Project NOMO Jeans: February 2012

Nomo Interview with CEO Mari Silvennoinen & COO, Co-Founder Jussi Mononen

Mari: Yes, it’s pretty hectic here as you can see - let’s start! Jussi over there is responsible for our marketing, he could join us as well… *Smalltalk*

Jussi: Here’s my business card – with that you can get 25% discount from our jeans, so please be encouraged!

Harri: A lot has happened in the past year, what have been the highlights and the toughest moments?

Mari: The year has been extremely busy and obviously the greatest highlight was the opening of our first store here in Helsinki. We have put a lot of effort in that. Another great moment was the opening of our first international store in Hamburg Germany. So tough moments along the way that those are the two most remarkable moments of the year.

Harri: You had some delivery problems during last summer and/or early autumn?

Mari: Yes, we had some delivery problems in the beginning, the production start didn’t go exactly as planned. We worked A LOT to smooth out the initial production launch issues. Now, against all odds (or what most people in the industry thought), we have managed to pull our production in China into really good shape and well.. uumh..

Harri: Do you still have production in Estonia and Finland then?

Mari: Yes, we do still have production in Estonia and we’ve been practicing in Finland as well but there is really a lot to do. The current situation is so that Chinese manufacturing works the best, Estonian needs some adjustments, Finnish would need the most work. From production point-of-view, we have managed to solve all of our major challenges. Naturally there is always something to improve on, but the quality that we get from our Chinese manufacturer is really good. After opening our sales last summer, we have received only one single complaint related to sewing quality – out of approx. 700 pairs of jeans delivered.

Harri: On general level, do you get a lot of complaints?

Mari: Yes, we do have some complaints that have come in for other reasons (than sewing quality). It is understandably inevitable to get some level of complaints in the beginning when we are still in developing stage of our so-called Zero Fitting Pipeline. It is very novel approach in the tailor-made clothing business. But that is, when we get all the pieces work together, such a competitive advantage that there are no competitors who could do the same quickly.

Harri: I’ve read blog posts and articles about you; the terms seemed to me a bit unclear, there were used mass customization and mass tailoring, what is it that you do?

Mari: It is mass tailoring that we do.

Harri: How do you define mass tailoring?

Mari: The idea is that the product is modular, so the customer cannot define everything. It is not tailoring per se, but the production process is based on defined formulas, on which the customer can tune to their own taste. That leads also to the fact that we are not able to serve all customers, for an example above or below certain waste line measures, because the formulas and parameters don’t work with very very small or very big people. We can serve the vast majority when we look at the Gaussian distribution. If the customer could choose anything or that we would choose to serve every single customer, the process would be entirely tailoring.

Harri: ..and that would increase the options and parameters exponentially, I presume?

Mari: Yes, definitely. And even with our only few strategic choices made to limit those a bit, it’s not easy at all to get it work. Basic idea relies on the different jeans models from which the customer can choose which one they want and then finetune it for their taste.

Harri: Where does the name Nomo Jeans come from?

Mari: Jussi?

Jussi: Well, Harri Rautio (CFO, co-founder) can be blamed for that I think. I had the initial idea and the working title for that was DZIINS when I was recruiting people to join me. Harri said “Yes, this is a great idea, I’m in, but we need to change one thing, the name is horrible.”

Mari: ..an engineer joke!

Jussi: Then we were like ok, well let’s think of what we can come up with. We wanted it to be short, referring to our core values, should not mean anything nasty in any language and that website url and company names and all that stuff should be readily available to register. We thought numerous different possibilities and Harri then one day asked how about Nomo? That became about somehow as a variation from my last name, Mononen, so it could’ve been at some point just an anagram, but that was not Harri’s initial idea, he just thought that it sounded pretty cool. We agreed that it was short enough, checked translations and found out that domain names and all that were available. At that point we also did an informal survey with people from different countries how did that sound and compared it with few other options as well. We liked it the best among ourselves, it received most positive and least negative feedback from our choices so it was then pretty clear that this is the best option to choose.

