Century 21's Larry Mentzer on reopening a legacy NYC off-price retailer

0:07Hello, everyone, and welcome to the Modern Retail Podcast. I'm your host, Cale Guthrie-Weissman. This week, we're going into the world of off-price, and we're going to talk with an iconic retailer. I'm really excited. We have Larry Menser. He's the COO of Century 21. For those who are uninitiated or not from New York, Century 21 is, I would call, an iconic retailer that was around for decades. I've shopped there many times over my life to get wallets and belts. in 2020. It sadly filed for bankruptcy, closed all 12 locations, I believe. But I think about a year ago to this week or last week, it reopened.

0:46And it's been doing its thing. It's back. It's in its well-known lower Manhattan location. I want to talk with Larry just about how the last year has been, what the plans are, especially it's an interesting time to be a retailer, especially more in the apparel space, how he's been strategizing it, how he's been thinking about it, what's working, what's not, all that jazz. We're going to go into all of that. But Larry, how are you doing? I'm doing well. It was a great intro. It was a great intro. I'm glad you're familiar with Century 21. Often people are not, and we are, in fact, an iconic legacy piece of New York, and we're happy to be back.

1:24Exactly. That's what I've always, I've known you, I think, my entire life. My grandparents shopped from you back in the day. And so, and it's always nice to hear, you know, a, I don't know if resurrection is the right word, but a coming back story where, you know, it's always sad to see something go away and now you're back and especially you're in the place where everyone associates you with. And so that's great. But let's first start with you. I was doing my usual LinkedIn stalking and you, you have been in retail and like, especially like department store retail for, for a long time. Am I wrong?

1:55Too long, too long. I started my accidental retail career back in, I think, 1991 at Macy's in New York. I was originally from Ohio, and my wife was from New York and wanted to move back home. So once we got there, I needed to find something to do. I was somewhat fresh out of college and stumbled into Macy's and really met some of the most, for me, memorable, iconic, talented retailers that really lit the fire within me to really get into retail. That was never my goal. You know, I thought I would be in marketing, which is certainly connected to retail, but not directly. And kind of grew up at Macy's and spent about 20 years there doing a variety of different roles in store management positions, store manager in a variety of different locations, and ended my career as the regional vice president for Metro New York.

2:55So I had the largest stores in the company as part of my group, but decided to leave there in 2011 to try something different and came to Century 21. And after a two or three hour interview with the owners, I left there thinking, I have to work for this company. I was inspired by their vision, by their passion, not just for the brand, but for New York and what was possible. And stayed there until we closed, as you mentioned, in 2020. We were a victim of COVID. You know, we were certainly in New York City, we were a tourist dependent retailer. And as tourism dried up and COVID kept folks at home, it just became very difficult to operate a privately held retailer in New York, getting a fraction of the customers that we were getting.

3:55But really, from the day that we closed, we talked about the relaunch. And shortly after the closing in December of 2020, we started having conversations about bringing the brand back. I had then moved to Florida. I had left New York. Um, but, uh, uh, was happy to, to get involved again. And, and, uh, I'm happy to see that the brand is coming up on its one year anniversary next year as Century 21 New York City. And it's been an exciting year. Wow. So for those who don't know, I feel like, I hope most of our listeners, you know, but I always viewed Century 21 as sort of its own unique kind of, it's technically considered off price, but it always had premium labels.

4:35Like it was, you would be able to get Ralph Lauren for a fraction of the price, which I would say is slightly different than what other people would think of other off-priced, at least in terms of selection. Or would you say that is a correct summation of what it was most well-known for? Yeah, I mean, Century 21 is really a store for everyone. You know, we carry basics, whether those are socks and underwear and just basic everyday retail necessities to the highest designers that you can find at the best stores and boutiques around the world. So we have a diverse assortment that's attractive to a lot of customers.

5:12But people come to Century for the good stuff. You can buy your socks anywhere. We have socks at an amazing deal. But to your point, some of the designer brands that we have, whether it's Versace or Balmain or Gucci, whatever, we really have amazing prices. And we think that's the white space that really differentiates Century 21 from all of the other off-price retailers. We set up as a department store. We believe that brands matter. So we're not just, you know, hashed out, sized. We respect the brands. We're proud to have them. Our customers expect to find them in the store. So we set up very focused on the brand and calling out the brands.

