"Steve & Barry's recruited five people from Shoppers Stop. The US chain offered a 40 to 50 per cent rise in salaries and the promise of a global experience".
Pardon my ignorance - I have never heard of Steve & Barry's. But an apparel chain catering to collegians piqued my interest and a google search yielded a wealth of information. ABC News provided the best summary:
In the summer of 1979, 15-year-old buddies Steve Shore and Barry Prevor started out in business with a megaphone and piles of excess-inventory T-shirts they sold for $1 each at flea markets across Long Island.
In college, they opened their first Steve & Barry's University Sportswear store at the University of Pennsylvania, charging fire-sale prices for T-shirts and sweat shirts emblazoned with college names.
Their low cost, casual clothing chain moved off campus for the first time in 1998 to a mall in Auburn Hills, Mich., and underwent a rapid expansion. Their 100th store opened in this Rochester suburb in November and they expect to swell to 200 stores inside a year and top 5,000 someday.
100 new stores in 7 years is impressive! The USP of Steve & Barry's appears to be 'cheap and cheerful'. Everything from cargos to jeans and sweatshirts sells for under $ 10.
Says co-founder Prevor: "McDonald's changed hamburgers, Home Depot changed hardware. Basically we're doing the same thing with clothes. There's no reason people have to pay five times the price for the items we're selling."
How do they do it
Analysts estimate that Steve & Barry's markups are just 2 - 20 %, far below the apparel industry's 54 % average. The secret of being able to sell cheap is buying cheap. Apparel Resources says: The company is an expert in international tariffs and sources merchandise from America, Canada, Central America, India, Mexico, Pakistan and a few other countries.
Their other successful business management stint includes purchasing merchandise off-season for a better price and allows manufacturers ship in full truckloads.
Apparently 40% of Steve & Barry's merchandise is now sourced from India. So it makes good sense to sell some of that stuff in India as well.
India already has an 'export surplus' type markets. But now the bargain basement shopping concept has been picked up by organised retail. There are the 'family type' places like Big Bazaar, the reasonably-popular-with-youth Vishal Megamart and the most promising of the lot - Pantaloons 'Fashion Station'.
Fashion Station is a first of its kind fashion outlet spread over 15,000 sq ft and is located in the NCR region’s largest mall. The outlet houses a wide selection of trendy apparel for today’s fashion conscious people at value prices. The USP of the store is "Fashion that fits your budget".
A good concept but not many outlets so far.
So yeah, I think Steve & Barry's has great potential to become a popular youth shopping destination. 'Everything in this store Rs 499 or less' is an unbeatable proposition. You'd go there once at least to see what they stock.
Like McDonald's 8 rupee icecream, they should consider offering a ridiculously low price on a few basic items. 'T shirts for Rs 99', anyone? If quality is decent - public will come. In hordes.
The college sweatshirt
One of the items Steve & Barry's appears to be famous for is college sweatshirts. In the US Steve & Barry's has licensed apparel from 350 colleges - the University of Michigan is their best seller nationally. According to Forbes magazine, today college apparel is less than a third of sales, but it still drives Steve & Barry's image.
I can't help wondering whether they will attempt similar licensing deals in India. Wonder what the Principal of St Stephen's or St Xavier's would say to such a proposal. Nope, can't see it happening. Imagine the kind of internal and external debate that would take place! The TV news channels would have fodder for weeks!
The other, more favoured method of building a brand is to advertise a lot and then hope people walk in and buy your over-priced goods. That's what Tommy Hilfiger, Nine West, Guess and a host of international apparel/accesory brands have been trying. It appears to me, without much success.
At Steve & Barry's the advertising budget is less than 1% of revenue. With that kind of attitude you'd better get your merchandise and pricing mix right!
Steve and Barry's has its own office in Mumbai by the name 4004 Incorporated. Not much people are aware of it, however all the back office operations are carried out from the office in Mumbai. There is a mass-market sweet spot in the Indian landscape just waiting to be discovered by retailers. The problem in finding it is getting the 'sasta-sundar-tikau' equation just right. Excessive weightage on any one of the variables will make the whole thing crash or require a drastic ( and maybe expensive) mid-course correction.
4004 Incorporated is situated amongst the most noticeable heritage compositions in the vicinity. Built during the British era, the building has over 100 years of history in its stride and is enhanced with flawless architectural statistics. The office accentuates the concept of change and enhancement of our work processes to support the ever growing employee strength at 4004 Incorporated. It has a capacity to accomodate over 700 employees.
4004 Incorporated is a US based company founded in 1985 by Steve and Barry who set out to open a new kind of “On Campus” collegiate apparel store and thus established Steve & Barry’s Sportswear, their flagship brand. Their mission is to offer the largest selection of high quality graphics with college names and garments to students as well as the university communities, at prices substantially lower than those previously available. Today it has licenses of several American Universities & Colleges and is one of America’s Top 20 Retailers of Licensed Collegiate Sportswear.
The company has grown extensively over the last few years and now owns and operates several retail stores throughout the U.S.A. – on the campuses of some of the most prestigious universities and in shopping malls as well. Along with specializing in licensed merchandise the company has now ventured into the Casual Wear Segment as well and is building its own brand. The product range includes jackets, jeans, khakis, T-Shirts, sweatshirts, sweatpants, shirts, polo shirts, shorts, jerseys, hats, nylon pants, sweaters and much more at prices that are generally at least 50% lower than the prevailing prices at college bookstores and mall locations.
This all seems reminiscent of the British era when they sourced cheap raw material from here and sold expensive finished goods in our country. The only difference now is that they source finished products from our country. I think this is globalisation. Let's just hope the the stuff is good. Their rock-bottom prices especially in college apparel which is frightfully priced more so for students. The quality is not that great but just right for the price. If you use a $9 tshirt or sweat shirt 4-5 times, its paisa vasool. I definitely think that S&B will make inroads in the Indian market. Merchandizing Indian college apparel is a whole different issue unfortunately.
We are demanding customers..pay less but want more..
We get what we deserve..
We get all the following all the time as if these were on demand..
Roads, Politicians, Social injustice, Corruption, Adulteration, Female infanticide, Dowry, Pollution, Fake Godmen, Hypocrisy, Casteist prejudice etc
Bottomline
In price and value conscious India I think a Steve & Barry's kind of mindset will click. As the success of dollar stores has shown, people are willing to make impulse purchases at psychologically appealing price points.
A bit of friendly advice: Don't sell us bottom-of-the-barrel stuff that has been rejected by the rest of the world. We Indians are difficult-to-please customers - don't take us for granted.
Humko style bhi, size bhi, aur sasta bhi mangta hai. Tall order - but then you are Steve & Barry's. Surprise us!
