Creative Kids Wear’s Short Run

Connie Ulasewicz
Revised by: Nancy J. Rabolt
Judy K. Miler
2018-11-01

Abstract

A successful, privately-owned company manufactures high-quality, high-priced self-development toys

that are sold only by non-store-direct company sales representatives. The owner of the company decided
to expand, and diversify her business by creating a high quality brand children’s apparel line, with
an educational element in the clothes, like the toys. An apparel production consultant is hired by the
company owner to advise her on her new venture to expand and produce the new product line, and
the company’s overall market reach. The line of clothing is designed, produced, and a sample-line kit
is developed for the sales reps to sell from. The new line is well received, with a great sell-through;
however, the sample making was a losing proposition, as the representatives did not buy the sample kits.
As a result, the manufacturer decides to discontinue the new line after four seasons.

Table of Contents
Learning Objectives .............................................................................................................................. 1
Introduction .......................................................................................................................................... 1
Business Problem ................................................................................................................................ 2
Business Questions .............................................................................................................................. 3
Extended Teaching Notes ..............................................................................................................

Learning Objectives
Upon completion of this case, students should be able to:

• Identify the changes that could be made in the planning and production process.

• Determine what could help improve the sample kit sales.

• Consider differences between store and non-store retailing.

• Gain an understanding of the proper planning and production of a profitable line of clothing.

• Consider potential problems when diversifying products within a company.

Introduction
Creative Toys is a successful California private company owned and founded by Suzanne Montgomery.
Her philosophy is to provide for the whole child and to help the child develop self-esteem by producing

1
This case is based on a fictional company to provide material for class discussion and independent learning. Names of companies
and individuals are used in a fictitious manner and any resemblance to actual companies or individuals is purely coincidental.This
case study was adapted from: “Creative Kids Wear’s Short Run,” by Connie Ulasewicz, published in Concepts and Cases in
Retail and Merchandise Management, edited by Nancy J. Rabolt and Judy K. Miler, 2nd ed. (2009) New York: Fairchild Books.
© Bloomsbury Publishing Plc. No part of this publication may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without
the permission of Bloomsbury Publishing. Copying or posting of this publication is an infringement of copyright.
 Creative Kids Wear’s Short Run

enjoyable and educational products. These products are unconditionally guaranteed and can be
returned by customers for any reason. Toys are sold directly to the customer only through home parties
and catalogs, which are distributed by independent “customer representatives” similar to Avon and
Amway, types of non-store retailers. Company representatives buy samples to show and demonstrate to
customers at the parties. Creative Toys merchandise carries a high price point, is high quality claiming to
last “forever,” and is available only through this distribution avenue. The Creative Toy customer is willing
to pay high prices. Typically, she is a grandmother with high discretionary income or a mother who wants
products for her children that are educational, good quality, and unique or special. She is not a Toys “R”
Us customer, but is a savvy shopper who recognizes high quality and good value. The owner feels her
customers would be receptive to a new line of children’s clothing that is also of high quality.

Business Problem
Suzanne felt her customer would be a good prospect for high-quality children’s apparel, a similar market
to Hanna Andersson (an upper-end Swedish catalog carrying high-quality, functional children’s apparel).
The apparel could be sold in the same venues as the toys. Because the apparel business is in many
ways different from the toy business, Suzanne hired Heather Hilstead and Jasmine Jones, consultants
with extensive apparel production experience, to advise her on this new apparel end of the business.
Suzanne wanted the following aspects incorporated into her apparel lines:

• a similar markup to what is achieved in her toy business (a 62 percent markup)

• the same type of educational element for the clothes as the toys have

• special or unique qualities in the clothes to satisfy her savvy customer

Suzanne did not want her very visible Creative Toys logo to be incorporated into the apparel line because
she was afraid that if the apparel line was unsuccessful, by association it could damage the good
reputation of Creative Toys. She was not willing to take this risk, so a new name and logo, CKW for
Creative Kids Wear, was developed for the apparel line.

Even though her customer is used to paying high prices for the toys, Suzanne wanted a lower price point
in the apparel because her customer, who is a smart shopper, is aware of the competition in the apparel
business (e.g. department stores, discount stores, off-price stores, factory stores, online stores, and so
forth). Therefore, prices on the apparel needed to be comparable to the local retail store competition.
However, Suzanne is used to a high markup in her toy business, and she demanded a comparable
markup in the apparel line. To beat the retail store competition, Suzanne wanted special features in the
clothes such as a gusset in each shirt for easier maneuverability for active children and a special jacquard
(patterned) knit collar rather than a plain, solid collar. A tab system, similar to the Sears’ “Geranimal”
concept, was incorporated into the garments so children could mix and match appropriate pieces. Also,
instead of screen printing patterns directly onto plain T-shirts, Suzanne had screen prints specially made
and appliquéd onto the T-shirts, a feature found in higher-quality apparel. Many items also had appliquéd
logo patches.