Harri: When we discussed briefly with our group, we were wondering about the name because when you pronounce it in English, you cannot help but notice the similarity to “no more” jeans…

Jussi: ..Yes, we’ve certainly talked about that as well and used an unofficial slogan “No more bad jeans” which was some kind of an internal joke with us in the beginning. Nomo also means a midget or fairy in some Spanish dialect, so speaking figuratively, we’re (for the time being) some sort of a weird midget or small player amongst the giants in jeans manufacturing so it kind of fits. Some of us we’re worried in the beginning – how can we be “no more” jeans and actually sell jeans; and another thing that came up with older people.. uuhmm.. No, I remember incorrect, it was with teens that it came up. Some young people made a joke – Homo jeans. After a bit of thought, we came to conclusion that that association would not be harmful, and on our primary target market group it didn’t make so much of a difference. So we decided to go with Nomo.

Harri: What is the primary target market group then?

Jussi: We have defined it initially as 30 to 55 or extending to even 60 year old urban women. It is somewhat similar as an age group to urban men which is the secondary target. Our customers are currently approximately 70% women, 30% men. When you talked with Mari now, I jotted down on some ideas what I think you could try to tap on in your project here. How we ended up with this primary target was that we did an initial customer survey in which we interviewed about 100 people, it was not any scientific study or anything, but one thing to consider could be kind of verification of our findings that do we really have the right target group – that is if that fits in the scope of your work. We have quite strong intuitive feeling that we do have a right target group and we’re communicating to the right people – but then again we have assumed wrong in some cases before as well.

Harri: In our initial talks, we concluded that Nomo is also very attractive amongst ourselves; that is 22 to 30 year old urban people. Having said that, of course School of Economics people might be a certain bubble among larger public, meaning that not all 22 to 30 year olds are comfortable in investing 130-200 euros for jeans – but nevertheless, there are significant amount of people in our age group that do.

Jussi: Yes, we made a conscious decision that we will not actively go after the approximately 24 year old highly fashion aware urban hipster because our idea relies on two distinct features: it is the very good fit of the jeans and on the other hand the possibility to fine tune the end product according to your taste. In the typical 24 year old target market, the fit is not that much of an issue because most body types fit, at least to some degree, the jeans available in stores already or they don’t mind that much is it a perfect fit. Another thing is that in that group people are perhaps not into the tune it to your own taste yet, they would rather follow the fashion trends than tune the jeans to their own taste. So we know in some level that we’re not able to serve that segment very well and hence have made the decision that we will not put out the newest of the new, latest trend fluffy stuff...

Harri: …yes of course not. But right next to the latest hipster trend group (trend setters) are the early adopters and early majority which..

Jussi: Yes, that (early adopters / early majority) on the other hand is very much our target group.

Mari: ..in Germany we have a real issue in getting to our primary target group people. We have managed quite well in Finland to do that, but we have a lot to do in Germany.

Harri: We noticed that few fashion bloggers have noticed and written about you. Have you targeted your marketing to them or have they taken the initiative on their own?

Mari: We have done PR work to reach the bloggers. We listed 15 blogs that we thought were to most interesting, and we set a goal that we want to be featured in at least half of them. We’re almost there with our goal, there’s one more “important” blog for us to reach as soon as possible. We hosted a press breakfast in November after our shop launch in Helsinki and she (blog writer) was coming then, but wasn’t able to write her story yet. Hopefully we get that done now in the beginning of the year. With blogs, we have actively done work to get our story out there, the same with magazines as well. There will be a story in MeNaiset this week, in the next issue of Viva, as well as the jeans special issue of Elle magazine. In Elle, we have the industry expert role in commenting the issue. With all that, we have practically covered all main media within our target market group.

Harri: What is the main message that you use in your marketing, is it the “no more bad jeans” or “jeans that fit” or…

Jussi: We have used three main messages in our communication. One is “Jeans that fit”, second “Stop wearing other people’s jeans” and the third “No more bad jeans”. I think we have thought about this quite extensively and one “exercise” that we did was to form a Nomo brand personality. In our opinion that person would be extravagant/extrovert speaker of the truth, challenger of the status quo. What comes to our actions, PR, marketing, all external communication etc. – i.e. do we actually do what we think, and is our message consistent with that – probably not 100%. These are the really interesting things for us if you could touch in your project/research a bit on: whether or not our target segment is correct or should we do some adjustments to that; what kind of positioning should we seek in that target segment; based on our core values and the positioning, what are the key messages we should constantly communicate; with our core values, the key messages and our very limited marketing budget, how can we build a successful, sustainable and street credible brand. These are things that we have given a lot of thought and they still a lot more thought given to them, but they are so challenging that every kind of external help in pondering these and developing us to be better would be extremely helpful. New ideas, point-of-views, opinions are always very welcome. If we take this even forward, then based on these, we could develop, considering our resources and all that: what is the best marketing mix for us, how do we need to localize our communication in different markets, and ultimately how do we proceed with the German market opening. That is currently our primary foreign market and we have a lot to do to get it off the ground.

