Handbag Maker Hammitt Maintains Luxury Status With Tight Inventory Control

For luxury handbag and accessories brand Hammitt, controlling the retail price of its products is essential to managing its brand image.

And the key to controlling the retail price, Tony Drockton, Hammitt’s founder and executive creative director, told CO—, is maintaining tight control of its product inventory.

As the Los Angeles-based company expands its direct-to-consumer business with pop-up stores and grows its wholesale distribution through specialty retailers and clothing and footwear stores, it is seeking to remain on the leading edge of inventory management with technology that helps it optimize its inventory across all of its points of distribution.

“Because we are a seasonal business, and we are a fast-growth company right now, the traditional model of using an external Excel spreadsheet to monitor when and where you need your inventory just doesn’t react fast enough and doesn’t pull enough third-party and real-time data,” said Drockton.

For fashion brands, ensuring that hot sellers are in stock and that slower movers are not overstocked is a never-ending challenge. At Hammitt, the problem is compounded by the company’s aversion to markdowns — the common practice for liquidating excess inventory at retail.

“Markdowns and discounting have a very, very negative effect on your brand,” said Drockton. “We try to avoid it all costs.”

Hammitt strives for uniform retail pricing throughout its distribution network, so that consumers can buy from their preferred retailer rather than shop for the best available price.

The company has been using NetSuite business solutions from Oracle since early on to help manage its relationships with manufacturers, consumers and resellers. The cloud-based system allows the company to leverage data from throughout the enterprise to drive faster inventory turns and ensure that the right products are in the right locations at the right price.

By using forecasting tools that crunch sales data from the company’s retail resellers, Hammitt is able to adjust to fluctuations in demand as required to maintain optimal stock levels. If some of its partners appear to have too much inventory on order for a particular item for which sales are trending down, Hammitt can help them shift some of their orders to styles or items that are on the rise.

“We bring the selling receipts from the floor of the store back into NetSuite through EDI [electronic data interchange], and it will run how many units of different styles are being sold by different partners all over the country, against what we’re selling online, against our [upcoming] orders, and then we are able to organize our supply chain better based on real-time demand,” Drockton said. “In the fashion world, if you can control your turns on inventory, then you are going to make money.”

Inventory efficiency has become even more important in today’s “fast-fashion” environment, where some online and omnichannel fashion retailers are able to sell through inventory in days or weeks.

“Fast-fashion brands pilot outfits and constantly restock inventory based on demand, allowing them to avoid eating losses or discounting surplus items,” research firm L2 said in a report.

The NetSuite software allows Hammitt to mimic some of the attributes of fast fashion, Drockton said. Although Hammitt remains a decidedly traditional, “slow-fashion” brand, with a 12-month lead time from inspiration through design and distribution, Drockton said he does look to the fast-fashion world for clues about how to take inefficiencies out of the supply chain.

Despite its deliberate approach, Hammitt is also able to generate some of the excitement that characterizes the fast-fashion segment by interspersing its product assortment with limited-edition styles a few times each month, among other activities.

Automating order follow-up

The company’s technology- and data-driven evolution is also expanding to include more advanced customer relationship management (CRM) solutions using NetSuite and a third-party platform in order to trigger responses to specific events or according to other criteria.

Hammitt currently has two customer service representatives who respond to traditional service requests via phone or email, but Drockton said he sees the potential to incorporate more automation into the process.

For example, if a retail partner has not placed an order for a certain period of time, Hammitt’s CRM system could evaluate that retailer’s order history and other data, generate a suggested order and send it out automatically with a link that would allow the retail customer to approve the order through NetSuite. A sales representative would also receive an alert to make a follow-up call within a certain amount of time following the automatically generated message.

“We would be out in front of it instead of being behind,” said Drockton, who said he expected to have the system working within the next few months.

At the same time, the company is transitioning to a mobile-first strategy for communication in an effort to satisfy consumer preferences for text and similar chat applications rather than email. Consumers, and younger shoppers in particular, are increasingly more comfortable with mobile-based communications than they are with email.

The company is transitioning to sending text-based transaction notifications, such as to inform a customer that an order has been shipped, for example.

“I think it’s a tsunami coming,” said Drockton. “If you are not texting direct or using third-party messaging, such as Facebook messenger, for at least all of the transactional and timely information, you are just going to be behind.”

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