Stay Fresh, Reinvent

Stay Fresh, Reinvent

RETAIL by Jean Gruss | Editor/Lee-Collier

Taking a cue from pop-diva Madonna, star jewelry designer Erika Pena constantly reinvents her merchandise. Erika and her sister, Bielka, have big ambitions for their young firm.

Just five years ago, Erika Pena was selling handmade jewelry at flea markets and fairs in Puerto Rico.

Today, the Fort Myers-based jeweler's designs adorn the hottest celebrities, from recent jailbird Paris Hilton to off-the-court tennis sensation Anna Kournikova.

How Pena, 31, went from peddling earrings at Puerto Rican flea markets to selling $900 necklaces to a sophisticated clientele in Dubai, Paris and Los Angeles illustrates how nimble entrepreneurs can quickly establish a global franchise. Besides having her jewelry sold in exclusive boutiques, Pena's jewelry also made it into high-end department stores such as Bloomingdale's and Nordstrom.

Pena is the name and designer at the head of Erika Pena Designs. Her sister, Bielka Pena-Bevillard, is the financial brains behind the operation. Recruited by her sister in early 2006, Pena-Bevillard is a former bank financial representative and stay-at-home mom.

Pena-Bevillard, 36, built the business with $20,000, using credit cards. The company's revenues hit $500,000 last year and that figure is expected to triple this year.

The sisters' ambition is to build an Erika Pena retail empire. With a recent $200,000 bank loan and investors eager to bankroll them, they have plans for 100 stores, online shopping and expanding the Erika Pena Designs to clothing, handbags and other accessories.

Chandeliers into earrings

The children of Dominican immigrants, the Pena sisters were born in New York and grew up in Fort Myers where their father was an auto mechanic.

The Pena children are all accomplished: A brother is a physician, and a sister is an architect. Erika received a full scholarship to study fashion at the Parsons School of Design in New York City.

After graduating, she worked at fashion houses in the city, including designing sportswear for Donna Karan. After 9/11, Erika moved to Puerto Rico to be director of the San Juan Fashion Center, an economic development organization established to promote the Puerto Rican fashion industry.

That's where she found her jewelry muse.

Armed with a small jewelry toolkit, Pena took apart an old chandelier and transformed the metal into earrings and chains. She set up tables at flea markets and fairs around Puerto Rico and quickly sold out.

The flea markets of Puerto Rico became a valuable training ground for Erika's retailing skills. Puerto Rican women, Erika explains, like to buy new fashions every month. To keep up, she had to create new designs.

One day, Erika's jewelry caught the eye of a local fashion designer who asked her to create 75 pieces for a fashion show. She recruited some of the local women who make jewelry and immediately went to work. "We didn't sleep for a week," she says. After the show, she sold $10,000 worth of jewelry.

Erika says her jewelry appeals to women because it's made of the most lightweight materials, and it's different from anything in stores now. She works with thin gold strands and translucent stones, for example. There's a new collection every three months, and it's usually dramatically different from her last creation. "Shells are going to be hot in six months," she asserts. Why shells? "I make the trends, baby," she laughs.

In fact, Erika already has designed next year's line of jewelry. She won't say exactly what it is, saying only that it involves "words" and "poetry."

Taking a cue from Madonna

Erika learned from her experience in Puerto Rico that tastes and fashions change quickly. In that world, it's essential to reinvent your products. She points to pop-diva Madonna, whose multiple reincarnations have kept her at the top of the music charts and on the covers of celebrity magazines. "Style has to do with reinventing yourself," she explains.

Fashion boutiques look for that kind of freshness, and Erika's unique designs have landed her in boutiques around the world. "Your stuff has to be different," she says.

Dreaming up new jewelry designs comes naturally; Erika has more than 1,000 original designs. "The ideas are endless," she says.

Erika is constantly on the road, visiting customers in far-away places such as London and Dubai. She recently spent three weeks in Europe, flew to Miami and then traveled to the MTV Awards in Los Angeles, briefly stopping in Fort Myers to help her sister move the company's offices to a larger building.

"When I travel, I make money for the company," she says.

Certain lines of jewelry sell better in some places than in others. In Dubai, for example, large gold earrings with a Latin flavor sell well. In France, the more understated, elegant necklaces are more popular. "The English market is the wildest," she says.

Erika and Bielka stand out at industry trade shows that bring together thousands of buyers and vendors. Buyers are always looking for new products, and judging by the number of stores who carry her lines the sisters have been successful.

