overseas offices. Consequently, margins have suffered for importers such as Lakhani, who have been forced to sell products to retailers at lower and lower prices.

Tharani says that he tries to keep margins roughly above 20 percent, but that is sometimes difficult, because a lot depends on who the customers are and the volume of goods ordered. The same amount of work has to be done irrespective of whether the order is for 20,000 pairs of jeans or 10,000. Economies of scale are a huge element in the garment business. For smaller players the margins are even lower, and it is even harder to win orders from retailers, Tharani contends. Lakhani believes that creativity has been compromised as a result.

“They [retailers] have to plan very much ahead and order safe items,” he declares. “They cannot afford to do too much fashion.”

The challenge for importers like himself, Lakhani feels, is to create clothing that is fashionable yet cheap — in other words, garments that retailers would not spend their time making because they are not volume oriented. Tharani believes that given the slowdown, companies involved in private label manufacturing (i.e., companies that make clothing for retailers with the retailers’ label, for example Macy’s Charter Club label) have a great advantage because they allow retailers to cut down on the travel needed to communicate with factories and mills overseas.

“In a recessionary environment, companies cut overhead, and travel is a big overhead,” Tharani explains. “This is the time we can go to retailers and say, ‘This is what we can do for you in private label.’”

Design and Delivery

The design division of a garment importer, whether of a nationally recognized label such as Bill Blass, or locally known vendor such as Krazy Kat, presents a clothing line to a retailer. If the retailer approves and places an order, things swing into motion – mills in overseas countries begin to spin and the fabric is prepared. Then the piece goods, as the fabrics are called, are transformed into outfits and the final products are shipped from the factories to the United States. The goods are then distributed to retailers. Tharani’s customers include premier, high-end retailers including Saks and Nieman Marcus.

“We dress some of the most affluent people in the country,” he says with pride.

In the private label business, importers have to customize their products according to what the retailer wants. Consequently, instead of presenting a finished line, the garment importers will work with retailers to come up with a design.

The India Connection

Tharani works with factories in 15 countries and he is deeply impressed with the factories that are now being built in India, especially those in Bangalore and the rest of South India. Others are hardly as effusive. Andrew Kirpalani, president of Andrew Sportswear International, which has revenues of roughly $100 million a year, says that up until two years ago he used to conduct business with several factories in India, Nepal and Bangladesh. Most of his goods now come from China and Taiwan. That is primarily because his company formerly dealt with mostly Indian fabrics such as cotton. When he decided to shift over to denim and stretch materials to serve the teen sportswear market in the United States, Taiwan and China proved to be more conducive.

Echoing Kirpalani, Lakhani adds that the limited number of fabrics that India makes is causing India to lag behind China. The productivity per machine is also comparatively low in India. Moreover, he alleges that Indian mill owners are too “greedy” and do not invest enough in overhauling outdated machinery.

Tharani, however, vigorously disagrees. Regarding India’s limited use of fabrics, when it comes to stretch materials, he declares that his company has been using stretch materials from India’s Arvind mills for two years.

“It’s all a matter of who you are sourcing from,” he charges. “If you decide from day one that you want to go to K-mart, you will only get what K-mart has to offer; it’s all there, you just have to look for it.”

Tharani says he encourages mill and factory owners to invest in machinery and his experience with India has been very positive. The lifting of the quotas in 2004 according to the World Trade Organization agreement will also make India’s role in the garment industry even stronger, Tharani declares.

“India is very dominant and will continue to be a major force in the apparel business 2004 onwards,” he predicts.

Technology and the Apparel Business

In the garment industry the lead-time, the time between the retailer ordering a product and obtaining delivery, is roughly 12 weeks. The biggest challenge is to have shorter lead-times, all agree, but technology cannot help there. Tharani explains that the piece goods used in some of his products may not be available in the country where they are manufactured. This naturally requires the fabric to be imported. That can take anywhere from 30 to 45 days. Production takes another three weeks. Finally, the goods are shipped to the United States by boat, which takes three weeks more.

But technology can help to make major headway in responding better to a retailer’s demands and keeping a low inventory, Tharani admits. The problem he says is that no one in the garment industry, which is very fashion driven, has communicated the needs of the garment industry to IT companies.

“IT companies should target the apparel industry, study what it’s all about and customize products for our business,” he says.