KARSTEN TEXTILES : A BIG STEP IN SELLING HOME TEXTILES IN THE US MARKET
Background
In 1994, Karsten had been exporting for many years to the US but was selling through distributors and agents. This has several problems:
Prices were too high because of two-tier distribution.
End customers were frustrated at being unable to talk directly to the factory.
Karsten brand was not being promoted.
Karsten was not close enough to the product design trends in the US.
Sales were at a low level and profit margins very slim.
The New Strategy
Intrix partners worked with Karsten to create a strategy to become a direct presence in the US market. The main steps were:
Acquisition of a beach towel design and marketing company.
Setting up Karsten's own company in New York to sell to all terry and tablecloth accounts direct. Establish and expand the importing, warehousing and logistics of operation in North Carolina.
Add tabletop design capability and bathrobe design capability.
Enter the annual sales cycle with customers much earlier and have Karsten's designs and constructions designed into end products.
Negotiate licensing agreements with leading brands to add value to products (e.g., Disney, Warner Bros, Harry Potter).
The Results
Sales levels in US dollars rose a factor of four times in six years. When measured in Real the growth is much larger.
US design expertise and ideas flow back to the Brazilian factories and greatly enhance Karsten product offering worldwide.
A new line "bathrobes" has been evolved, in Karsten worldwide, based upon the initial US market requirement.
Commentary
This case required a major change of thinking. It is a tribute to the late Gunar Karsten and to the Board of Directors that they were able to support and pursue this new thinking with all its ramifications for the Brazilian operations, its balance sheet and operating results.
Intrix partners worked over a period of three years to complete research and analysis of what was needed to succeed in the US, to analyze the acquisition and joint venture partnering options, to identify key personnel needed, to support negotiation of the acquisition and to provide US-based advice while the new strategy was being implemented and the start-up problems and issues were being resolved.
