David Reiss: staying in control

In the notoriously fickle world of fashion it’s rare to find a name that has persisted over the decades without either collapsing under the weight of its own ambitions or lapsing into corporate uniform.

In the notoriously fickle world of fashion it’s rare to find a name that has persisted over the decades without either collapsing under the weight of its own ambitions or lapsing into corporate uniform.

In the notoriously fickle world of fashion it’s rare to find a name that has persisted over the decades without either collapsing under the weight of its own ambitions or lapsing into corporate uniform. And it’s rarer to find one that is still controlled by the same restless entrepreneurial spirit that founded it.

Reiss, the idiosyncratic British fashion label founded by David Reiss in the era of Swinging London, is an exception to the rule. Well known as a label among fashion-conscious Brits, Reiss has now embarked on an international expansion programme that’s set to establish his name as a global brand.

Reiss’s interest in fashion developed young – his father ran a small ‘gentleman’s outfitters’ in Bishopsgate – and he started out as an agent for wholesalers, selling to retailers. ‘I managed to do pretty well, but I thought “this is just making money for other people”.’

In a bold move, he decided to set up a shirt manufacturing business with a partner. In the early ‘70s era of flower power and enormous collars there was a ready market for the bold fabrics and designs Reiss was producing. ‘My partner went up to Yorkshire to run the factory while I did the selling and the design,’ he says. ‘In no time at all we were employing 100 people.’

Although Reiss is now primarily a retailer, he attributes much of his success to these early experiences, which exposed him to all areas of the fashion industry supply chain. But as a manufacturer, the 1970 dock strike taught him an early lesson in the importance of being in control of his supply chain: ‘At one point we were selling all of our collection as soon as we got it; then all of a sudden there was a dock strike. We had nothing to produce. You can suddenly find there are factors out of your control,’ he says.

Reiss had also inherited his father’s Bishopsgate shop, and he used this foothold in the retail market to launch an early experiment in what would now be called vertical integration. ‘I got together with the landlord to buy the shop next door and turn a small traditional menswear shop into a modern concept, a contemporary fashion store,’ he says. ‘We became one of the first UK retailers to start importing fashion goods from Italy and France.’

The contrast between his powerlessness as a manufacturer in the face of the dock strike, and the control he could have as a retailer, was a turning point for Reiss. ‘Getting involved in manufacturing has held me in good stead, with an insight into that side of the fence,’ he says. ‘But in retail, you’re in control. If people don’t come through the door then you can do something about it.’

As the retail business took off Reiss decided to withdraw from direct manufacturing and use third parties to ‘cut, make and trim’ products to his design and from his choice of fabric. The template for Reiss was more or less complete.

‘“We were very design-led, very focused. I was very decisive in what I wanted to do,’ he says. ‘I believe you have to have to have a vision, you have to have a purpose. Other entrepreneurial people I’ve met all have that desire, that determination – it’s like they’re on a mission.’

The Reiss shops prospered through the 1970s, finally opening a flagship store on a prestigious site on the King’s Road. ‘The King’s Road store took off from day one, offering luxury clothes at affordable prices. We had a unique look because we manufactured some of our own goods and we were also bringing in the hot fashion labels from abroad.’

The 1980s were boom time as the business expanded to 15 stores. But as the decade wore on, warning signs began to emerge. ‘Boom times don’t go on forever: right at the end of the 1980s we had an enormous hike in rents, at the same time as people stopped spending with no warning. We weren’t geared up for that like we are today, and in 1990-1991 we had to restructure.’

Reiss decided the only way to move forward was to become totally vertical and only sell own-label goods. ‘We decided to become more aspirational and focus on the brand,’ he says. ‘We changed the whole way of approaching the business – to make a personal statement and also achieve the margins we needed to survive.’

Although the recession was a tough period, Reiss believes this laid the foundation for the company’s current success. ‘It was a pivotal point in the whole way I look at things today, and that’s no coincidence,’ he says. ‘Some of the most successful retailers today are the ones that got sucked into that recession.’

Reiss also became an early innovator in the use of offshore manufacturing: ‘I could do this because I had the manufacturing background,’ he says. ‘I started going to the Orient and looking at other places where I could produce.’ In the new retail environment of the 1990s Reiss realised that the only way to perform in the high street was to be a major player. ‘Throughout the 1990s it was a case of building the image,’ he says. ‘It wasn’t just about products any more, but the aesthetics of the stores.’

