Gambling on MAGIC
Small companies weigh the costs—and potential rewards—of attending the giant Las Vegas trade show
When Peter Kim’s streetwear company, Drunknmunky, was only a year old, he made a major gamble.
He spent $20,000 to go to MAGIC International, knowing that the humungous trade show in Las Vegas would either make him or break him.
“This was our last shot,” Kim recalled. “If we bombed at MAGIC, then maybe it was time to pack it up. That’s what it came down to.”
So in August 2000, when sales of the freshly minted apparel venture were limping along and the future didn’t look too bright, he and his gung-ho seven-person team prepared for the trade show. They bought four door panels at Home Depot to build their own booth, parlayed their way into free hotel rooms and did a lot of legwork to generate good buzz.
“This was separating the men from the mice,” said Kim, president of Drunknmunky. “It was a huge cost, but I knew I had to go there, make a presence and sell.”
However, Kim’s accountant, Albert Jang of Kim & Lee in Los Angeles, was apprehensive. Did Kim know something he didn’t know?
“To be honest with you, I may sound like a typical accountant, but I am not really into that specific market, so I didn’t know what to expect from the show,” said Jang, who is in his 30s.
The business Drunknmunky got from the show saved the company. Kim said buyers saw him at MAGIC and then followed him to Action Sports Retailer, the Southern California trade expo that features boardsports apparel and edgy clothing. In the end, the MAGIC show generated from $60,000 to $70,000 in orders, Kim said.
Since then, the company has attended every MAGIC show in Las Vegas. Early this year, Drunknmunky wrapped up a partnership with New York–based Fubu, another streetwear company, to expand its business.
Drunknmunky was one of the lucky ones. Not everyone is successful at the mammoth trade show that comprises 7,000 booths in the Las Vegas Convention Center and the Sands Expo & Convention Center.
And not everyone is as adventurous as Kim and his colleagues. For advice on whether to make the trek to MAGIC, most new companies turn to their accountants. Accountants will tell them that after opening their wallets to set up a booth, ship apparel lines, buy airplane tickets, get hotel rooms and pay for food, the tally comes to at least $8,000 to $10,000 for the four-day event.
“You need to look at the strategic reasons for being there and the financial ef fects,” said Rob Greenspan, managing partner at Moss Adams LLP, an accounting firm that caters to the apparel industry. “I have smaller clients that go to MAGIC and think it is worthwhile, and I have smaller clients that leave MAGIC. You go because you need to give people the vision of your company and to express an image.”
That’s why Lisa Shin decided to go to MAGIC last February even though her new T-shirt company, Kookie Inc., was barely walking at two months old. Her accountant told her she was nuts.
She went anyway and spent $30,000 to set up and staff a booth, transport goods, and pay hotel and food costs.
“We did it for the exposure,” said Shin, inside her ninth-floor working space on Broadway Street in Los Angeles. “If you get even one buyer that is big, it’s worth it.”
Shin wrote about $25,000 in orders at the show.
“We walked away meeting JCPenney outlet stores and the bigger department stores,” she noted.
But she is not exhibiting at MAGIC this August because she prefers the show in February, when her company normally receives more orders.
Accountants have a hard time gauging whether it pays for new small companies to spend scarce capital on MAGIC.
“Las Vegas ain’t cheap,” said Bruce Berton, director of international business consulting at Stonefield Josephson Inc., an accounting firm in Santa Monica, Calif., that has several apparel clients. “My advice to a new firm is that unless they are in a highfashion area, then the MAGIC show is not the show to start off their business.”
Berton said new companies could get a better response by participating in smaller regional shows in Atlanta, Dallas, San Francisco and New York.
If companies do decide to participate in MAGIC, accountants suggest they set up several appointments for buyers to visit their booths.
Apparel companies should send out postcards to notify potential buyers of the lines they will show and their booth locations.
They should also purchase a mailing list to get new retail clients to visit.
