Magazine Article | October 1, 2003

Growing Pains And Revenue Gains

Source: Innovative Retail Technologies

With an aggressive plan to grow its store base 138% over the next four years, Jos. A. Bank uses its own store-level data to penetrate markets new and old.

Integrated Solutions For Retailers, October 2003

When Gary Merry became Jos. A. Bank's (Hampstead, MD) CIO three years ago, he joined an organization that, by all accounts, was an average-performing specialty retailer. Sure, the brand was strong and the company was establishing a niche in the hotly competitive men's clothing space. But, coming off the dotcom bust, the nearly 100-year-old multichannel retailer was operating only around 100 stores. Web and catalog sales were suffering the same case of the bends experienced by most sinking multichannel retailers of the day. And, its stock was selling in the neighborhood of an anemic two dollars per share.

But, soon after Y2K, things began to turn around. Robert Wildrick, the company's CEO, and a core group of other C-level executives took a road show to potential new markets, rallying investor support and evangelizing its big plans for growth. New stores began popping up across the country, expanding a geographic footprint that had previously only permeated the Eastern seaboard. By 2003, the company had grown its 1999 revenue by 51%, and its store base had nearly doubled. Web and catalog orders recovered and now keep pace with brick-and-mortar store sales growth, accounting for 12% of the retailer's overall sales. The company's stock followed suit and has recently been trading in the ballpark of $40 per share, garnering recognition as one of Nasdaq's top 1% performing stocks.

No one can argue the reality of Jos. A. Bank's growth spurt. Neither can anyone argue the role IT plays in preparing the company for each new store.

Store Visibility Is Key To Growth
Adding 50 new stores per year is a risky endeavor for a retailer of any size and one that requires intense scrutiny. While Jos. A. Bank is building new stores where it previously had no presence, the retailer has also found that saturating existing lucrative markets is a sound growth strategy. For instance, the heavy concentration of stores in and around Washington has had a positive effect on sales, and opening stores in relatively close proximity has not been found to hamper business at any one store. The company is finding the same success with multiple store openings in the Southeast and Midwest, centering multiple stores on the Miami and Chicago markets. But analyzing a market's ability to support multiple stores requires significant market analysis.

One approach Jos. A. Bank has taken to gather the granular level of data needed to assess market potential is to tap into its own data. For instance, if there are two stores doing well in Chicago, the company will scrutinize their performance as it relates to Web and catalog orders from the same region, giving it a snapshot of the market's potential and ultimately helping it discern the validity of a new store there. Of course, this makes data integrity all the more important. "We spend a lot of time tweaking our systems to give us visibility of many different aspects of our business at the unit level - its location, its sell-through, and its gross margins, for instance," says Merry. The retailer studies the same data at a regional level to help determine market penetration and the feasibility of expanding stores in a wider geography, as well.

The company uses information gathered from brick-and-mortar POS stations (it runs TradeWind POS software by DataVantage [Solon, OH]), catalog orders placed via mail and telephone, and Web orders to assess customer preferences and market saturation for specific demographics. Web shoppers, for instance, are prompted to enter valuable CRM (customer relationship management) data including size, style preference, and shipping information to expedite the shopping experience. Storing this data not only improves customer service, it improves customer visibility.

CRM Helps Market Research
Thanks to an intensive effort to get to know its customers, Jos. A. Bank can confidently claim its average customer is a professional, married man living in a quarter of a million dollar home and earning more than $100,000 per year. "When it comes to gathering data, we're first and foremost very scientific about our customers. Being a multichannel retailer gives you plenty of opportunity to gain visibility of customer characteristics," says Merry. Clear customer visibility leads to the successful launch of new stores in markets that can support them. But as new stores are added almost weekly, gathering this granular data is like trying to hit a moving target. "As we grow, we're trying to figure out how to market to specific geographies. We need visibility of what is selling, to whom, and why," says Merry.

DC Consolidation Helps Data Control
When it comes to analyzing the data gathered from multiple sales channels, Jos. A. Bank finds it advantageous that its entire enterprise is supported from a single DC facility near its Hampstead, MD headquarters. "Retail software provider Island Pacific (Irvine, CA) maintains our inventory here, which supports catalog, Internet, and retail sales," says Merry. This channel integration helps the company keep its finger on the pulse of the merchandise fulfillment artery even as it grows exponentially, tracking product movement through each sales channel and, ultimately, to customers.

Assess Your Systems Before Your Growth
Jos. A. Bank has carefully mapped the expansion of its brand to 500 stores. "We work very diligently to anticipate when we will outgrow an application, so we're ready to move on before it becomes a problem," says Merry. He offers advice to other retailers who are anticipating growth: analyze the health of your applications prior to any anticipated growth spurt. "The symptoms of software you're about to outgrow are very clear," he says. "If you're writing a lot of customized programs to accommodate reporting, for example, or if you need to create one-off interfaces to tie new applications in with your legacy or other systems, you've either outgrown the code or you're running the wrong product altogether. You should then analyze your software in relation to your growth," he advises. Merry also says an increase in consulting fees can indicate it's time to talk to your software provider. "Retailers need to drive those conversations," he says. "Tell them where you're going and ask them if they're coming. If they're not, tell them you're moving on."

That's sound advice from a man in the trenches of a successful battle for market share. Is calling Jos. A. Bank's quest for 500 healthy stores a success this early in the game editorializing on my part? Well, just before press time, the retailer released its financial statements for the month ending August 2, 2003. Its $17.5 million month set a new company record, beating July 2002 sales by nearly 32%. Its recent earnings statements have consistently been green with profit. In this economy, that's enough to make most any retailer green with envy.