SuperPACs eyedfor mayoralelection

BY DANIEL MASSEY

Conventional wisdom in city poli-tics holds that the only alternativeto the campaign finance system isfor a billionaire candidate likeMichael Bloomberg to throw tensof millions of dollars into a run.

But the phenomenon of superPACs is about to flip that thinkingupside down. From Utah to Indi-ana, these giant funds have spentmillions to shape elections. Nowthey’re poised to come to New YorkCity,where they could shake up the2013 mayoral race by promoting abusiness-friendly candidate whomight not be able to self-finance.

“There will be super PACs,”said New York Republican StateCommittee Chairman Ed Cox.“It’s impossible not to have them.They’re a part of the process now.”

While their arrival may be in-evitable, there are plenty of ques-tion marks. Strict local disclosurelaws mean super PACs here will be

BY MATTHEW FLAMM

It took three years and $1 million forthe founders of Next Big Sound tobuild their company out of an incu-bator lab in Boulder, Colo. But inJanuary, when a second financinground brought in $6.5 million,it was

time to head for the big city. Andthere wasn’t any question which one.

“Our clients are in New York,”said Alex White,chief executive andco-founder of Next Big Sound,which analyzes data for the musicindustry, and which officially makesManhattan its home June 1. “It’llcost us more, but the ability and

speed with which we’re able to de-velop products will be accelerated.”

For decades, New Yorkhas been known as thetown companies left whenthey needed to expand andcouldn’t afford the highersalaries and rent. But a re-versal is taking placeamong tech firms:Compa-nies are moving here.

They’re drawn by a thrivingecosystem fed by money from pri-

vate investors, and supported withincubator labs and other shared

work spaces, some of themsponsored by the city.There’salso proximity to hometownindustries like media, adver-tising, fashion and finance—all going through digital dis-ruptions—and a growingpool of engineers, as well as

seasoned entrepreneurs who canoffer encouragement and advice.

Tech startups moving to NYC

See TECH on Page 22

See PACS on Page 22

Wave of digital companies from across U.S.sees Big Apple as base for next-stage growth

Biz groups’ millionscould upend 2013race for City Hall

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VOL. XXVIII, NO. 20 WWW.CRAINSNEWYORK.COM MAY 14-20, 2012 PRICE: $3.00

BY ADRIANNE PASQUARELLI

Looking to kick its retail operations into higher gear,hipster clothing chain Brooklyn Industries last fallborrowed from the playbook of higher-flying com-petitors H&M and Zara, known for what the retailworld calls “fast fashion,” or ultraquick turnaround ofthe latest designer styles.

“When you think fast fashion, you think of cheapdesigns copied from the runway,”said Lexy Funk,chiefexecutive of the 13-unit chain. “We want to innovatewith original designs but do it in a fast manner.”

To get stylish duds on the selling floor more rapid-ly,Ms.Funk has shifted some of her chain’s productionto New York. In one example, it took just six weeks todesign and deliver a line of leather bags to her stores,

See FAST FASHION on Page 9

FASHION GETS FAST

TOP STORIES

INDEX

Brooklyn Brewerytaps new leadersPAGE 2

Out-of-town brokerhits a local wallPAGE 2

Pearson’s test flubscould cost it dearlyPAGE 4

Enrollments are upat summer campsSMALL BUSINESS, PAGE 14

Real Estate Report:Third Ave. bargainsPAGE 15

NEW YORK, NEW YORK _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _8THE INSIDER _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _10NEIGHBORHOOD JOURNAL _ _ _ _ _ _ _ _ _ _ _ _ _11VIEWPOINT _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _12FOR THE RECORD _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _19CLASSIFIEDS _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _20HOT JOBS _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _25EXECUTIVE MOVES _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _25THE WEEK AHEAD _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _27

INSIDE

GOTHAM GIGSHelping parents makethe grade P. 25

● ANNE FISHER Egostifles innovation P. 25

● MOVERS & SHAKERSBike-share’s chief cyclistgets ready to roll P. 26

● GAEL GREENE Beirutimport offers bold takeon Mideast cuisine P. 27

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LEXY FUNK OF BROOKLYNINDUSTRIES: Her specialty retailchain makes more goods locallyso that new merchandise arrivesin weeks rather than months.

Trend-driven retail industry’s need for speedis changing how apparel outfits do business

Jamie Dimon’s$2 billion ‘oops!’

In the Markets

Page 6

rather than the six months it couldhave taken if the bags had comefrom Hong Kong.