Harri: How have you marketed Nomo in the German market now?

Mari: If I say bluntly, we have not made any significant marketing efforts there yet. We’ve had people handing out flyers, the local radio in Hamburg made a story about us and we are currently planning more action. The small challenge is that we have only a part time resource doing the marketing / PR stuff with our store manager there now.

Harri: Why Hamburg from all the places in Germany?

Mari: The German language market is the largest jeans market in central Europe, and clearly our main market, and that’s where we started to look for opportunities. We made a list of 15 cities in that market, evaluated the market potential of that area, i.e. the number of people in the larger proximity of the city and what is the purchasing power index of that area compared to others. These analyses lead to a short list of 5 cities in which we started to look for shop locations and specific commercial properties to set up a shop. Hamburg is one of the least formal cities in Germany when it comes to business dressing, so it is in a way a “jeans city”. Berlin was of major interest as well and we have already talked on few specific commercial properties but what denounces Berlin is that there is a very large student body present, which in turn decreases the purchasing power average for Berlin. Other interesting cities on our list are Munich, Dusseldorf and Frankfurt. From those, Dusseldorf is now the most interesting one – commercial property is somewhat available and shop staff as well. Munich, the challenge is that for an example store managers are asking for 7000 euro monthly salary – because competent people are fairly hard to find. I was thinking that I could leave there to be a store manager, it sounds so good, haha!

Jussi: …and I’m coming with you.. Oh no no, I had reserved.. uuhmmm.. what was it? East Malaysia!!

Mari: Yes, so the German market started from those basics. And when we continue our expansion there, we will continue going through our short list first and look for commercial properties through real estate brokers.

Harri: The shops in Germany are your own shops?

Mari: Yes, in Germany the Hamburg shop and next upcoming ones are our own. There has been some interest for franchising agreements lately but that continues currently on other markets. Franchising activities are currently outlined from our core strategic actions, so we are moving ahead with those on a slightly slower pace, and it’s more collaboration based work that needs to be done on that field.

Harri: Running your own shops of course gives you the most control but it also is fairly capital intensive. Have you considered other options for sales & distribution, like franchising, shop-in-shops, pop-up-shops?

Mari: Well, to speak the truth, our franchising concept is moving currently ahead so that we are in development stage with our franchising agreements, store concept and all that, and it’s actually moving forward in Mid East. What comes to shop-in-shops, we have decided not to consider them as an option for now, as we are so new actor in the market. The conditions we would get now from major department stores or key accounts would be extremely challenging for us. We have the power of just a label for now, not yet a brand. So our negotiation power is for now fairly low. We need to develop our brand and its recognition significantly before going into that direction. Shop-in-shops definitely are a considerable option at some point but there is a lot we need to develop also in our shopping space concept for that. What we have now in our shops would need some serious compacting in order to fit in to the approximately 12 square meters the department stores are willing to allocate and “rent”.

Harri: What about competition, who do you consider to be your toughest competitors?

Mari: We have examined both Finnish and German markets with a price anchor research. That is, we have listed all relevant competitors and looked at their anchor price levels. We found that in Germany, different labels and brands clearly have a certain anchor price level, in Finland it was not so evident.

Harri: From the list here, can you mark and explain who do you consider to be your primary competitors and why (scale 1 to 5: 1=never heard of, 5=worst competitor)?

Mari: …(marking down the list).. Yes, Denham will be when we have selvedge (denim), but at the moment not so clearly. Kuyichi is somewhere between 3 and 4.. we don’t have organically produced denim yet. If Replay can get their “Made in USA” line into better condition, then we are there with 4. In our primary target segment, we are competing strong with Sand Jeans.

Jussi: …If we look at men who come to our shop, I can with confidence say that most of them are wearing Diesel Jeans. That is very evident on the male shoppers.

Mari: That’s a good point. I was looking at this from purely feminine point-of-view… That is very true that Diesel is strong in our male customer group.

