When Dennis Tavares could not find nice suits at an affordable price, he started his own source: Empire Customs Inc.
When Dennis Tavares ordered a suit custom made in Asia four years ago, he had no idea it would change his life.
As a Toronto-based account executive for an international company, he wanted to dress for success, but that was a stretch for his budget. He found there was little choice between going to a high-end men's store and paying upward of $2,000 for a custom-fitted suit or shopping at "the kind of store your Mom brought you to get a suit in Grade 8."
That led him online, ordering made-to-measure suits from companies in Hong Kong, China and Thailand. The first couple of attempts were flops, but a family-run tailor shop in Bangkok sent him just the suit he was looking for.
"People at work asked where I got my suit and I said I can have one made for you. A couple of my colleagues were willing to order one and they fit so well, suddenly other guys were getting referred to me."
Mr. Tavares got so busy he rented a small office in downtown Toronto to take measurements for customers in the evenings while he kept his day job.
Within two years, he was selling dozens of suits a week. He stopped working at his day job and devoted all his time to his new company Empire Customs Inc., partnering with the tailors in Thailand to invest in new equipment and hire more staff, with specialties such as pants and sleeves, to keep up with the demand.
Offshoring production overseas is a smart move for more than just savings on labour, comments Muhammad Mohiuddin, assistant professor of international business at Thompson Rivers University in Kamloops.
"What Canadian companies should be focusing on are sectors where they can be better than others in the market. We call them high-yielding segments," he says.
"What we can do best in North America includes designing and developing products, logistics, marketing and quality assurance." But for actual production there's a growing advantage in looking to the global supply chain, says Dr. Mohiuddin, a co-editor of the journal Transnational Corporations Review.
"It doesn't mean we can't produce here, but it makes more business sense that we procure expertise from places that already have the specialties we need."
That makes particular sense for high-end products like suits, because there are few young Canadians interested in becoming apprentice tailors, he adds.
The number of Canadians making clothes declined from 94,260 in 2002 to 19,340 in 2010, according to Statistics Canada.
Meanwhile, skilled tailoring is a traditional occupation in Asia. The pay for skilled cutters and tailors in Thailand is still extremely good for that economy, Dr. Mohiuddin says.
There are about 40 hours of hand labour in a custom-made suit and top quality fabric for a suit costs at least $200. Even if he could find the expertise to have suits made in Canada, it would double the cost of the finished product, Mr. Tavares estimates. Empire's prices start at $750 for suits comparable to off-the rack suits that would cost $1,500 or more in a men's store.
There were initial logistical issues that had to be worked out through collaboration with his Thai tailor.
Initially, there were some customer complaints about fit in the shoulders and collars, the most critical parts of the suit. Mr. Tavares collaborated with the Thai team to innovate a fitting process that uses moulds to determine what shoulder fit is best for a customer's build. They also created a system to measure the neck to shoulder angle to ensure the roll of the collar was appropriate.
All this was done initially without Mr. Tavares having to go to Thailand. He had regular meetings with his Thai partner via e-mail and video calls on smartphones. More recently they have travelled back and forth to meet in person and "it's really like he's part of my family," Mr. Tavares says.
Shipping became a bottleneck that was solved by using priority courier service to get suits delivered in two days rather than the three weeks it could take for ocean freight. That included customs duty processing so all paperwork is prepared in advance and managed by the shipper.
He learned that developing a business in Canada doesn't have to depend on advertising; 80 per cent of his business comes from referrals and repeats. "If you have a good service or product, people will refer you. I was dealing with really picky guys who used to go to the top men's stores and they came to me expecting the same standard." But, he adds, it is important to ensure the delivery of consistent high quality, "otherwise people go nuts and the whole business model will collapse."
Business has grown steadily for three and a half years. The company sells more than 150 suits a month.
Empire Customs concentrates on the Toronto market but now Mr. Tavares is eyeing London, England, and hopes to open a branch there next year. The spread between the pound and the Thai baht make the expansion a good bet, Mr. Tavares says.
The recent drop in the value of the Canadian dollar affected the bottom line but not significantly, he adds. As the dollar fell, the relationship to the baht cut the profit in each suit by about 10 per cent, but at the same time, sales have improved this year.
"If anyone is looking to start a business internationally I advise just starting small, versus getting a lot of seed money to open a store and develop the initial ability to sell lots of units," Mr. Tavares says.
"The key is just to start, because working on solving problems brings people together like nothing else. That may sound generic, but it's the truth."