More than 300 independent fashion stores now carry her jewelry and she employs four women in Puerto Rico who manufacture her pieces. In California alone, 68 boutiques carry her jewelry. "We make 1,000 to 3,000 pieces a month," she says. Each item costs from $60 to as much as $900.

Back-office in Fort Myers

Back in Fort Myers, Bielka watches every penny carefully. Her priority, she says, is paying vendors and suppliers on time to maintain the company's good credit.

Every bill is closely scrutinized. Erika travels cheaply, staying with friends and riding public transportation. Recently, Bielka agonized over a $200 breakfast tab Erika ran up while she was courting a client.

"I need to be able to pay the vendors," Bielka grumbles. "For two years I was living off a boyfriend," Erika jokes.

Bielka is tough on stores when it comes to returns, giving them just five days before charging them a restocking fee. "I'll be the bitch," she says, adding: "Remember, we're trying to make it."

Still, Bielka says she must strike a careful balance between pleasing retailers and being inflexible. Negotiations are particularly tough with large department stores because they have lots of buying power. For example, Bloomingdale's initially stocked Erika's jewelry in 40 stores in October. By November, they had sold out and ordered 2,000 pieces in November and December to be sold at 60 stores. "I don't really want to mess with them," Bielka says.

The fiscal diet has forced the sisters to be creative. They hired an Argentinian firm to create their Web site (www.erikapena.com), an elaborate project with graphics, photos, music and multiple visual elements in motion. Total cost: $1,200. "I'm very frugal with the company," Bielka says.

Their quest for lower-priced vendors hasn't always been as successful. For example, they traveled 26 hours to Humen, China, last year only to discover the place was riddled with sweatshops and low-quality materials. They ordered onyx hearts for a fraction of what they cost in the United States, but for some reason they reeked of a foul odor when the box arrived and each one had to be washed by hand and spritzed with perfume.

They're not going back to China. Instead, they're considering adding manufacturing capacity in Rhode Island, which they say is the jewelry-making center of the country.

Expansion plans

With the help of Suzanne Specht at Florida Gulf Coast University's Small Business Development Center, the sisters developed a business plan with big projections and landed a $200,000 loan from First American Bank.

Now, the sisters say investors are interested in backing their future plans. "We can't talk about it," they say.

The Penas recently moved into a larger 1,800-square-foot office in Fort Myers on McGregor Boulevard where they hope to open their first store. Stores could generate $20,000 a month, Bielka estimates.

Still, Fort Myers is a backwater of the fashion world, despite the fact that another hugely successful retailer, Chico's FAS, made its debut on nearby Sanibel Island and is headquartered in Fort Myers. "I'll probably need to move back to New York," Erika says.

Erika Pena Designs must have a presence in New York or Los Angeles to have real credibility in the fashion industry, Erika says. The first step will be to have a showroom in New York by next year where she can meet with buyers. "A lot of buyers ask, "Where's your showroom?" Fort Myers doesn't cut it.

What's more, the fast-paced energy of New York City feeds Erika's creativity. She's going to need it if she expands into other items such as clothes and handbags and building as many as 100 Erika Pena stores by 2010. There are also plans to sell jewelry online.

Bielka, though, is happy to be running the company from Fort Myers, where her family is well established. "It doesn't matter where you collect and pay," she says.

Star Power

Erika Pena knew she had made it when Paris Hilton gave her a hug at a party and told her how much she liked her jewelry.

Yes, that Paris Hilton, the hotel heiress who just got out of jail.

So, how do you hook your jewelry on stars?

Erika Pena made sure her designs were stocked in the chic Los Angeles boutiques, such as Kitson, and she made connections with celebrity agents.

Pretty soon, she was invited to "gifting parties."

These are highly selective events, where stars set fashion trends with new designs. "The celebrities are into 'different,'" says Pena.

The by-invitation-only events feature designers who must pay thousands of dollars to rent a table and give away as many as 300 items to celebrities.

A table at a gifting party at the most recent Sundance Film Festival cost $20,000.

In return, photographers shoot photos of the celebrities wearing the fashions, which the designers can then use to promote their wares online and in magazines. Check out Pena with Paris at www.erikapena.com (click on "Press").

REVIEW SUMMARY

Industry: Retail.

Company: Erika Pena Designs

Key: Erika Pena and Bielka Pena-Bevillard want to expand beyond jewelry to clothes.