The apparel collection consisted of two separate lines: one for boys and one for girls. The boys’ line had
pants, shorts, T-shirts, polo shirts, jackets, and a licensed cap and socks. The girls’ line included jumpers,
dresses, shorts, pants with a feminine ankle bow, T-shirts, and vests.

Similar to toy samples, sales reps purchased apparel samples. These were in the form of “kits.” Suzanne
had a full-time merchandiser who planned the lines and the kits. Reps did not buy samples of all

2
This case is based on a fictional company to provide material for class discussion and independent learning. Names of companies
and individuals are used in a fictitious manner and any resemblance to actual companies or individuals is purely coincidental.This
case study was adapted from: “Creative Kids Wear’s Short Run,” by Connie Ulasewicz, published in Concepts and Cases in
Retail and Merchandise Management, edited by Nancy J. Rabolt and Judy K. Miler, 2nd ed. (2009) New York: Fairchild Books.
© Bloomsbury Publishing Plc. No part of this publication may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without
the permission of Bloomsbury Publishing. Copying or posting of this publication is an infringement of copyright.
 Creative Kids Wear’s Short Run

garments in the catalog; the kits merely gave a representative look of the collection. For example, a kit
might include one color of shorts, T-shirt, and jacket. The company provided all reps with fabric swatches
of four solid colors and two prints along with sketches of other items produced by a CAD (computer-aided
design) system. Reps were not required to purchase the sample kits, but some did. Many felt the fabric
samples, CAD sketches, and catalog pictures were sufficient to show customers, especially in the light of
the added costs the reps would have to incur to purchase the kits.

Developing the catalog to include the apparel line was problematic because the photo shoot for apparel
had to be scheduled far earlier than the toys. The apparel shoots had to wait until all the various pieces
arrived from the different manufacturing sites. Toy styles didn’t change often; therefore, many toy pictures
were reused in new catalogs. On the other hand, the apparel line was more demanding because color
pallets change each season, necessitating new shoots for each season.

To keep prices down and to achieve Suzanne’s required markup, Heather and Jasmine sourced the
jackets in Peru, T-shirts in Los Angeles, and the pants and jumpers in Mexico. As a result, pieces came
into the warehouse at different times. After all the pieces arrived, workers assembled the items into
packages to be sent to the customer representatives. The warehouse, which was set up for toys that all
came in as a unit at one time, had to be rearranged to accommodate the apparel kit assembly, which was
also a time-consuming process. Additionally, there was a scheduling problem for the warehouse. The
toy business is essentially a holiday business, with November and December the busiest times in the
warehouse. The Spring apparel line required a January delivery of the apparel sample kits to reps. This
necessitated a December 15 delivery date to the warehouse so that kit assembly could be accomplished.
This definitely interfered with the normal smooth operations of the toy distribution at the warehouse.

Manufacturers were very pleased to produce the apparel sample line because it was easy: one size (size
4), one color, and a large order. The problem was that the reps didn’t buy the sample kits as anticipated,
leaving the company with a huge inventory of a one-color/one-size product. However, after the reps
showed the samples and pictures to customers, they loved the line. Orders came in, and the production
had a great sell-through, with a 52 percent markup, appearing very successful. Especially successful
were the higher-end products with special features. But the sample making was a losing proposition. After
four seasons of production, Suzanne decided to discontinue the extensive apparel line and concentrate
on the toys.

Business Questions

Major question
What could Suzanne have done differently in the planning, merchandising, and production of Creative
Kids Wear to ensure more success? Develop several alternative solutions and identify several
advantages and disadvantages of each solution. Which one would you recommend and why?

Study questions
1. What should Suzanne do with the huge sample inventory?

2. What potential problems are there in combining toys and apparel in the same company? How are they
the same and how are they different?

3
This case is based on a fictional company to provide material for class discussion and independent learning. Names of companies
and individuals are used in a fictitious manner and any resemblance to actual companies or individuals is purely coincidental.This
case study was adapted from: “Creative Kids Wear’s Short Run,” by Connie Ulasewicz, published in Concepts and Cases in
Retail and Merchandise Management, edited by Nancy J. Rabolt and Judy K. Miler, 2nd ed. (2009) New York: Fairchild Books.
© Bloomsbury Publishing Plc. No part of this publication may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without
the permission of Bloomsbury Publishing. Copying or posting of this publication is an infringement of copyright.
 Creative Kids Wear’s Short Run

Extended Teaching Notes

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4
This case is based on a fictional company to provide material for class discussion and independent learning. Names of companies
and individuals are used in a fictitious manner and any resemblance to actual companies or individuals is purely coincidental.This
case study was adapted from: “Creative Kids Wear’s Short Run,” by Connie Ulasewicz, published in Concepts and Cases in
Retail and Merchandise Management, edited by Nancy J. Rabolt and Judy K. Miler, 2nd ed. (2009) New York: Fairchild Books.
© Bloomsbury Publishing Plc. No part of this publication may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without
the permission of Bloomsbury Publishing. Copying or posting of this publication is an infringement of copyright.