Winnie Cheung was studying at University of Western Ontario to be a chartered accountant when she discovered several of her classmates were ordering customized shirts and suits from vendors who measured customers on home soil but manufactured their products in Asia.
Ms. Cheung and a colleague from university, Noorneet Singh, started doing some research in January, 2009, and investigated probably the best-known player in the market, the first travelling tailor to come to Canada, Hong-Kong based Maxwell's Clothiers.
Maxwell's makes two cross-Canada trips a year. Owner Andy Maxwell creates makeshift storefronts in hotel conference rooms where customers can choose from 5,000 fabric swatches, eight collar styles and five cuff styles, among other options. After measurements by Hong Kong tailors who accompany Mr. Maxwell, customers wait about 10 weeks for their new threads to arrive in the mail.
Based on the Maxwell model, Ms. Cheung and Mr. Singh, now both 25, came up with the idea of starting Toronto-based Shirtpal Co.
“Our sales and marketing initiatives come from Toronto, our digital and Web development from Singapore and manufacturing from Thailand,” Mr. Singh said. “And we shuffle in between. But we are all Canadians.”
Although the nature of a dominant player varies by industry, said Stewart Thornhill, professor of entrepreneurship at University of Western Ontario's Richard Ivey School of Business, that big player is often faced with its own time constraints and issues related to consumers, suppliers and technology. As a result, he said, it doesn't spend a lot of time focused on the small entrants. And 90 per cent of new entrants never threaten the market.
“New entrants often overestimate the attention the dominant player is giving them. But this can be an opportunity for the startup,” Prof. Thornhill said.
The best strategy for a new business is to focus on building its own business, he said; eventually, when the dominant player takes notices, it's because the new entrant is a success. Shirtpal developed an online strategy to differentiate itself from the competition, where customers can custom-order clothing from the site, in addition to attending live purchasing events. (Although Maxwell's has a website, Mr. Maxwell himself acknowledges it's not as sophisticated as it could be.) Shirtpal invested in its site with help from grants from the Singapore government, where a third partner, 28-year-old Ash Singh, now lives. Online sales represent 65 per cent of total Shirtpal orders.
Monthly sales in Toronto average $20,000 and Shirtpal has expanded to Montreal and Vancouver. It also started marketing in Australia this year, where Shirtpal said it is generating revenue between $3,500 and $5,000 a week. It is also operating in the United States, Singapore, Japan and Thailand, where there are either sales or franchise offices.
“We are continually looking for franchisees in markets [where]we currently don't have presence,” Noorneet Singh said. “It is difficult to find franchisees since we are still in the startup phase.”
The company has 20 employees working full-time on manufacturing the orders in Bangkok, three people in Web development in Singapore, four people in sales in Toronto and a two-person sales team in Montreal.
In an interview, Mr. Maxwell said custom-tailoring competition in Canada and the United States has been pretty flat for most of the 30 years his family has been in business. Competition started to gain momentum after the dot-com bubble burst and customers shed their business-casual clothing. With the return to more formal business attire, clients started demanding more custom-fitted clothing, leading to greater business opportunities. But he said it wasn't until about three years ago that competition jumped noticeably. It was then he started to get requests from clients, about 10 a year, about whether he would supply clothing for clients' startup tailoring businesses.
“Anybody can start this business,” Mr. Maxwell said. “You export the tailoring, cutting [of the fabric]and fabrics. But the appeal in custom tailoring is the professional tailoring. I always ask the prospective business owners if they have tailoring experience.”
Ms. Cheung hasn't met Mr. Maxwell but said she would welcome the opportunity, although Prof. Thornhill said focusing too much on what the dominant player is doing isn't a wise strategy.
“Don't worry about them,” he said. “Focus on the customer and your value proposition. Get your ducks in order. Worry about your own stuff. And hope that your biggest problem is becoming as big as the biggest player. If you get big enough, you'll either stand on your own two feet, or be an acquisition target.”
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