The Globe and Mail's Report on Business

Luvali's coup, and conundrum


Special to Globe and Mail Update, May 18, 2011
At first, Jackie Dinsmore wasn’t even sure if the April 5 e-mail from a buyer for Debenhams Retail PLC was the real thing.

The British-based retail giant, which has close to 230 stores worldwide, wanted to order a huge quantity of merchandise from Luvali Convertibles, the Toronto-based company co-owned by Ms. Dinsmore, her husband, Jamie, and her mother, Shirley Durk. 

Not only did it want to place orders representing all of Luvali’s roughly 300 products, but it wanted the order filled in less than a week’s time.

It was a great coup for Luvali, created in 2007 as a maker of convertible bags that can be transformed into different styles by changing or reversing a slip cover or removing a strap, which has since expanded its product lines to include reversible sun hats, reversible jewellery, organic baby clothes and diaper bag kits.

But it was also a great challenge. 

Luvali’s products are sold online, in 10 of The Bay's flagship stores and through a network of about 700 independent boutiques across North America. None of them, or their orders, come close in size to Debenhams.

Its order – which Ms. Dinsmore says was about 50 times more than a typical one from her boutique customers – nearly depleted the company’s stock, which can take more than 90 days to replenish. 

“Initially they were just interested in the bags, but after I told them about my other products, they wanted everything – every product in every colour,” says Ms. Dinsmore, who says she has no idea – and has had no time to find out – how she even got on Debenhams’ radar.

“In the end, the order added up to a couple of thousand units worth tens of thousands of dollars.”

To ensure she had enough to also meet the demands of her other clients, Ms. Dinsmore says she pushed back on some of Debenham’s requests, negotiating lower quantities on some items.

With Debenham’s order filled and Luvali’s sales continuing to grow, Ms. Dinsmore wants to make sure her company is now in a position to take on more large orders – but without the risk of jeopardizing her smaller boutique accounts as a result of suddenly low inventory levels.

She could keep more products in stock by ordering in larger volumes from her manufacturer in China. Instead of putting in 10 small orders a year, as she does now, she could buy in bulk twice a year – a move that would save her money because of volume discounts.

But the manufacturer will want to be paid upfront for the large order, which would create cash-flow problems for her young company.

The challenge: Ms. Dinsmore wants to be ready to meet large rush orders from big retailers– but without the risk of short-changing her small boutique clients. She has to ensure that she has enough stock to supply the network of small boutiques that have helped the company grow as rapidly as it has over the last two years.

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