Elite Creations: Nitesh Sakhrani

He transformed his family’s business into a £17.5m fashion supplier

Young people are so fickle. One minute a diamanté bracelet is the latest must have accessory, the next it's useless tat.

To you and me this is just something adolescents go through, but the clothing industry has its own name for the phenomenon: fast fashion.

For Nitesh Sakhrani, recently appointed chief executive and former sales director of Elite Creations, fast fashion is no joke. It's the reason his business exploded from a £200,000 turnover in 1998 to an expected £17.5m in the 12 months to March 31 this year.

Uncovering new markets

Founded by Nitesh's father Mohan in 1973, Elite Creations began its life as a supplier of inexpensive costume jewellery and hair extensions to wholesale businesses throughout the UK. When Nitesh joined in 1998, his father was about to wind down the business, but instead Nitesh identifi ed a huge new growth market in fast fashion. He redirected the company's focus, targeting major retail groups.

“Fast fashion has developed over the last 10 years and we've grown on the back of it,” he says. “We notice trends that stay around for only three or four months. You have to get on it, sell volume and then get out at the right time. Every month there is something different.”

Remember invisible necklaces? Probably not, as they were one of a series of flashes in the fashion pan. For those of you who blinked and missed them, they were hair-thin wire necklaces with a diamanté drop dangling at the end, which gave the impression that the gem was hovering around the wearer's neck.

Elite has moved through mini clips, triangle bandanas, necklaces, earrings, bags and belts. The last of these, in particular, has been a substantial source of revenue for the company and until 2004 was responsible for 90% of sales, selling eight million units in 2005/2006 alone.

As Elite developed its product lines, Sakhrani looked for new customers beyond its wholesale base, building up an impressive line of retail customers around the world, ranging from value to mid-market retail chains, as well as a sprinkling of concessions in UK high street stores.

“Wholesaling is a stock game,” he says, “meaning you need a place to put it all, while retail is made to order so you have less risk and the number of cancellations or returns is minimal. It's a much more profi table business model.”

Today, Elite supplies 80 store groups worldwide and while the UK remains its biggest market, sales in Europe are growing (by 400% in Spain last year) and new accounts are being opened all the time.

The aggressive growth strategy landed Elite some lucrative contracts such as Inditex – one of the world's largest fashion distributors and owner of the Zara chain – and pushed sales towards the £5m mark in 2003.

Restructuring to grow

But the rising tide of new customers put pressure on Elite's simple operational structure, and Sakhrani saw the need for a step-change. Adapting to a corporate culture has been a key driver for the company ever since.

“People don't realise the problems you have to deal with when you're experiencing that kind of growth,” he warns. “Typical issues are logistical, storage, warehousing and merchandising – demand keeps pushing you.”

“It's always been a very hands-on family business. Until last year my mother was financial controller and my father was warehouse manager, but we had to bring in professionals to pass the £5m mark.”

Restructuring the business allowed turnover to reach £6m in the 12 months to March 2004 and double to £12m in 2005. With staff headcount also doubling to 30 last year (55 worldwide), Sakhrani is confident that sales will pass £17.5m in 2006 and £22.5m next year.

And while several members of the Sakhrani family are still employed in senior positions – Mohan Sakhrani remains the major shareholder – they are supported by a growing network of fresh-faced staff, including designers, merchandising gurus, sales people and marketers. This concentration of what Sakhrani calls primary roles enables the company to promise a dedicated account manager and merchandising manager for each client.

“What we've done in the last six months would take two years for most companies, but we've had to get these people in,” he asserts. “Six months ago I was in sales looking after 20 customers with one assistant. It doesn't look like a family business any more.”

As you'd expect, the ongoing structural upgrade is being carried out in tandem with Elite's everyday functions as a trading business. Sakhrani admits this was a source of anguish early on and the business came in for criticism because of inevitable glitches.

He remembers the period around 2002/2003 as a stressful time for the management, with orders coming in faster than they could be dealt with, enquiries going unanswered and no time for a break.

Customers threatened to terminate contracts either because they weren't getting the product on time or because they received lower than expected volumes. He says setbacks finding the right storage facilities and manufacturers were to blame.

Fast fashion is notoriously unforgiving, and the top clothing stores such as H&M and Topshop expect new catwalk designs to be available within a matter of weeks. Late or inaccurate deliveries are catastrophic for retailers and suppliers alike, because shelf life is so short.

Now Elite works with a reputable manufacturer in China, which has the capability to fulfi l almost any order. They are efficient, cost effective, quick to learn and have more capacity than their rivals in India and Eastern Europe, according to Sakhrani, who adds that it runs at only 50% to 70% of full capacity in peak months.

Elite also has a substantial and convenient 18,000 square foot warehouse and an ever-expanding cluster of showrooms in West London. “We've invested a lot in infrastructure,” he says. “It means fewer mistakes and fewer deliveries arriving late. A couple of years ago the percentage of late deliveries was in double figures, now it's almost zero. We have great supply partners so we hardly ever upset a customer.”

Aggressive expansion

As you'd expect, Sakhrani is a dedicated follower of fashion, but also keeps up-to-date with macroeconomics. He sees a mild slowdown in the belt boom of last year and has adjusted Elite's product offering to match. Bags are where it's at in 2006, apparently.

Cheap ‘throw away' fashion is more resistant to economic downturns and accessories have been growing consistently over the last 10 years. The demand for fast fashion is spreading beyond its teen roots and is being picked up by older consumers with more purchasing power.

Sakhrani believes that people are now more likely to spend £7 or £8 on a belt or bag to jazz up their look than £25 on a new top. “We don't see a bust to this trend,” he asserts.

This year will see more aggressive expansion through new product lines. Plans are afoot to move into bigger accessories lines such as sunglasses and trendy watches. It's a risky business, as Sakhrani discovered two years ago when he failed to impress retailers with a line of lifestyle gifts, so this time he will start small and build with demand.

Growing geographically is also a chief project for 2006. Elite established a branch in Hong Kong last year and plans to do the same in Los Angeles in January 2007, as well as building on the company's success in Europe.

Fast fashion accounts for 18% of clothes purchases in Spain, 10% in the UK, yet just 1% in the US. Sakhrani sees the Americas as an undiscovered goldmine for Elite. “We'll know a lot more by the end of this year,” he predicts.


Name: Nitesh Sakhrani

Company: Elite Creations

Founded: 1973

Proposition: Fast fashion accessories

Turnover: ?17.5m to March


(will not be published)