Thom Browne on Men's Wear - Interview

[cbarr]

Originally Posted by bbhewee

Unfortunately the reality is much different from the theory. Unless one is able to up the numbers over time, prices will not decrease for various reasons which I won't get into. Furthermore it's highly unlikely that a substantial decrease in cost (10%) would have enough repercussions on price elasticity to further drive sales. According to a previous post, there was a 20/30% decrease I'm RRP but I think it's safe to say TB isn't driving RLPL volumes...

Well, if you're not focused on upping the numbers over time, why are you in the game? I can assure you, his backers, who are making the decisions, are looking for growth .

And again, not saying price will decrease. I'm saying cost to manufacture should, assuming you have reasonable brainpower at the helm.

I'm not speaking from a theoretical position. I run a similar-size company in an unrelated industry, which produces fine goods with every bit the QC requirements of clothing. And while it took years to get there, and it meant refusing weekly offers from interested investors, we've built a manufacturing model which yields a very healthy net profit, paying american workers a very healthy wage, to make things with their very expert hands.

The reality is, it can be done, but you have to commit to the hard fight.

 

[SkinnyGoomba]

There is enough RL sold at or near Full retail that the company grows year over year. They hit the markets of people who are looking for staples, those looking for something whimsical and also those looking for high fashion.

Thom is getting closer, especially with the Black Fleece deal, but I think he needs to start making more staples that the average 'fit' person would wear.

 

[bbhewee]

I must then genuinely congratulate you on your commitment and hard work.
I myself work in this industry for a small company, and production is always our biggest issue... Having said that, the problem which we are facing are the set-up costs which are the same if we produce 300 or 30000: absorbing these proves to be much tougher since we produce a very vast array of garments, whereas (it seems) TB creates garments from a limited set of patterns on a catalogue of fabrics... My comments are based on my experience: our growth has been based on offering a larger catalogue but still limiting the numbers, but for a brand such as TB with a very very defined product offering, either expanding the catalogue through fabrics or just selling more of the existing styles would equate to similar economies of scale (it doesn't really matter if you cut a 1000 TB suits from one roll of fabric, or 500 and 500 from two different rolls).

I guess the point I'm trying to make is that your argument is true if you make a certain well-defined array of products. However I don't think that, say if TB wants to make a pair of jeans, any of the investments they've made in making a good suit will help.

 

[cbarr]

Originally Posted by bbhewee

I guess the point I'm trying to make is that your argument is true if you make a certain well-defined array of products.


Or if you create a front-end model that's not dependent on selling at wholesale, which gives you the fringe benefit of control over brand experience.

 

[cbarr]

Originally Posted by SkinnyGoomba

There is enough RL sold at or near Full retail that the company grows year over year.

Or rather, there are enough RL licensed goods sold...and they're rolling those businesses up into their wholesale numbers.

They're not making those numbers selling tailored.

Maybe TB needs a $35 fragrance to drive growth.

 

[bbhewee]

Are you talking about operating and controlling your own stores? The investment required for this not to rely on wholesale and getting the necessary presence to up your brand recognition would be huge. I don't think it's a realistic option in a non-volume driven business. This isn't Hermes or Vuitton we're talking about where volumes go along the margins.

Maybe TB needs a $35 fragrance to drive growth.

The biggest money maker for most luxury brands...

 

[OttoSkadelig]

Originally Posted by zeroconspiracy

Its called a fashion 'statement'. Think about it.

this is the essence of it. thom browne suits are not designed to be evaluated according to classic SF rules, which is what people are trying to do. it is a concept designed to push the boundaries of the acceptable.

i would no more try to evaluate TB via the usual SF filters than i would try to evaluate a jeffrey koons installation using the same yardstick as i'd use for a rembrandt. and before you pounce all over me -- yes, i know the analogy is not perfect - find me one that is.

we need such provocateurs every now and then, even if their creations are unusable on their own, because otherwise we'd all be stuck in an infinite stagnant loop.

 

[cbarr]

Originally Posted by bbhewee

Are you talking about operating and controlling your own stores?.

This is why everyone gets stuck.

You don't _need_ stores, in the traditional sense, to sell clothing at this price level. My guess is that you could get by with 2 - NY and LA.

It's an artifact of pre-internet business, when it was impossible to distribute information efficiently, so stores did it for you. Stores were where you learned. Not the case now.

This isn't a walk-in impulse buy. It may happen, maybe enough to matter, but it's not the bulk of the business. These are planned purchases, and there's a decent chance the retail experience actually works against the sale.

So you find another way. Maybe you shift to a more personal by-appt model, and you have top-notch TB reps who travel to meet with your clients. If I'm dropping five figures on multiple suits I'd feel much better about that than the typical retail experience.

You could set up a hell of a nice network like that for far less cost than the margin cut you take when you wholesale. And your fixed retail costs become very low - and you're incredibly agile. If you find there's huge demand in some oddball tier-3 market, you do a week of appts there. If you find there's a major market where you're not performing, you can lop it off and lose nothing.

And from a buying-experience perspective: Say I'm a TB client (I'm not) from somewhere like Seattle (also not). My "guy from TB" comes 4x per year, I'm going to think about that visit for months, and I'm probably going to buy more often, and buy more each time, and feel really good about it, because it feels aligned with the price, and the story.

And every step of the experience aligns with the TB brand. Vs going to barneys and trying to get some guy with 14 rings and eyeliner to understand the concept of waist supression.

I don't know much about his company. But probably about as much as the average customer. I know what he tells the market.

And to me, it seems like 90% of the reason to buy a TB suit is about the romance/story/idea. But wholesaling doesn't support this. You have almost no control, and you're making almost no margin.

