At Mothers Work, a 6-week-old baby sleeps on a conference table. Stuffed animals are plopped on filing cabinets. Pink blankets have converted an executive couch into a child`s crib. Clearly Mothers Work is not like most companies.
Nor was it ever. The executive-maternity-wear company was founded by a woman with no expertise in retail or fashion. Just nine years ago, with only $10,000 in savings, Rebecca Matthias launched a one-person mail-order company to sell maternity clothing for professional women. Today she has a $10 million manufacturing-and-retail company with 130 employees and 40 stores bearing the Mothers Work name.
How did such a novice pull it off? With a shrewd learn-by-doing strategy that has kept her attuned to the marketplace.
”You find a sheltered market that allows for mistakes and then make enough money to survive for five years,” say Matthias, chief executive officer. ”You can`t predict exactly what you`ll need to do to stay alive, so you have to stay loose, stay ready.”
Matthias has practically made a religion of being flexible. ”Swirl, bob and turn to stay afloat” is her motto. This approach of trying something, getting feedback, assessing the pros and cons and then trying something else has been central to the success of Mothers Work. Here`s how her strategy works:
Matthias always has had a talent for adapting well to new situations. She has a master`s degree in architecture from Columbia University, but she worked as director of finance administration for a computer company. When she became pregnant with her first child, Matthias knew she wanted to continue to have a career. Being her own boss, she decided, might give her the flexibility to do that.
Besides, starting and running businesses was in Matthias` blood-her brother are entrepreneurs, as was her father. From watching their successes and failures, Matthias knew that with only $10,000 in savings, she`d have to find a niche in an untapped market, one with little or no competition.
Successful business launches often are inspired by the search for a solution to a personal problem; Mattias stumbled on just that niche while hunting for maternity clothes.
”I saw a lot of frilly dresses and polyester pants, but nothing that looked really professional,” she says.
Matthias set about researching the maternity retail market. The maternity stores she visited had little for the pregnant career woman. Competition has stepped up in the last few years as more career women have decided to have babies, but in 1981 the major maternity chains (such as Mothercare and Motherhood) specialized in casual, lower-priced maternity fashions. Other competition included boutiques or maternity departments in the major stores, where the selection also was limited. Matthias decided to plunge in.
Mail order seemed to be the ideal way to sell the clothes she had in mind, and so, weeks after giving birth to her first son, Isaac, Matthias paid a visit to Seventh Avenue in New York to look for maternity fashions to fill a catalog. Shocked by the meager selection, Matthias spent $3,500 stocking up on the few garments she liked. The rest of her savings went for printing and distributing the catalog. Matthias` mother, father and husband, Dan (an electronics consultant who had helped Exxon set up its electronics company, Qyx), helped her with typing, layout and mailing.
The first catalog, printed in black and white to keep costs down, featured a small selection of fashions. Prices were moderate to low by retail standards, high by maternity-wear standards (dress prices ranged from $69 to $100). First-season sales were a disappointing $3,400.
”I considered giving up at that point,” says Matthias. ”But we still had so much inventory that I decided to do one more catalog.”
How could she keep things afloat until she came out with another-she hoped more successful-catalog? Matthias intensified her market research. She telephoned 150 people on the mailing list and discovered that consumers don`t respond to black-and-white catalogs; her selection of clothing was, as she feared, too limited; and her product was wrong.
”I still wasn`t giving the executive woman what she wanted,” which in the early `80s was the dress-for-success suit.
The second catalog, mailed in fall 1982, was half black-and-white, half color. In it Matthias tested a suit put together from a blazer she`d found in one store and dyed to match a jumper from another store.
Dan Matthias (who joined the company in 1985 and now is vice president)
recalls the panic when the orders started coming in. The suit was the catalog`s best seller. The only hitch: It didn`t really exist.
Matthias knew she had to find a way to produce it-and fast-because that suit was her ticket to staying afloat at least another season. In a hurry to get the product to her customers, Matthias found a sample maker at Perry Ellis who could cut and sew a suit within a week. She drove an hour and a half each way to deliver fabric to the sample maker. For her next catalog, Matthias commissioned the sample maker to sew a dozen suits rather than one at a time. The suit was a success. Matthias was onto something.
