As the 15 Harry Rosen stores, three outlets, and two Zegna stores gradually reopen across Canada, MR catches up with retail icon Jeff Farbstein to assess the state of business.
How’s the reopening going and how’s business?
A: Most of our stores are now open except for Toronto’s financial district. There’s nobody working downtown: it used to take me 35 minutes to drive from my home; it now takes 15. Stores inside shopping centers just opened two days ago so it’s a little too soon to assess. And, of course, our priority at this time is safety: masks, sanitizers, distancing—we’re taking every precaution to protect our associates and customers in the stores. That said, business is not good and clearly, the suit business is in deep trouble with the postponement of special events: weddings, graduations, proms…
Q: But can’t you make for these lost sales down the road?
A: I don’t think so. The pandemic has changed the way men think about wearing clothing, so I believe the suit business has changed forever. Can we train customers to relax at home in a Cucinelli sportcoat? Maybe, but between working from home, Zoom meetings, restrictions on business travel, there are so many reasons for men not to dress up. And remember: tailored clothing affects many other businesses: dress shirts, ties, accessories, dress shoes… Will any of this rebound? I think we’ll be better able to evaluate come fall, maybe by the end of September. But clearly, without tailored clothing and its related categories, business will remain tough. Sportswear margins are not going to pay the bills…
Q: Are all your associates back to work?
A: No, we’re bringing them back as needed. And just 10 days ago, we let go of some people in the buying group. With the current state of business, we all have to cut expenses. But unfortunately, stores can never save their way to profitability; they need to sell…
Q: You don’t sound too optimistic…
A: I believe for retailers, it will become a market share battle: someone will have to go out of business for a store to gain share. I do think department stores will be shutting multiple doors which could benefit luxury specialty stores like ours. But we need to be realistic and admit that a lot of our problems were in the works well before the pandemic; we shouldn’t rush back to doing things the way we did.
Q: What do you mean?
A: I would regularly speak to my specialty store colleagues and hear the same things: we’re paying too much rent (but don’t want to negotiate with the landlord), we’re having poor sell-throughs (but won’t edit or cut back because we need the volume), we’re paying 10 percent more to vendors (but can’t risk losing those brands), our key brand just opened a store across the street (but what can we do?), and on and on. Perhaps we’re all paying the price now for being a little too frivolous. There are no friends when you have to pay a bill.
Q: I assume business is better online than in store…
A: Our online business remains a relatively healthy percent of sales but the problem is—sales are way down. On top of that, we’re seriously promoting to generate cash flow. I believe in e-commerce, especially when it works in harmony with in-store, but too many retailers approached it with unrealistic expectations, thinking of it as an easy extra business rather than trade-off transactions. You cannot sell on-line from in-store; you have to stock a warehouse. The bottom line, when customers come into a physical store, we can romance them. Offer a glass of wine, talk about life or sports or kids, show them a beautiful product, and most often, they relax, take their time, and buy more than they intended. You can’t do that online.
Q: Can you offer a solution for luxury merchants?
A: I think ultimately, it will be about regaining confidence. If you can look yourself in the mirror and say I can do this better than anyone: discover great resources, curate a compelling mix, create excitement on the selling floor, inspire associates, all the things that make a great merchant. And then do more with less: fewer square feet, fewer brands, fewer associates…. I remember the days when I would do the buying, unpack the boxes, put product out on the floor, sell it and get such a tremendous thrill from each sale… Maybe a little of that can return. And if we have to do a little less volume with a little more profit, that sounds like a sensible way to go.
Q: Anything else good going on?
A: Yes. I took five strokes off my golf game by taking lessons on YouTube.