Casual Male's Hefty Ambitions
Casual Male is the leading retailer in the men's big-and-tall apparel market. This week, it got a little larger, acquiring the second-biggest retailer, Rochester Big & Tall, which has long specialized in high-end fashion for the hard-to-fit man. A little over two years ago, Needham (Mass.)-based retailer Designs purchased Casual Male out of bankruptcy court, looking to put it on sound financial footing. Designs was also seeking to take advantage of the undeniable growth in plus-size apparel, a market growing along with the obesity rate in the U.S.
The renamed company, Casual Male Retail Group CMRG , with nearly 500 stores, posted revenues last year of $429 million. Rochester does about $65 million a year in 18 stores. The chain's selling price was $15 million in cash, plus assumption of $5 million in debt.
The primary catalyst for Casual Male since it changed hands two years ago has been the ascent of George Foreman's line of clothing, which will be 27% of store sales this year. It's projected to climb to 40% of the chain's business next year, predicts CEO David Levin. The former boxer-turned-grill-pitchman has caught on so quickly that his brand will soon displace Casual Male's own long-standing private label, Harbor Bay.
Casual Male lost money last year, but Levin believes it will turn the profit corner next year, thanks to several moves: a combination of more Foreman; the recent additions of brands like Reebok RBK , Ecko Unlimited, Nautica, and Rocawear; the acquisition of Rochester; and better inventory-management systems.
All this is happening, though, while retailers like Old Navy, Sears S , JC Penney JCP , Eddie Bauer, Land's End, and Joseph A. Bank Clothiers JOSB have all been adding to their big-and-tall sizes. BusinessWeek Marketing Editor David Kiley David Kiley recently spoke with Levin about the dynamics of selling apparel to big men, how the market is changing, Big George, and fending off competition from general retailers. Edited excerpts of their conversation follow:
Q: We know that obesity rates favor your business. Where exactly is the category headed? A:
Q: We know that obesity rates favor your business. Where exactly is the category headed?
A:Big and tall men's apparel is about $6 billion, or 10%, of the whole men's apparel industry. The market will continue to grow because as baby boomers age, they're getting heavier. And we know about the obesity rates among Generation X and Generation Y, which are higher than among baby boomers. As guys are getting bigger, selections get more limited at general retailers.
Q: But companies like Eddie Bauer and Old Navy are adding sizes, and Sears S
and JC Penney JCP
have catalog businesses. Aren't you afraid of the bigger companies squeezing you? A:
Q: But companies like Eddie Bauer and Old Navy are adding sizes, and Sears S and JC Penney JCP have catalog businesses. Aren't you afraid of the bigger companies squeezing you?
A:Not really. Customers know from shopping those companies that sizing big and tall men is more than just adding up sizes. There is a lot that goes into sizing for big men. It's not just adding inches of fabric.
We have more than 40 different sizes and colors for a single pair of pants. The others don't compete on that level. We have been working on our sizing for 15 years. One of our vendors told us that a major department store that has added big sizes was strong-arming them for our sizing specs, because theirs weren't working. But our vendor wouldn't give them up. Both Casual Male and Rochester have seen a lot of business come back to us after customers have tried other retailers who added sizes.
Q: How important is the image of the store and the brand to this customer? A:
Q: How important is the image of the store and the brand to this customer?
A:We did a survey a year-and-a-half ago and found that the most important thing to them is comfort and fit. That said, image of the store is important, which is why general retailers -- like the ones we have talked about -- get a lot of trial. We have added major brands like Perry Ellis, Nautica, Polo, Izod, and Reebok to our lines, which is helping our overall image and the image of our customers. The Casual Male stores need upgrading, which we are working on.
Three-hundred stores will undergo upgrade. But one telling anecdote that speaks to the image issue: Rochester recently took the "big-and-tall" off their shopping bags. Salespeople had been asking for that for years as many customers asked for plain brown bags, and management finally went along.
Our customers don't want to advertise that they shop at a big-and-tall store. I'm not sure I would call the stores Casual Male if we were starting from scratch, but the name has equity now. We are, however, changing the logo from the current yellow-and-black design, which is not very good.
Q: How did the George Foreman deal come about? A:
Q: How did the George Foreman deal come about?
A:I was at a trade show and heard that George's agent was looking to cultivate an apparel deal. I tracked him down because I thought it could work. Some people here had doubts. Was his image right? He could sell grills, but clothing is far different.
George loved the idea because he and his sons already shopped at our stores. We designed the George Foreman Comfort Zone line to address our customers' priority with fit and comfort. It's all about stylish clothes that are constructed for the best fit through the areas that give the most trouble -- waist, shoulders, abdomen. We've added stain-fighting material, perspiration-free shirts. These are all things our customers asked for, and which resonate with George.
Q: Does George really get involved in product development? A:
Q: Does George really get involved in product development?
A:We give him prototypes to wear all the time, for his feedback. He e-mails us and calls us with his opinions. He recently called me about a pair of shoes we designed for the line, which he was wearing. He said he never wanted to take them off. Our shoe business has been small, about 3% of sales. But we see that going up with George's name on them.
Q: What is your biggest problem? A:
Q: What is your biggest problem?
A:Our struggle right now is store traffic. People have a perception that Casual Male is boring and white-bread. But they are getting reeducated about our newer, fresher offerings like Reebok, Rocawear, Nautica, and NFL-licensed apparel. We found that customers were buying less before we added these lines. They were saying, "I already have four pairs of khakis and five Oxford shirts. I don't need more."
Now, when customers come in, they are buying more. But we have to get overall foot traffic up. We are right now going to customers who haven't shopped us in a year to invite them in to see the new Casual Male.
Q: What's the most significant trend? A:
Q: What's the most significant trend?
A:The demand for really fashionable lines is growing fast. We stocked fashion-stripe shirts, burgundy shirts as a kind of test because some of our people and store managers said they wouldn't sell much. They sold out fast.
There's a hunger among our customers for the same fashions being offered at places like Gap (GPS ), Banana Republic, and major department stores. We're now adding licensed NFL and NBA apparel, which our customers told us they really wanted but couldn't find in their sizes. We have a unique challenge at out stores.
In a comparatively small space, we have to effectively serve the 16 to 20-year-old, as well as his father and grandfather. All three audiences have to feel comfortable in the store and be served with product. Not too many specialty retailers face that. But we're in the best position to deliver that because we know our customer and are well-resourced to get it. The mom-and-pop stores aren't set up to deliver that.
Edited by Patricia O'Connell