In 1983, after a move from Boston back to her hometown, Philadephia (by this time with two sons in tow), Matthias leased half a floor in a
manufacturing building outside the center of the city. Now that she had space for her own cutting room, Matthias hired a cutting team and then contracted out Mothers Work`s sewing to an independent sewing company.
Another coup: She lured Beate Hemman, a 29-year veteran of Albert Nippon, to Mothers Work as her key designer.
Matthias describes Mothers Work clothing as the maternity-wear counterpart of Ann Taylor-sophisticated, serious and fashionable. The company`s staple is the tailored maternity suit, but the catalog`s selection has changed with the times. ”We don`t want to lose the executive image, but now we`re more relaxed in style,” says Hemman.
By 1984, after three years of mail-order catalogs, Matthias` trial-and-error strategy had brought Mothers Work to the point where it had a good chance of taking off.
Matthias wanted faster growth and a national presence. She saw franchises as a way to achieve this without paying the high price of opening her own stores. Experts agree.
”Franchising is a method of expansion that enables a business to grow rapidly with minimum capital,” says Donald D. Boroian, chairman of Francorp, Inc., a Chicago-based specialist in franchise development. As a franchiser, Matthias would be giving up some control, but it was a low-risk way to test the Mothers Work concept nationally. If it was successful, her business could leapfrog to a whole new level. Once again her strategy of trial and error and quick response to market feedback would help make that happen.
The response from the first six franchises was great. Corporate sales doubled. Now it was time for Matthias to consolidate her success and bring home the profits. Why not collect 20 to 30 percent of sales from a company-owned store rather than the 4 to 6 percent her franchisees were sending her?
In the four years that Matthias had been in business, she and her husband had invested $100,000 to $200,000 of their savings to keep going. To buy stores, however, she needed more capital. Her stay-afloat strategy had kept Mothers Work alive until it had credibility with the banks; she quickly landed a $150,000 loan to finance the purchase of her first store, in Boston.
Getting the bank financing inspired Matthias to write a business plan and try to attract outside investors. She realized that venture capital would allow her to finance growth without giving up control or paying out huge sums in interest. In November 1985 Keeley Management Co., a group of independent investors just outside Philadelphia, invested $250,000 in the company. Over the next year, Keystone Venture and Penn Venture Fund invested another $500,000. Since then another $250,000 has been invested in Mothers Work, and Matthias continues to seek venture capital.
”Mothers Work was very interesting from an investor`s perspective because Matthias had correctly identified a segment of the retail marketplace that was not being served,” say Kerry Dale, vice president of Keystone Venture Capital in Philadelphia. ”We saw that this small category could be dominated by one company: Mothers Work. Rebecca has a tremendous level of control and insight, which is unusual. She`ll get information about customers and act on it.”
Feedback has been key to Matthias` learn-by-doing strategy, and as the company has grown, Matthias` methods of getting it have become more and more sophisticated. To boost communication with her stores, she developed a computer system that relays customer reaction and sales figures to her at the end of each sales day and allows for immediate replenishment of sell-outs.
Today there are 40 Mothers Work stores (26 company-owned and 14 franchises)in major cities across the nation. But Matthias isn`t resting yet. New catalogs and store advertisements read ”Mothers Work and Play” because, in response to changes in the market, the company now offers casual weekend clothes for executive mothers-to-be who want to relax on the weekends.
By staying flexible, Matthias has navigated the very tough start-up years that spell doom for so many businesses. She`ll need that strategy now more than ever: Her new five-year goal is to hit the $50 million sales mark with 100 retail outlets.
———-
In Chicago, a Mothers Work store is at 50 E. Washington St., second floor (1-312-332-0022). For a catalog: 5th Floor, Dept. HG, 1309 Noble St., Philadelphia, Pa. 19123 (1-215-625-9259).
