There are times success can kill a business. It almost killed Renee Bertrand’s twice.
Trained in theater and costume design, Bertrand socked away money she earned waitressing to start Renee Claire, a dress and coat designer, in 1990. For the next nine years, while still occasionally waiting tables at night, she ran a one-woman operation out of her apartment and even managed to get her creations into department stores.
But keeping up with the demand weighed heavily on the operation. “In the dress world,” she said, “every six weeks you have to come up with something new. There has to be a new pattern. It’s very costly.”
So in 1999, with no market research other than a frustrating experience shopping for “sophisticated” pajamas, she decided to screen some dress prints on soft cotton to make sleepwear. She was able to convert many of her old Renee Claire accounts to the new business, BedHead Inc., and bankrolled the changeover by extending her credit card debt to $30,000.
“Because I had inroads with the sales teams in L.A., I knew who the top reps were,” she said. Those reps helped put BedHead pajamas into Nordstrom and Anthropologie stores and allowed BedHead to sell $53,000 worth of product in its first thee weeks.
At first, the orders were coming so quickly that Bertrand often didn’t have the money to fill them. “I had maxed out my credit cards and had these orders, but no money for manufacturing,” she said. “I started to factor some of my receivables and was paying a lot of interest on top of sales commissions.”
By turning to factors, Bertrand was able to keep the business going. Factors purchase accounts receivables for cash, offering protection against bad debt losses and credit and collections services, among other financial services.
But it came at a cost in interest payments that soaked into revenues. By 2001, the crunch had lifted, and BedHead was able to stop using factors. “They were loan sharks, but if it weren’t for them, my business wouldn’t have survived,” Bertrand said.
Making a name
BedHead now puts 125 prints on a few basic patterns of women’s pajamas, loungewear and nighties, as well as designing men’s and kids’ robes and pajamas.
Joan Pickett, owner of Pickett Fences, a clothing store on Larchmont Boulevard, said she carried Renee Claire dresses and has sold BedHead pajamas from the beginning. BedHead is one of her most expensive sleepwear lines, but “but the quality makes up for it,” she said. “People want a high-quality cotton. A $60 pair of pajamas is not going to look the same as a $120 pair. There’s a lot of difference in quality and construction.”
Priced to retail between $108 and $169, BedHead has maximized the exposure for its “comfort” pajamas with some savvy product placement deals that have made them a favorite among the super-hip.
Susan Dornby, BedHead’s public relations agent who often works with startups, gets the goods in front of magazine editors and TV producers; BedHead pajamas have appeared on “Everybody Loves Raymond” and “King of Queens,” at $1,000 per placement. “When something is on TV, you can usually translate that into magazine placements,” said Dornby.
BedHead doesn’t formally track sales attributable to its product placements. “We often see spikes in online sales because our Web site is mentioned in the articles,” Bertrand said. She expects a feature planned for InStyle’s February 2005 issue to generate $30,000 to $60,000 in sales. “I’m buying fabric for that now.”
The company expects to hit $3.1 million in revenues this year, of which 20 percent is based on Internet sales she attributes to print media exposure that often mentions its URL, as well as the ease of buying online and a wider array of offerings than are carried by most stores. “A lot of our online sales are in the plus size category, which stores don’t often carry,” she said.
By cutting out the middleman, BedHead can sell a pair of pajamas it costs $28 to manufacture for the full retail price of $122. It would sell the same pair to a wholesaler for $59.
But what Internet sales save on overhead costs is trimmed by the added risk, such as product returns and free shipping and handling that run as high as 15 percent and forces the company to hire an additional employee to manage operations.
That’s why Bertrand still relies on a 300-square-foot retail store in front of its crowded Culver City shipping facility to help pay the rent. It generates $150,000 in annual sales.
She now designs about 80 percent of BedHead’s prints. If the print is simple, such as a stripe for men’s pajamas (“which is about all men go for”), BedHead has the fabrics milled in Los Angeles. Otherwise, they’re made in Korea. Thirty sewers at Chalad Fashions downtown and Judy’s Fashions in El Monte make the finished products.
“I only manufacture in the U.S.,” said Bertrand. “I like to have the control. I’ve been offered to do it overseas and cut the cost by two-thirds,” she added, but “I like the idea of the product being made in America. It’s on our care label, ‘Made in Glamorous Los Angeles.'”