By the end of the 1990s things were going ‘very nicely’. But the high street began to change again, as innovative chains such as Zara and H&M began to broaden the options available to the fashion and cost-conscious. ‘I realised we needed to take the brand even further away, to make it even more aspirational,’ he says. ‘I didn’t want to be derivative. The whole high street follows the herd; they see a concept and try to copy at the best price. I decided that was not where we wanted to be.’

Reiss adopted a twin-pronged strategy – investing in designers to ensure that Reiss’s products were unique, while ensuring that the quality was such that they could be sold at an aspirational price. The strategy paid off when in 1997 Reiss won the Drapers’ Record award for men’s retailer of the year.

‘We had a very strong menswear niche,’ he says. ‘Our core customers were in their mid-twenties to late thirties, people who aspire to own beautiful designer clothes but don’t want to pay designer prices.’ Reiss realised that this ‘bridge’ concept could appeal to the wider and potentially more profitable women’s market. ‘Men buy clothes when they need to, but women shop till they drop,’ he says.

Through 1999 the company worked on the launch of Reiss womenswear, which proved to be another turning point for the company. ‘Everybody said we were crazy, it’s such a competitive market, such a tough environment,’ says Reiss. ‘But I was determined to make it happen.’

This time it wasn’t all plain sailing, however: ‘It was one of the times when I didn’t have total control,’ says Reiss. ‘I took someone on board with all the right credentials, gave them a clear brief and thought I would get what I wanted. But as soon as the collection hit the stores I realised it wasn’t what I wanted – it just didn’t sit with the menswear.’

Reiss took ownership of the women’s line and spent the next year going up a very steep learning curve. ‘I became very hands-on because I had to,’ he says. ‘In menswear you have four collections a season – in womenswear you need new things every week. You can’t have products in the stores too long; you need newness, freshness, a level of excitement all the time. That, in turn, means you need more flexible factories.’

Recognition came soon afterwards at the 2003 British Style Awards. ‘Totally against expectations – for a business which had just launched a new division – we won the award of fashion retailer of the year,’ says Reiss. ‘That made us believe that we’d arrived. Everybody started talking about us. We became a major talking point in the industry.’ For Reiss, this kind of recognition is as, if not more important than commercial success.

The success of the women’s label has become the launch-pad for the current phase of global expansion. Reiss stopped wholesaling in 2001, and now the only way to buy Reiss clothes is through therapidly expanding chain of Reiss stores.

Reiss currently has 38 stores, but plans are already in place to expand this to 100. The group will continue to expand on a small scale in the UK, but the real growth will come from overseas. Here Reiss is following a double strategy: expanding through master national franchises in markets like the Emirates, Scandinavia and Hong Kong, while owning its own outlets in primary markets such as the US.

Reiss has no difficulty with using franchising alongside organic expansion. ‘It’s horses for courses,’ he says. ‘In the States we speak the same language, so we can send our own people out there and source the locations ourselves.’ Conscious of the need to arrive in style in the States, Reiss put intense personal effort into the creation of the company’s flagship outlet in New York’s painfully fashion-conscious SoHo district.

With an open budget Reiss’s designers came up with a 5,000 sq ft store that wowed New Yorkers on its opening in February 2005 with its combination of sandblasted brick walls and acrylic fibre-optic sculpture. It has already won two major awards, including best international store design, and is trading at 50 per cent above expectation.

While the plan is to have 50 fully owned stores in the States, it is the franchising model that will deliver Reiss’ vision of 250 stores worldwide.

‘This is why we’re growing so quickly,’ he says. ‘The franchisees take ownership but the products and the aesthetics are all done under our umbrella.’ Reiss sends its own people over to help set up the franchises, which must purchase all their product and shop fittings from Reiss and operate according to the ‘company bible’.

Even on a like-for-like basis the business is growing at 20 per cent per annum. Despite the increasing scale of his operation Reiss believes the only way he can continue to be successful is to remain in direct control of the business. ‘Every week I speak to at least 30 stores,’ he says. ‘All the time I’m in touch, speaking to people in offices, going round stores, hearing the positives, hearing the negatives. I’m the driver of the business. I take it forward, I work with the design team, I look at locations and countries and that takes up most of my time.’

Reiss remains one of the few major fashion retailers still in private hands, although he says he gets approaches ‘all the time’. But with very low gearing and the internal resources to fund the expansion he is in no hurry to sell out or bring in investors. ‘As long as I’ve still got the same passion that I’ve always had, the same level of energy, the same level of excitement, I’ll carry on.’

And after three decades in the business, he has no fears about Reiss losing its place in the market. ‘People have so much choice these days,’ he says. ‘But if you give people what they want, you’ll do very good business.’

This article was originally published in Masterclass magazine.

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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