Harri: You use somewhat Facebook and Twitter in your marketing, LinkedIn perhaps not that much (according to observation). How important is the social media aspect in your marketing?

Mari: SoMe (Social Media) is our primary marketing and advertising channel, so yes, it is extremely important. That is also a reason why Germany is very challenging for us – the social media scene is very different from Finland, people use significantly less, and many people don’t use social media at all there. We should launch our German facebook page soon, so we do consider that it’s important there as well but we also need to think about alternative ways to get our message through in Germany. Social media suits our corporate values well because we strive for openness, transparency, responsiveness and things like that.

Harri: Have you bought advertising space in social or traditional media?

Jussi: We have invested a bit in Facebook marketing, other forms are still in process..

Mari: …yeah, well, in Elle (magazine) we have an advertisement coming up.. And the only reason we went there is that we got it with so low price, hahahha!

Jussi: We need to get our website, Facebook page and Twitter feed working well, later on maybe look at LinkedIn, it’s currently very strongly b-to-b marketing in which we don’t have that much to contribute. There is a Nomo Jeans group or employer there and we have an employee as well who we don’t know..

Mari: There are a few groups in LinkedIn that I follow actively but I don’t contribute on my own. And yes, there is some American who has put us to her resume although she’s not working with us…

Harri: How far have you looked at your possibilities in social media? Meaning, as a wild idea, there are markets for tweets already (you can buy endorsement from people with lots of followers)?

Jussi: We haven’t really. I believe in “genuine” user feedback. Yes, we could buy some tweets and such but in my opinion, that would be pretty shallow. I don’t condemn it as unethical as such but for me, its more important to find ways to get right kind of responses from right kind of customers. It may be slower and take more effort but that is something we are willing to invest in because it is more sustainable to build our brand that way. For bloggers, we have done PR work like: “Hey, we exist, this is our product, come and try it out” and that’s about as far we can try to influence them, it’s up to them if they do come and check out us or if they write about us. And that kind of stuff is fine I think, but getting endorsements by buying tweets is uuuhmmm.. gray area..

Mari: Yes, and we haven’t actually invested anything for blogger interest, all of them have paid their jeans on their own. Journalists have as well. We have offered a minor discount but that has been our only “monetary” incentive. Except for few very rare exceptions.

Harri: About your plans, you probably have looked at the next possible markets to enter. What is your expansion plan?

Mari: Well, Nordic countries, excluding Iceland are very interesting for us. From our perspective, Sweden is the most likely to proceed towards the end of the year. From resource perspective, it goes so that we look at countries on one-by-one case basis and build our brand so that we move gradually and develop our concept along the way. Proceeding one by one is in our view more effective than tackling multiple cases at the same time. Every country needs their own little perks. It’s more feasible to have many shops in one country than to have one shop in many countries. Proceeding with the Swedish market will most likely to happen anyway.

Harri: How is it with the franchising proceedings, what schedule and goals do you have for that?

Mari: That is actually moving forward with some pace right now, we hope to have two franchise shops open in the summer already. Clearly, what we have managed to solve is the process from scanning to ready made jeans, which is the most difficult part and that interests our (possible) partners a lot and that’s what’s driving the partner interest and requests forward.

Harri: What are your goals? What is Nomo like in 2 to 5 years?

Jussi: Profitable, well known in Europe, smart jeans brand, strongly customer centric, ethical.. A brand which is customer driven, not design driven. We have good clothing design as the basis, but we design for customers, not to boost the ego of our designers. In certain aspects, a no-nonsense brand, strong value for price ratio, and what we are paid for, as we are a premium priced jeans brand, is good value – the substance behind everything we do.

Harri: You mentioned ethical action. You produce your jeans in China – how do you make sure your suppliers and/or contractors follow your principles?

Jussi: We screen our suppliers and partners very carefully on an ongoing basis. What we emphasize is of course machine setups, and in all actions how does everything work around it. Production quality is number one but we cannot brag about how we force our Chinese partners to do this and that for us, we are a small player still. I think I’m the only one of our core team without children and that can be seen in our actions: because of jeans, we don’t want to take anyone’s childhood away by working in sweatshops nor do we want to leave our planet in any worse condition to our children than it is now. We want to be profitable, but making profit is not justification to do any bad to each other or the planet itself. I cannot articulate this very well I think, we have been pretty quiet about these, but these are matters that are very deeply built in or ingrained in our minds, actions, the company dna. It’s not in any way like: “Yeah, this is hot and in right now, so let’s put a stamp on it and put out some artificial marketing campaign.” We are not perfect in everything production and ethical action related. And we want to get better. It’s not a thing that we want to shout out loud on every street corner, it’s action that we want to be considered in every single thing that we do.

