Master The Art Of Micro-Merchandising

In May 2002, David Levin, president and CEO of the company then known as Designs, Inc., put a team together to execute his intent to purchase and turn around then-floundering menswear giant Casual Male. Dennis Hernreich was on that team as the COO/CFO. At the time of the acquisition, Casual Male was in bankruptcy and hadn't made significant enhancements to its legacy UNIX-based IT systems in more than 15 years. Its management was bloated, and inefficient paper-based DC systems were labor-intensive. The retailer was losing money, and its parent company had put a clamp on its budget.

Hernreich paints a gloomy picture of the enterprise he was to help fix. "It's true, we faced many daunting challenges," Hernreich recalls. "Casual Male was ill-managed and overexpensed. It hadn't invested anything in IT systems. It was running an old, mainframe-based, expensive-to-operate legacy system," he says. Over time, due to the working capital squeeze put on the brand by its parent, the company cut back on assortments and sizes, which led to a seemingly lazy merchandising strategy. "It was selling Joe-six-pack stuff, as opposed to treating customers with some fashion respect and putting good merchandise out there," laments Hernreich.

In DCs, bar code scanners were unheard of in the paper-based systems the company ran, as were labels and bar codes. "When we bought the company, DC employees were printing bills of lading and manually checking them against cartons. They made color-coded markings on the bills of lading and sent them to a keypunch operator for input," he explains. This approach to processing receipts was error prone and heavily dependent on manual auditing of shipments. "It took days to receive, audit, and turn merchandise around and ship it to stores," says Hernreich. Even then, the merchandise that finally made it to stores was often incorrect or not sellable. Merchandise planners tried to chart sales, find trends, and make purchasing recommendations by analyzing Excel spreadsheets. All of these problems contributed to the retailer's consistent comparable store decrease of 5% per annum and an eventual declaration of bankruptcy.