When Rebecca Minkoff co-founded a New York-based luxury handbags company in 2005, her goal was to develop a high-quality product that was both practical and sexy. What she didn't expect -- especially in the competitive fashion industry -- was that sales would rise so quickly.
Revenues at Rebecca Minkoff LLC jumped to $17.5 million in 2010 from $5.5 million in 2008, according to the Women Presidents' Organization (WPO), which ranked Rebecca Minkoff No. 6 on its recently released Top 50 Fastest-Growing Women-Led Companies annual list.
"We came out at a time when contemporary bags were hot and exciting," says Minkoff, who is 30 and also the youngest business owner on the WPO list. "We definitely rode that momentum and learned how to build a business along the way."
Minkoff's journey into the fashion business started when, at age 18, she moved from St. Petersburg, Fla., to Manhattan and landed an internship at fashion-design house Craig Taylor. She worked closely with the CEO "who took me under her wing and taught me about the whole business," Minkoff says.
By the time she left the company in 2001, Minkoff was already working on her own designs. Her first taste of national recognition came when actress Jenna Elfman -- best known for her starring role in the TV sitcom Dharma and Greg -- wore an "I Love New York" T-shirt Minkoff designed on the Jay Leno show. After the appearance, retailers began calling and Minkoff spent the next six months "sewing T-shirts on my living-room floor."
Although Minkoff continued designing, starting a full-fledged company was daunting. So, her older brother, Uri, who had founded a small handful of health-care and technology startups, joined her, and the duo officially launched Rebecca Minkoff LLC in 2005. Minkoff serves as creative director, while Uri is CEO. The company's first prototype was a leather satchel Minkoff called the "Morning After Bag."
"I envisioned a bag that you'd want to take with you on late nights out when you weren't sure where you'd wind up or when you'd come home the next morning," she says.
The $500 bag struck a chord with consumers -- including celebrities such as Lindsay Lohan and Hayden Panettiere. Minkoff's line has expanded beyond handbags to include accessories and women's apparel, which are sold in 300 U.S. retail stores -- such as Nordstrom, Bloomingdales and Saks Fifth Avenue. This spring, the 30-person company launched a new division called Ben Minkoff, named for Minkoff's grandfather, which manufactures and sells men's bags and accessories.
How to Break into a Crowded Industry
Minkoff's fast-track growth is particularly notable because she found success in an already crowded and fiercely competitive fashion industry. While the number of fashion-design houses has decreased 2.3 percent annually since 2005, industry revenues have been growing 0.6 percent per year, giving the remaining players an increasingly bigger piece of the market, according to IBISWorld, a market-research firm based in Los Angeles.
Here, Minkoff shares her top three tips for launching a business in a competitive industry:
- Be unique. Piggybacking on an existing product or service usually won't get your business noticed in competitive markets, Minkoff says. Yours should fill a need and stand out from the competition. "I created a line for what I wanted to wear -- and what I saw there was a lack of in the market -- in terms of design and function at an affordable price," she says.
- Know your price point. Regardless of the industry, customers want a quality product for a great price, Minkoff says. Setting an appropriate price for a product or service is crucial.
Minkoff learned that lesson after she downgraded the leather for a particular handbag without lowering the retail price. "I didn't put a tag on it saying it was made with this other type of leather, but the bag didn't look the same, and my customers knew it," she says. "We recognized that immediately when sales for the item didn't perform."
- Listen and respond. Establishing communication with customers and making them feel a part of the decision-making process has been important to Minkoff's success. She connects with her 23,000 Twitter followers and more than 16,000 Facebook fans. In 2009, Minkoff launched Minkette, an online forum for customers to share thoughts about the brand.
"If someone writes in and tells us the strap on a particular bag isn't long enough to wear in the winter when she's wearing a coat, we'll make the bag with a longer strap the next season," Minkoff says. "My customers know I'm listening and responding."