Mari: Yes, it’s kind of in the background all the time – which figuratively speaking means that it’s in the precondition to everything. If you know anything about the fast fashion vs. slow fashion movement, we are very much in the slow fashion side of that equation.

Jussi: The life-cycle thinking of how jeans are manufactured is important. It of course have to be so that as little as possible waste is produced in the manufacturing process and all that. But in our view, the worst case of cloth or jeans ever manufactured is the one that is manufactured that never used – meaning that it goes to landfill from the store for being outdated or that it sits in your wardrobe for a year or two before being disposed of. That is the waste we should try to get rid of.

Mari: In certain aspects, the whole China phenomenon is interesting. The fad of fast fashion of selling a lot, constantly renewing models, manufacturing a lot, making profit with replacing the old with new fashion at increasing pace is greed that has ruined the reputation of manufacturing in China. For an example, the kinds of knowledge and machines that we are using in China, cannot be found nor operated by European manufacturers – the latest know-how and technology is in China, because of the big players that have transferred their manufacturing there years ago. Now, that we have worked to do manufacturing in Estonia and Finland, the ground level on which we work on is significantly different. The local players here are about 4 years behind in technology, washing techniques that are environmentally friendly, etc. We are paying the price for fast fashion ruining Chinese manufacturing reputation with over exploitation.

Harri: These are all very good points. Why doesn’t your website and communication tell all this to the consumer?

Jussi: We have been somewhat quiet on this. That is perhaps one thing we would need to improve on. We have wanted to build a strong foundation on it first and have not communicated it that much for the time being. For a practical example, we have set a goal that not a single pair of Nomo jeans go to landfill: we have some returns that we can use for color models or for fitting purposes in our store, and the ones that we cannot use, we remove the labels and donate to crisis area help – there it is not priority number one do the jeans fit perfectly. So not only do we concentrate on minimizing waste during production and sales, we try to think where the jeans go after they leave our hands. This is in a way a two-sided sword for us – yes, that is good that we do this and it would make sense to use that message in our marketing and communications as well, but that is not good advertising to us – those actions and values should be self evident, that is what we do, that is what we are. So how could we advertise that? In these kind of issues, it would be good if you could help us on ideation, how can we carry this message without making a big fuss about it? It is clearly an inherent part of our story, but I don’t want that we get the so common “hypocrite green label”. We don’t want to raise a cynical reaction from our customers. Lots of large companies “greenwash” their products and image, produce environmental reports and all that to use it to their benefit. How do we tell the ethical and green part of our thinking and doing in a non-intrusive and natural way, the Nomo way – that we haven’t come up with yet.

Mari: …and that is not a central message in our marketing..

Harri: …maybe not. But by not telling about it, it leaves a “shadow” of suspicion or a question mark, have you thought about these? And very clearly you have.

Jussi: We have thought these yes and of course we are not perfect in every sense. We should do more to try to communicate it, and we will I think with time and a bit more resources.

Harri: What are your greatest challenges at the moment?

Mari: It is our formulas and production process. The no fitting approach has required and still requires a lot of work to make it really good. We are the first in the world to do this and we have made it so far, but still there’s a lot of room to improvement. We are small company acting bigger than we actually are – resources are always stretched. No one of us leaves work early in the afternoon, not even on Fridays, so that our table would be empty of work for the day.

Harri: How many are you at the moment?

Mari: Including temps and distant workers we are 15 in Finland, 3 in Germany and one in China. Almost 20. We talked with many people last Friday in the Finnish Catwalk-event – one of the topics being that we created 13 new jobs last year for the clothing industry in Finland. Someone mentioned that it just might be the largest increase anyone has created for this industry in a long while.

Harri: This has been extremely interesting. Thank you very much for your time.

Mari: Thank you for the interest. It was really nice talking with you. Please don’t hesitate to contact us if more questions.

Project NOMO Jeans

Monday, February 27, 2012

Final presentation slides

Sunday, February 26, 2012

Interview with Nomo Management

Competitors' advertising

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