So why do it?

 

[bbhewee]

I would have to agree with you on a lot of points, but this approach poses two problems in my humble opinion: some feel reassured by a brick & mortar store. And the personal shopping experience is only really effective with customers that are already aware of the brand.
Fair enough, TB as such is quite niche, but it's going to be tough attracting new customers relying solely on two stores (let's say four to include London and Tokyo) and a few personal salesmen/saleswomen. That might be just me, but I don't want my staff to know where I shop so an office visit is a no-no, and I don't let just anyone walk into my house, unless I have a prior experience with him/her... It limits the scope if you solely rely on this but at the same time, I would have to say this would be an excellent support structure to an existing retail network.

I must say I'm thoroughly enjoying this conversation and the posts, whether based on ideas or personal experience.

 

[SkinnyGoomba]

Originally Posted by cbarr

Or rather, there are enough RL licensed goods sold...and they're rolling those businesses up into their wholesale numbers.

They're not making those numbers selling tailored.

Maybe TB needs a $35 fragrance to drive growth.

You're correct, the tailored is certainly propped up by wholesale. Which is what TB needs to do if he wants to remain solvent.

 

[edmorel]

Originally Posted by SkinnyGoomba

There is enough RL sold at or near Full retail that the company grows year over year. They hit the markets of people who are looking for staples, those looking for something whimsical and also those looking for high fashion.

Thom is getting closer, especially with the Black Fleece deal, but I think he needs to start making more staples that the average 'fit' person would wear.

Ralph Lauren's business should be a course at a business school. Can't think of anyone that has dominated the top/bottom, mens/womens business as they have. Easily one of the most recognizable brands in the world, and makes everything work, from the cheap licensing stuff to the top end signature stuff. Able to sell cheaper stuff to the lowest income demographic and still retain the cache to be wanted by the highest income demographic. Wholesales, licenses, have their own retail shops, outlet shops. The whole nine yards. Not sure if anyone else will be able to replicate the brand's across the board success but you don't have to in order to be successful. There is nothing wrong with being a niche, but you need to know how to market and sell in your niche. You can't try and take a niche product and launch it like you are selling Polo. Wholesaling should be avoided when you are small/starting. No need to do it now. Same thing with having a retail presence, nice but no longer needed (at least in the beginning) and the margin cut is just not worth it.

 

[SkinnyGoomba]

Agreed, I think he's an excellent example.

Its probably the only retailer stock I would consider owning.

 

[zeroconspiracy]

Originally Posted by edmorel

Ralph Lauren's business should be a course at a business school. Can't think of anyone that has dominated the top/bottom, mens/womens business as they have. Easily one of the most recognizable brands in the world, and makes everything work, from the cheap licensing stuff to the top end signature stuff. Able to sell cheaper stuff to the lowest income demographic and still retain the cache to be wanted by the highest income demographic. Wholesales, licenses, have their own retail shops, outlet shops. The whole nine yards. Not sure if anyone else will be able to replicate the brand's across the board success but you don't have to in order to be successful. There is nothing wrong with being a niche, but you need to know how to market and sell in your niche. You can't try and take a niche product and launch it like you are selling Polo. Wholesaling should be avoided when you are small/starting. No need to do it now. Same thing with having a retail presence, nice but no longer needed (at least in the beginning) and the margin cut is just not worth it.



True, no one does it quite like RL, but many designers have diffusion lines. RL has Polo, CHAPS, and RL to segment the market demographic. Donna Karan has DKNY, Marc Jacobs has Marc by Marc Jacobs, Calvin Klein has Black Label and White Label. Tackling many different segments in fashion is not unique to RL, but given they do it on a much more grand scale then any close competitor.

 

[edmorel]

Originally Posted by zeroconspiracy

True, no one does it quite like RL, but many designers have diffusion lines. RL has Polo, CHAPS, and RL to segment the market demographic. Donna Karan has DKNY, Marc Jacobs has Marc by Marc Jacobs, Calvin Klein has Black Label and White Label. Tackling many different segments in fashion is not unique to RL, but given they do it on a much more grand scale then any close competitor.

also RL covers pretty much every member of the family, the house, and the dog. There really is no company in the industry like them.

 

[JPHardy]

Originally Posted by edmorel

Ralph Lauren's business should be a course at a business school. Can't think of anyone that has dominated the top/bottom, mens/womens business as they have. Easily one of the most recognizable brands in the world, and makes everything work, from the cheap licensing stuff to the top end signature stuff. Able to sell cheaper stuff to the lowest income demographic and still retain the cache to be wanted by the highest income demographic. Wholesales, licenses, have their own retail shops, outlet shops. The whole nine yards. Not sure if anyone else will be able to replicate the brand's across the board success but you don't have to in order to be successful. There is nothing wrong with being a niche, but you need to know how to market and sell in your niche. You can't try and take a niche product and launch it like you are selling Polo. Wholesaling should be avoided when you are small/starting. No need to do it now. Same thing with having a retail presence, nice but no longer needed (at least in the beginning) and the margin cut is just not worth it.

Originally Posted by zeroconspiracy

True, no one does it quite like RL, but many designers have diffusion lines. RL has Polo, CHAPS, and RL to segment the market demographic. Donna Karan has DKNY, Marc Jacobs has Marc by Marc Jacobs, Calvin Klein has Black Label and White Label. Tackling many different segments in fashion is not unique to RL, but given they do it on a much more grand scale then any close competitor.

Very true on all accounts Ed.

Not only does he sell at all levels but he sells the same product to different people. The Pony shirt gets sold, at the Madison Avenue store, at the Polo section at Macys, in onlinesite, and at the outlet.