“We’re actively moving more ofour sourcing to the U.S.,” she noted.

As fast fashion continues to winover shoppers, more specialty retail-ers like Brooklyn Industries, whichtraditionally freshened merchan-dise just a few times a season, findthey, too, must speed up their turn-around cycles.And that could createnew opportunities for their gar-ment-district suppliers and NewYork-area vendors whose proximityallows for faster production.

Annual revenues for fast-fashionstalwarts Forever 21,Uniqlo,H&Mand Zara increased an average of18% from 2006 to 2010, accordingto a report called Fashion.NYC.2020, released last month bythe city’s Economic DevelopmentCorp.Meanwhile, specialty retailerslike New York-based Aéropostaleand Gap were hard-pressed to keepup, seeing sales rise only 2% on av-erage over the same period, accord-ing to the report.

Analysts expect the trend to con-tinue in New York as fast-fashion re-tailers snap up high-profile locationsin popular shopping meccas aroundtown, from 34th Street to Fifth Av-

enue. “Fast-fashion stores havetouched the trendy side of every-one,” said Candace Corlett, presi-dent of WSL Strategic Retail,whichanalyzes shopper behavior. “Themessage to specialty shops is thatthey have to have a lot of trendy,too.”

The rise of fast fashion has beenmeteoric. In the late 1990s, H&Mwas just entering the Americanshopping scene; it now has 10 storesin Manhattan alone.Especially overthe past four years, such retailershave taken off by appealing to reces-sion-weary consumers who aremore aware of new looks—thanks tothe Internet—but less willing tospend big on an outfit.

Quick turnoverDubbed “fast” for their turn-

around speed, these retailers canproduce merchandise within 14days, compared with the 90 days ofthe competition. Zara, a $10.5 bil-lion retailer that recently opened aFifth Avenue flagship,brings in newinventory twice a week at each of its1,800 stores worldwide. Since mostof Zara’s goods are produced near itsheadquarters in La Coruña, Spain,it’s able to keep a tight grip on itssupply chain. By contrast, less nim-ble retailers often produce in Chinaand have less control over timing.

“Fast fashion is all about quickturnover,” said Oona McSweeney,vice president of retail and special

markets at trend forecasting firmStylesight. “It’s see it now, buy itnow, wear it now.”

The movement could bring aneeded boost to local manufacturersin the garment district and outerboroughs if retailers start turning tothem for faster delivery of dresses,handbags and sandals. Big Applemanufacturers are already used toquickly producing limited-run mer-chandise for a handful of designers,including Nicole Miller and MariaCornejo. Though prices are highcompared with those of overseasproducers, rising labor costs in Chi-

na could level the playing field.“There is definitely opportunity

for New York,” said Kristy Sundja-ja, senior director at the city’s Eco-nomic Development Corp.

Saving timeAlready, by moving some of its

production to New York, BrooklynIndustries has cut months out of itsturnaround cycle. Last October, the14-year-old retailer—whose 2012same-store sales were up 11% as ofApril—began using factories inDumbo and midtown Manhattanto manufacture its new line of

women’s leather bags.The tote bags,which cost around $134, are sellingwell, Ms. Funk said. She’s now try-ing to shorten the timeline forsportswear as well. “The market isgetting a lot faster,” she noted.

Specialty shops such as Aéro-postale and J.Crew, which declinedto comment,typically dedicate about10% of their merchandise to verytrendy wares, according to analysts.But the retailers could be looking toincrease that ratio, scrutinizing themerchandise cycles of stores such asH&M in order to get their own prod-ucts in the door more quickly.

“All [specialty retailers] are look-ing at how they can be faster and whothey can partner with to manufac-ture,” said Nancy Liu, a retail strate-

gist at consulting firm Kurt Salmon.In the meantime, the fast-fashion

folks are only getting stronger.Stock-holm-based H&M recently reporteda 16% rise in March same-store sales.The parent of Japan-based Uniqlo,the aptly named Fast Retailing Co.,generated a net profit of $715 millionfor the six months ended in February.With three massive Manhattanstores, Uniqlo is planning further ex-pansion into U.S. malls.

“Uniqlo and Zara are now onFifth Avenue near Cartier andLouis Vuitton,” noted Ms. Liu.“That speaks to how well they’vedone.” �

Fast fashion boosts NY retailersContinued from Page 1

May 14, 2012 | Crain’s New York Business | 9

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‘It’s see it now, buy it now, wear it now’