This is the time of the year that calls for polling fur buyers and high-volume trappers around the country. My questions are pretty standard fare: “What are your thoughts on prices?”, “What are you going after this season?”, “What do you think the harvest size will be like?” and “What about the international markets?” And then, the big one, “What are your pricing ideas?”
Just about every market watcher has an opinion. But, this year, my calls yielded more questions than answers. While some of the questions directed toward me were phrased differently, the theme was the same: “Why are you so upbeat on the wild fur market?” Wow. It’s a question without a single simple answer. In fact, it’s a question that requires looking at many converging elements.
Standing alone, no one reason will pull our wild fur markets out of the doldrums. There will be no one marketing season that will be our breakout year. Higher prices will come to us slowly. It’s a lesson we should have learned from the 400-year history of the North American fur trade. Let’s look at these converging factors one at a time. Hopefully, they will explain why I’m so “bullish” on the future of our fur markets.
It’s been 20 years since the fall of the Soviet Union. While it took a few years to trickle down, the citizenry of Russia and the Baltic nations are finally now witnessing the fruits
of free markets and capitalism. Consumer goods are available and they have the money to buy them.
Twenty-five years ago, if communist Chinese subjects had any status, decent government jobs and were privileged, they had their choice of a gray, brown or black Mao suit. Beyond that, most of the billion or so people were in rags. Many Chinese now have a well-paying job — by their standards — some disposable money in their pocket and access to nice goods once available only to a privileged few.
These two factors added millions of potential fur consumers to our fur market each year. This newly achieved status brings with it a burning desire for symbolism. What better
way to demonstrate some accumulated wealth than owning a fur?
Fur garment makers today have completely different business models than in the past. Twenty fi-ve years ago, fashion houses and volume fur makers bought their furs raw shortly after the end of the harvest season, had the collection dressed, made samples, displayed them and then waited for the orders.
Those days are gone.
This old business model was based on the assumption of “Just In Case,” or JIC as it was called. The raw furs were there, available, waiting in storage for the orders, when and just in case, they came. This, of course, added signifi cantly to the cost of the finished product. Holding inventories was costly. The new business model is now “Just In Time,” or JIT.
Introduced to the manufacturing industry more than 20 years ago by the Japanese auto makers, this model spread rapidly around the globe. Not surprisingly, Korea and China were among the first major manufacturing nations to adopt this method.
Nowhere in the manufacturing sector is there better example of JIT than in our fur trade. It certainly explains the robust “private treaty” activity after the major international
auctions. A great deal of the carryover collections have been sold. Yes, our fur market develops later each season due to JIT. That’s not likely to change. Sure, well-financed speculators can impact the market, but just barely.
Moreover, look at the ongoing ranch fur activity. A recent Copenhagen late-season ranch fur sale posted growing attendance numbers and advancing prices. Also recall, a couple of months ago it was reported in this space that fur makers in China were running critically low on raw furs. When a company has standing orders for merchandise in hand, shortages of fur can prove fatal to its ongoing existence.
The formula is simple: Fill the orders, regardless of the rising cost of raw furs, or shut the doors. Aft er all, the cost of raw goods is relatively small as it relates to the entire cost of the finished garment. T e only cost cuts that are practical are in the dressing, labor and distribution. Besides that, the cost is merely passed on to the consumer.
This too is being addressed. Retail fur vendors are working with thinner profit margins, relying on rapid replacement inventories. A quickturn is the name of the game. Profits will
come. They will be less, but cost of sales is kept to a minimum. Will the overall quality of the finished product suffer? Probably, but there’s always a market for the lower class merchandise if the price is right. Our low-grade collections come to mind. And this is the segment of the market that needs attention.
The future is bright, just when and will there be enough of us to fill the demand when it comes, is the real question. Let’s hope there is and that it comes soon.