Retailer of the Week
30 Oct. 2013
Kay lee, Otte, New York City, USAKay Lee wears numerous hats in the fashion business. A graduate of Parsons with a degree fashion design, this native Korean started her career as a designer for a large company in New York’s Garment Center. In 1999, she opened her first multibrand contemporary womenswear boutique, Otte, at the new Mini Mall in Williamsburg, Brooklyn. While the original Brooklyn store closed in 2009, Lee has gone on to open and successfully run five brick-and-mortar branches of Otte in Manhattan, plus an online shop. Today there is one Otte shop each in Greenwich Village, Madison Ave and Third Ave on the Upper East Side, Tribeca and the newest, in Nolita, which opened earlier this month. Lee also designs, produces and now wholesales an in-house fashion line and recently opened a multiline wholesale showroom, #8 New York. Here she discusses her enviable career and what she enjoys most about retailing. Interview by Christopher Blomquist
Tell us about how Otte came about. What did you carry?
I had to fill up the racks and my friends were designing too so it was leftover stuff on consignment. And I sewed and made scarves and skirts. Had two jobs. I was working for that company in the Garment Center four days and working at the store three days. I hired a salesgirl to work in store those four days. Monday and Friday I would go to market and buy the clothing and Saturday and Sunday work in the store.
But you eventually left that design job to devote 100% of your time to the shop….
Yes. That was really good to become a successful retailer. I have a fashion background but I spent all my time in store and with the customers for three years. I think that is a really good asset for the business. I worked with so many different girls and the customers became my friends. I went out with them for drinks, I listened to their personal lives. And I did free alterations all by myself at home. And the customers loved it. They were like, “Oh my God, that’s amazing.” People started coming and it was all from word of mouth. People even came from the city. Three years later I opened West Village store. During the week it wasn’t so busy but during the weekend, you have no idea. There were so many people and two fitting rooms were not enough. So we added another fitting room but there were still so many people on line. Even Sarah Jessica Parker called about seeing a Rebecca Taylor dress in the window. We still get a lot of celebrities.
Otte Nolita interior
Where does the store’s name come from?
I am Korean and “ott” means clothing in Korean. I put the “e” at the end and a lot of people ask if the store owner is German or Dutch because it’s a German last name.
You added the Madison Ave branch in 2008. How does the vibe there differ from the West Village?
Madison is very interesting. There are a lot of rich people and their business is very different from downtown people. I opened that store in July of 2008 and I didn’t expect that there would be much shopping in the summertime. But when we opened the store we had crazy sales. We noticed that if people there like one style that they buy every single color. If they like the perfect white pants, they have to buy three pairs. They buy the same sweater but three pieces or the same jacket but two pieces because they love it and have to keep wearing it.
How do you discover such differences in your customers?
Every new store I have to go to and work myself. You have to. I have to work the floor and commit to eight hours. I have to know what kind of customer it is.
What percentage of your retail business comes from your online store?
Probably 10% but it is very, very limited. But on Black Friday and we have all the promotions going it is insane. The girls didn’t have time for lunch and didn’t move. My business partner, Nancy, was printing all the labels, one girl was doing all the orders, one girl was doing all the packing…. We do all of that from here. We don’t have a warehouse.
Does the online shop ever cannibalize the brick-and-mortar business?
Our online platform and brick-and-mortars help each other actually because customers look at the model online and think, “That’s kind of cool and I saw that in the store. I should go back and check it out one more time.”
What are your current bestsellers?
Our bestseller is our own line. We have an internal CPA come in once a month and she said this past summer, “What is going on?” We did an amazing July and August. Everybody else was in markdown or having a sale and we had a profit margin of almost 80%. We’ve never seen a number like this but I know why: Our brand.
What about outside brands?
After that 3.1, Alexander Wang, Kenzo and Isabel Marant.
Does Otte have a “typical” customer or does it really vary by store location?
It can certainly be neighborhood-y so uptown versus downtown is a very different vibe. Particularly Tribeca is very, very leather influenced. Anything like a leather jacket or coat is the number one selling piece there. We carry things like Woolrich coats and Canada Goose or a shearling coat. Any new young designers that are very contemporary or trendy we try in the West Village because that is the most trendy with the most traffic. On the Upper East Side they are ladies but they don’t want a lady look. They might be old but they want to look young so we have feminine with an edge. That target is the most complicated but they spend a lot of money so it is really challenging for me all the time. Third Avenue is a mix and match. Some are conservative and some are trendy. They have all different clients.
Otte Nolita outside
Do you think you might expand outside of New York eventually?
