Nenad Bakić on the Varteks digital revolution (Interview)
March 20, 2019 – It was once among the leading brands in the entire former Yugoslavia, and its fashions were in demand internationally. Are the good times returning to Varteks in its 101st year of history? TCN learns more about the digital revolution from the CEO of Varteks and a member of the Financial Times’ 100 Best Digital Champions for 2018, Nenad Bakić.
During many years of living in the Soviet Union, Russia, Georgia and finally in Croatia, the scenes were depressingly familiar to me. The once great socialist system, whose factories not only employed the majority of the local population but defined the town or city, lay in ruins, its once proud factories abandoned, as well as those once guaranteed jobs and all sense of hope. Ghost towns where thriving communities once existed, powered by the factory that defined most aspects of the common way of life.
After she moved from Hvar to a village near Varaždin a few years ago, the shadow of the former fashion giant Varteks did not take long to make itself known.
Varteks was in Varaždin for the longest time. This beautiful baroque city (yes, I really think it is the most beautiful in all of Croatia) and the former capital before Zagreb, was synonymous with the local textile factory, which at its peak had as many as 187 high-end properties that sold their high-quality goods throughout the former Yugoslavia. And abroad. Varteks suits quickly traded in Italy, the UK, the US and Switzerland, to name just a few of the western markets where the company had a presence.
At its peak, Varteks employed as many as 11,500 people, with production facilities throughout the Varaždin County. Levi jeans were produced in Novi Marof, and there were also production facilities in Ludbreg and Ivanić, as well as the parent company in Varaždin itself.
Today, Croatian industry is almost non-existent, due to the Homeland War, but in the case of Varteks, the company survived after the war, but was soon a shadow of its former glory. While the quality of its products did not decline and it continued to sew for some of the world’s top fashion brands, as well as produce its own clothing lines, the workforce was literally decimated from 11,500 to 1,200, and losses were paralyzed (800 million kuna – about 110 million euros ) over the course of ten years brought the once proud company to its knees.
(Catalog from 1937, when Varteks operated under the previous name Tivar)
One of the leading Croatian entrepreneurs, Nenad Bakić, took over the position of President of the Management Board last year, in the 100th year of the company’s existence.
Bakić has a no-nonsense approach to life and a clear vision of how things should be done. That is one of the qualities he brought Financial Times to include it in the list of the 100 best digital champions of Europe in 2018.
(Queen Elizabeth II at the Birmingham Fair with the then CEO of Vartkes in 1967)
Bakić quickly realized that Varteks had an incredible heritage and brand recognition in the region, but also that it desperately needed to modernize its marketing approach.
He took over the company at the celebration of the 100th anniversary, and until the end of this month, a truly extraordinary exhibition on the occasion of the 100th anniversary was set up in the City Museum of Varaždin. If you can’t make it, check out the video tour above.
Varteks suits and commercial clothing have been at the cutting edge of fashion and technology throughout the company’s existence.
For example, he ran a successful mail-order catalog business before this 50-year-old correspondent was even born.
A very nice promo video from the Varteks archive above – see how the Varteks catalog and clothing delivery has affected the life of a normal family. The year is 1967.
(From the exhibition 100 years of Varteks – Levi Strauss, Varaždin)
But the all-too-depressingly familiar tale of industrial decline may not be the last chapter of the Varteks story. Nenad Bakić and his team have a clear vision of how to re-establish the Varteks brand, playing on its strengths such as its proud history, branding and exceptional quality, and adding innovative digital campaigns to completely reorient the Varteks brand and target market.
I met Bakić yesterday at his Varteks office in Varaždin, where he was kind enough to take the time for an interview. In my own words:
“Varteks was the largest and most important clothing and fashion company in the former Yugoslavia. But it has been in constant decline, I would say for the last 50 years. People have noticed the decline in the last 12-15 years when the losses were piling up year after year. to more than 100 million euros, which ate up most of his substance (assets), but he actually declines for many more years from that.
“It was founded in 1918 by Czechs from Moravia and very quickly became the most important textile company in the former Yugoslavia.
(Airline personnel, hunters, hoteliers and musicians – for all there was a high-quality Varteks uniform)
“As textile markets declined and foreign markers were lost, the company concentrated on sewing for other labels. This is what we continue to do in our two factories, sewing for Hugo Boss and other global labels.
“Then we have another job in the production of high-quality uniforms according to NATO standards, for special forces, police uniforms, corporate clothing and so on.
