The Men's Wearhouse: tailoring an off-price mix - Apparel Merchandising - Company Profile

Discount Store News, Feb 20, 1995 by Jeffrey Arlen

During the '60s pundits predicted that suits would become relegated to an archaic past where men's clothing was based on the military uniform prototype. During the next decade many sartorial experts really believed leisure suits were here to stay. The '80s saw power suits rule in corporate America even as many men began to dress down during business hours. Now, as we approach the millennium, the casual consciousness shows no signs of abating.

Marketers of tailored clothing have witnessed their universe contract, and most tailored clothing retailers - department stores as well as specialty shops - have had to reassess their commitment to suits and sport coats as the menswear world moved from dress up to Dockers.

In light of this merchandising context, the growth of The Men's Wearhouse, a company that doubled its net earnings on a net sales increase of 80 percent from 1991 to 1993, is surprising, if not extraordinary.

Net sales for the fiscal year that ended last month were $317.1 million compared to $240.4 million for the same period for the prior year, a 32 percent increase. Net earnings increased 39 percent to $12.1 million, according to market estimates.

The company, founded in 1973 by chairman/president/ceo George Zimmer as an outlet store for his father's manufacturing business, managed to produce increased earnings during the third quarter of 1994 while lowering SG&A as a percentage of net sales. Meanwhile, gross margins rose marginally for the period.

Currently, The Men's Wearhouse operates approximately 232 stores - 50 new units opened last year - in 23 states, with a major expansion into the Chicago area imminent.

So, what's its secret? Like some of the giant retail success stories - Wal-Mart and Home Depot, for instance - it comes down to execution.

"The way you go about doing business here," says executive vice president Richard E. Goldman, "is with an understanding that we are not really in the clothing business, but in the retail business.

"We could be selling widgets. We are not in love with the product. What's important is to approach the business in a way that works for us. not by what's been done by others in the past."

Pretty philosophy, but what are the concrete concepts that make The Men's Wearhouse house extraordinarily successful. while other off-price tailored clothing stores, such as NBO which recently filed for Chapter 11 protection, are being hung out to dry?

On the surface, the answer is simple: Offer consumers value - The Men's Wearhouse sells clothing at 20 percent to 30 percent below full-price tickets in department and specialty stores - in a friendly environment, and empower employees to do what it takes to satisfy customers.

The concept may be simple, but turning that credo into reality takes a concerted, conscientious effort that few retailers have been able to successfully effect.

At The Men's Wearhouse it began with the corporate culture.

Early on "George [Zimmer] and I realized that whether you're a sales associate from Boise, Idaho, or the president of the company, we all come from families. So, we felt that if we could create an atmosphere that sort of felt like a family, for some people take the place of a family or for others enhance their existing families, we'd be successful. We knew that to make sure our customers are treated right, we had to treat the people who work for the company right," says Goldman, whose "family" has grown to some 3,200.

"Suits University," a multifaceted training program, is the starting point for the company's internal strategy. All The Men's Wearhouse employees go through this three-day program, which is held at the midpoint between San Francisco and San Jose in Fremont, Calif., at the firm's executive offices.

During the sessions, staffers are imbued with product information and taught selling techniques while being acclimated to the corporate culture. The program is augmented by numerous employee development programs, including in-store training meetings and social events meant to bond personnel and the company.

"We want our people to feel they are being treated fairly, and it all starts at Suits U. First of all it's an all-expenses-paid trip to Northern California, which can mean a lot to a new employee. Once we get them at Suits U. we don't teach people how to use the cash register; that they can learn in the store. What we do is inculcate them with the corporate culture," says Goldman, who like virtually all The Men's Wearhouse employees started his career with the company on the selling floor.

Motivation and enthusiasm is central, says Goldman, because in an uninspiring setting things can get dull and sales suffer.

"When you think about it, what we do is pretty drab and pretty boring. Retail in general can be pretty boring, and this is men's clothing. When a guy goes out to buy golf clubs he's happy and excited. But for the average guy, buying a new suit is about as exciting as buying a washing machine. It's important that our sales people make the process more interesting and pleasant," says Goldman.