For 54 years, Clifford Grodd, the 83-year-old CEO of high-end clothing retailer Paul Stuart, has arrived at the New York flagship store before dawn to examine every pattern, display, and ad. Grodd, a former U.S. Air Force pilot, is a man of routine. Every work day, he arrives fresh from the Yale Club, which opens early to allow him his 4 a.m. workout. Grodd then dresses, dons suspenders, adjusts his pocket square, and heads to work, where the starting time for most employees is 7:00 a.m. His stringent standards and studied idiosyncratic style lead underlings to joke that "Grodd is in the details."
That painstaking approach to business created a devoted following for the 69-year-old brand, which has stores in New York and Chicago and 100 licensed stores internationally. It's also left Paul Stuart with an aging customer base and a reputation for conservative fashion. To update the brand's image, Grodd is launching a new line of clothing in Paul Stuart stores on Oct. 8--the company's first-ever sub-brand, called Phineas Cole--to appeal to a hipper, younger demographic. Grodd's challenge is shared by many a CEO: Stay relevant by adapting to changing customer needs and tapping new growth markets, but maintain the connection with core customers. The need to master this balancing act is particularly acute for Grodd, who owns a majority stake and became CEO in 1965 when his father-in-law, Ralph Ostrove, stepped down. He wants Paul Stuart to remain family-owned and says he rebuffs at least two to three offers a year from private equity firms and others.
In Phineas Cole, Grodd thinks he's found a way to achieve that balance. If Paul Stuart is a cosmopolitan man in his 50s, Phineas is his thirtysomething errant nephew, tapping away on his PDA and sporting purple socks and an orange tie. He is described by company executives as a world traveler with a rakish attitude and an impeccable sense of style. Presenting Phineas as a fictional relative (there was a real Paul Stuart--Paul Stuart Ostrove, the founder's son) is helpful for the line's designers, who say they continually ask themselves: "Would Phineas wear this?" It also frames the launch as an evolution, a new member of an expanding family, and allows Phineas to trade on Paul Stuart's cachet and heritage, says Madison Riley, a strategist at retail consultants Kurt Salmon Associates.
That translates into a sleeker, more contemporary silhouette and bolder colors and patterns. Jackets are slimmer and a half-inch shorter than classic Paul Stuart styles and sport two extra interior pockets for MP3 players or PDAS. Trousers are long and lean, and shirts cut close to the body with no pockets. Prices are similar to those of the main brand--$1,400 to $2,400 for a suit, $190 to $300 for a shirt, $110 to $170 for a tie. Both lines are designed in-house and are partly hand-sewn.
The roll-out of Phineas mirrors a broader shift within Paul Stuart. Although Grodd brushes away talk of retirement--"I get too much fun out of what I do. Playing golf or bridge wouldn't be sufficiently challenging"--he's thinking about succession. Growth has been steady, he says, but the company could benefit from a fresh eye. The logical choice, he acknowledges, is his 47-year-old nephew, Michael Ostrove, currently vice-president. Grodd also acquired an experienced No.2 with the hiring late last year of retail veteran Sandy Neiman as director of merchandising.
Neiman's charge: Revitalize a Paul Stuart that has aged alongside its baby boomer customers and bolster its e-commerce business. Plans for Phineas include guerrilla marketing, Web video, a blog, and possibly celebrity endorsers who'd wear the line to events and host launch parties. "Gordon Gekko's back, along with an interest in proper dressing," says Neiman, so Web ads will target young Wall Streeters.
The strategy makes sense, says Richard Jaffe, retail analyst at Stifel Nicolaus. But, he adds, "I don't know how you find this customer and let him know you're younger than you appear." Grodd hopes putting young Phineas front and center will do the trick.
By Elizabeth Woyke