(From the exhibition 100 years of Varteks – Varteks was much more than a factory, it was a community, a way of life)
“And our third activity, which is now our main focus, relates to our own brands and retail. Varteks used to have the largest retail network in the former Yugoslavia, around 187 stores. They were mostly sold to cover constant losses. And so Varteks is no longer a big player as before in the region, and companies like Zara or H&M today are ten times bigger than Varteks. But in people’s minds, Varteks is still a huge company, I would say, and it is also the only relevant Croatian brand that has survived.
(Bakić gave an excellent presentation about the digital revolution in Varteks at last week’s Digital Takeover conference organized by 24 sata in Zagreb)
“Now in Croatia we also have smaller designers, who are also successful, but they are all small businesses. But of the larger ready-to-wear and fashion houses, only Varteks remained.
“However, a year ago it was bankrupt again and this time there were no assets to cover the losses. So when I became more active as a member of the supervisory board, and now the president of the management board, we decided on a very clear direction towards quality and re-establishing our presence brand.
(Campaigns such as Vintage Varteks and The Imperfect Man in the Perfect Suit achieved unqualified success)
“We are working very hard to restore the quality of the brand. The quality of the brand has always been high, but maybe sometimes not at the level of some brands that are imported to the Croatian market.
“When it comes to the quality of fashion and clothes, we strive for extremely high levels, so we now put the best quality suits and clothes in our stores.
(Several prominent Croatians proudly joined the campaign to revive this Croatian industry with so much potential, including Mate Rimac, owner of Rimac Automobili, who is conquering the automotive world with his electric cars and technology)
“We produce for some of the biggest brands in Europe. So the quality is there, but two things are missing.
“First, the design did not always follow the latest fashion and we fixed that. And the second is the marketing approach.
“I would say now that we are by far the most innovative fashion company in Croatia when it comes to marketing. We have several marketing initiatives and are now developing a very broad portfolio. So we have the best quality suits in our limited edition, but we have also entered a new niche of suits for young people.
(What to wear when you’re unveiling the world’s fastest electric supercar at the Geneva Motor Show? A Varteks suit, of course!)
“This was one of our new ideas to partner with the players, where we have a new collection of suits for the younger generation. We mutually strengthen our brand, and as you can see from their social media statuses, they are also very proud to be part of our initiatives and to be ambassadors of our suits.”
(Two men who bring hope for Croatia, both on The Financial Times list of the 100 best digital champions of Europe in 2018 – Mate Rimac, left, and Nenad Bakić)
Tell me about Varteks Modabus.
(Selling in the manner of Varteks in 1937)
“We have something here that I’m very proud of, and it’s something that can be presented at any retail conference in the world. What we’ve done is something that’s very old in retail – a moving shop. When they used to sell Coca Cola in the wild in the west 100 years ago, or even Tivar (as Varteks was called), they did it with a mover, which was usually in the form of a moving truck.
(Selling in the manner of Varteks 2019, and in the middle is Varaždin, World Cup coach Zlatko Dalić)
“We took that from history and reinterpreted the idea by taking the biggest possible bus, which has 40 m2 inside. So it can really function as a presentation like a modern store, but it’s also paired with an online store.
“So what’s the customer journey like? The customer feels welcome and comfortable inside the store. There are dressing rooms so customers can try on, but we don’t sell anything on the bus. All items have a QR code and they can scan the QR code that goes to our webshop. From there just one click to SMS/WhatsApp/Email confirmation with a coupon offering 10% discount if they buy within 36 hours.
“So the customer’s journey involves using the oldest possible way of retailing – the mobile store – with the latest technology and a webshop. I am very proud of this concept. In addition, as Varteks has sold most of its stores across the country, it sends a strong message to our customers that we are returning to places we have been, but also that we are agile, modern and ready for new trends.”
(TCN with Varteks board president Nenad Bakić in Varaždin. I’m not in a Varteks suit… yet.)
Are you planning to go outside Croatia by bus?
“Our next goal is to visit Bosnia and Herzegovina because we are present on the market there. Now we are trying to re-establish Varteks in Slovenia, and now we have webshop delivery to Slovenia. Internationally, we will see. At the moment we have fantastic quality at excellent prices, but there is no presence of the brand in most other countries, so we will test those markets through the webshop and see.”
Check out the Varteks website and webshop.
More about developments in the story of Varteks and other initiatives of Nenad Bakić, follow the dedicated TCN page here.