So many brokers e-mail us with opportunities like in California or Florida but we don’t want to grow so fast. We just want the right speed. I’m thinking that if I want to expand I would want another New York store and then maybe after that.
What do you enjoy least about being a retailer?
If there’s no one working I have to work. The majority of my Christmas spent is working at the store. Everybody else is off. Christmas Day it is closed but Christmas Eve I have to work because so many of the girls are on vacation. But now I think we have a good staff and we have hired more people. We now have a general manager who does all the scheduling so that helps.
How do you find good employees?
You have to play your guts and listen to your first impression. The first impression is always right. It’s instinct. You look at the person eye to eye and you have a feeling.
What current fashion trend is doing well at the stores?
Our store is not super trendy but sort of trendy. That means that right now everybody is buying sweaters to wear with jeans. And now a lot of people are wearing skirts. Last year it used to be that jeans were selling better.
What jeans brands do you carry?
My number one jeans are still J Brand. I still want to keep J Brand because we grew up together. I carried it for the first time. I am never going to drop that line. I can’t because I carried that jean since Day One. Same as Current/Elliott… from Day One.
How do you discover knockout brands like that? Is that also a case of following your gut?
The guts—that’s most important. With Current/Elliott I decided to try it. In the middle of summer we put it on the table and it started flying out. We sold out in one day.
What is the least expensive item you carry and the most expensive?
Least expensive is Hanky Panky $20 underwear and the most expensive is a shearling coat by Pierre Balmain for $2,850. We sold out of it, actually.
How about your shoe brands?
Shoes are really hard because you have to carry so many different sizes and they take up a lot of space. Since you don’t do well they get stuck in stock and then you have to have a markdown and you don’t make a profit with that. Shoes also have a minimum as it does not make sense that you would only buy three pairs. My store is head to toe total fashion with shoes, clothing, jewelry, accessories—everything. My shoe business started slowly but now it’s becoming kind of big. We do really well with Rag & Bone. And we bought a lot of sneakers for next spring.
What sneaker brands do you have now?
We have Golden Goose which does very well and Common Projects sneakers do very well. I try to buy the designers from the original root. If you design T-shirts very well and then design a whole collection I don’t like it that way. Some people start with jeans and then make a whole collection. J Brand started with jeans and now has a whole collection but I don’t buy the collection. To help them out I bought it and it didn’t do well. It totally makes sense. If a designer’s strong point is a sweater, you had better stick with the sweater. That’s my philosophy.
What are some golden rules of retailing?
Trust. Trust your employees and trust what I am doing. And loyalty. Also in retail inventory is the most important. When you have more inventory at the end of the year you are losing more money. My goal is that at the end of the year or the end of the season you have to get rid of that merchandise as much as possible.
How often do the stores get new merchandise?
We have set deliveries and my major deliveries are in January and February and July, August and September. But new merchandise is still coming in almost every week.
How do you stay in touch with your customers?
E-mails and promotions. We also hire highly stylish salespeople and they coordinate with their customers. If they have a best customer they will always contact her. And we do trunk shows with designers but that’s kind of new. I buy what I like but sometimes even if it is something I don’t like, the trunk show is successful. I’m willing to explore.
Please discuss the stores’ displays.
My girls are doing an amazing job. I do have an official merchandiser but she’s not in every day because she also works at other stores. But in-store they do a really good job. I should not get credit. All my people say, “Your store is amazing and that window is awesome.” And I have to say, “Shhhh… It’s not me!” But I still like to do my little touch, especially in the small stores. All my decoration type things like the terrariums I do myself or I’ll do a little touch like close zippers or button up something. It’s my little touch and that’s my happy spot. I even love things like folding!
How do you compete with the monobrand boutiques of brands you carry such as 3.1 Phillip Lim or Rag & Bone? Do they hurt your business?
Obviously when they didn’t have a store we had a better sell-through. When they opened a store it helps because it makes the brand more recognized and desirable but some of my customers say, “I can go to 3.1 and get the entire collection. Why should I buy this?” while other loyal customers will buy it from me. We kind of help each other but the trend is that all the designers are going to open their own stores because they get a higher margin. That’s the other reason I started my own line because otherwise we don’t have anything special for our store and we don’t have any high margin brand. For margin we have 40% to 50% and that’s good but sometimes we markdown and it’s below the cost. So we really have to have a special brand.
What are the challenges of having five different locations all over town?
With more stores I get less of a chance to go to the stores and that’s not good. But I do at least go to the West Village store at least once a week on the weekend and I connect with the customers. But I still buy everything that is in the stores—even socks. I have to feel it, touch it and I have to see everything. My eyes are my asset.
Otte (West Village location)
121 Greenwich Ave
New York, NY 10014
+1 212 229 9424
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