How Gabee got retail success in the bag

The niche leather goods business sprung from one family's flight to asylum. Now the third generation is taking it into a new era.

Gabee, a niche family business that started off 65 years ago as a handbag specialist, is being reinvented for the third time.

Back in 1949, Heinz Arnheim set up the business which he named after his wife Gabriella. Arnheim had grown up in the city of Forst in Brandenburg, Germany. His family ran textile mills and he grew up learning the process of manufacturing cloth. With the Nazis persecuting Jews, he left Germany in 1939. He was on one of the last boats out.

Heinz Arnheim’s first 10 years in Melbourne were spent working at textile mills in Yarra Falls but he wanted to set up his own business. After trying furniture, he created a wholesale agency for women’s handbags. It was very much a niche business at the time: no one else was doing it and goods were in short supply. But the business grew and grew. Soon, Heinz also created Cobb & Co leather goods and luggage in homage to his new country. 

His son Frank, an accountant looking for new horizons, came into the business in 1969 and expanded it. “It was actually my own decision,” Frank says.  “He never asked me or suggested that I do it. I made the decision myself.”

It was an opportunity to learn all about the business, and he took to it straight away.

“I got out on the road meeting customers,” he says. “I used to do most of the selling. Dad did some but I took over quite a bit and gradually I took over most of it.”

Frank took the company up-market. He moved it from its office in Melbourne’s Little Bourke Street, the site now occupied by the Chinese museum, to Collins Street, near Georges department store, then to Richmond. When it outgrew that space, he relocated it to suburban Notting Hill.

Gabee now has offices in Sydney and New Zealand and distribution networks for both countries. What was once just a handbag business now also sells bags for executives, scratch-free leather luggage, purses, wallets, smart phone cases, iPad and laptop bags, travel passport folders and key and card holders. There are Gabee customers who have been buying its goods for generations.

In the early years, Gabee sold Australian manufactured bags. When the bottom fell out of manufacturing, it started importing Italian bags. Now it sources bags from China and India.

The company employs about 20, including Frank, his daughter Monique, her mother Deany and brother Mark as well as agents throughout Australia.

A former architect and a trained Japanese translator, Monique says she is there to take the business to the next level. Now in charge of marketing, design and e-commerce, she is moving the company into the technology space. Bags, luggage, iPad and iPhone covers, wallets and purses with RFID tag technology protection – a big issue for travellers - will be made available through online ordering for wholesale customers. The company is also creating an online catalogue for bricks and mortar stores. It’s a long way from its humble beginnings.

Frank Arnheim says the new strategy driven by changes in retail is the way of the future.  “The bricks and mortar retailers are struggling and disappearing,” Arnheim says. “That’s an issue for us because we’re losing customers.”

As part of its new direction Gabee has been working with retailers, putting their stores on its web site and running social media campaigns.

The e-commerce strategy aims to get the company on a new growth path. It was growing strongly in the 1990s but over the last decade or so, things have plateaued.

“We have now developed some new strategies to try to expand the business to different levels,” Arnheim says. “We are finding new distribution networks. There are networks out there doing internet selling. Most of the new ones are via the internet.

“We are now doing a lot through internet resellers plus we are setting up our own internet outlet as well,’’ Arnheim says. “The technology has changed so much and if you don’t move with it, you’ll be left behind. It’s a change of thinking.”

There is a lot more competition these days from outlets selling synthetic gear but Frank says Gabee’s competitive advantage lies in leather goods and luggage, now being sold at David Jones. And it’s very much a family business. When Mark had his first child, the company started creating backpacks and bags for kids.

Frank says he never asked his children to go into the business. Indeed, with Monique he was insisting she develop another career. “I wanted her to have a career path other than the family business,’’ he says.

But Monique felt the business calling her, it was in her blood. “I had grown up with it and I remember we used to have the bus tours,” she says. “I would have been 10 years old sitting in the office processing sales. I clearly remember that.”

She is now developing new markets and building Gabee’s brand. The third generation is taking over, changing the direction of the family business, again.

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