5:50And we do end up, obviously, on pipe fixtures or X-Racks as we break price and we start to clear through goods. But when goods first delivered to our store, it's set up by brand with as much respect as we can give the assortment in our store. We're proud to have it. I mean, I always – my memory of the store pre-pandemic was it was a department store in my eyes. That's how it always seemed to me. It was. It was. that has become a dirty word recently, department store. We were Century 21 department stores. We're now Century 21 NYC. But at the end of the day, in my opinion, every store is a department store.

6:32If you go into really any retailer, there's a men's department, a women's department, a shoe department. They may not call themselves department stores, but they are stores of departments, which is what we are as well. Got it. So let's talk about what the initial conceptualization was with the relaunch. So I think most of our conversation will just be talk about how the last year has been, what you've been learning, but what were the big changes in place so that it would be set up for success? Well, we knew we were going to live in much smaller space. Previously, the Century 21 downtown specifically was over 200 ,000 square feet.

7:11We had entrances on Church Street, Day Street, Cortland Street, Broadway. The store was big, but we really knew that retail had changed and New York had changed and that we should probably operate in a more manageable, smaller footprint. So the store now is about 100 ,000 square feet gross, and that's down to 65 ,000, 70 ,000 square feet of selling space. And we knew that we couldn't carry everything that we carried before as it related to different departments. So we looked at our history. We had 60 years worth of data to look at. So we knew our customer. We knew why they came to us. So we made the strategic decision to really focus on apparel for him, her, kids, accessories, shoes, and really cut out some of the lesser penetrated departments, at least in terms of being lesser penetrated in the past, which were home, kids' shoes, and lingerie at the time, although we're bringing that back later this year.

8:06So we really tried to curate the assortment and focus on the brands that mattered the most to our customers. And as I said, we had 60 years worth of sales data. So we knew what worked. We also knew what didn't work. And we really made a conscious effort to edit the assortment, keep it tight, turn faster, carry less inventory, and show the customer really must-have designers and must-have items that you can't come back tomorrow and get it. Really trying to drive turnover and that propensity that the customer has to, I've got to get this today. There's no waiting. It's an amazing price. It's an amazing item from an amazing designer.

8:47I have to convert today. And we think we've done that. We are nimble. We're quick. We get deliveries every day. If you come into our store today, I can guarantee you it'll be dramatically different a week from today. We believe that we know what the customer wants. And she wants amazing brands at amazing prices in a frictionless environment. She wants to get in and get out. If she's coming to the store, she wants to look. She wants to be inspired. She wants to see enough items, a broad enough assortment that she has choices. And then she wants to get out. And we think that we've really hit all of those.

9:25Can you talk a little about the assortment part? because I feel like traditionally the department store model has been to have a glut of inventory. And it sounds like you're doing not the opposite, but you're trying to be really efficient and know what will sell and what won't. And so you said you use data from your 60 years in business. How do you do that when you want the store to look full? You want it to look like what people think a store looks like, but you also, and how are you able to ensure that there is the proper turnover? Is that just about having enough manpower? Is that a question of data and past sales?

10:02How are you doing that? It's a little bit of everything. We have an amazing merchant team that has deep roots in history in New York, in retail, in off-price retail, somewhere from a century in the past, including our chief merchant. Number one, they have relationships. So they know how to work the market, get out there, and get amazing deals. We also have great partners. We're working with a logistics company called Dynamic out of New Jersey, and they're amazing. Their ability to either receive or pick up the inbound freight to Dynamic, process it quickly, and get it to our store quickly. They've been an incredible partner.

10:42But at the end of the day, it comes down to really having a solid business plan in terms of what is your financial plan for the year? How does that break out by FOB, men's, women's, kids, shoes, whatever? What is your target AUR? And how many units do you need to fill up the store? And the goal is obviously not to fill up the store. The goal is to have the right amount of merchandise to support the business. And I find, having grown up in department stores, that the days of front-loading a 200 ,000-square-foot building and packing the stock room and adding all these incremental fixtures to the floor to look like you're deep in this business, the customer doesn't really want that anymore.

11:21They want to see, first of all, they want an easy-to-shop store that's easy to navigate. I think the days of walking into a 200 ,000, 250 ,000-square-foot department store and being trapped with no windows and you can't get out, those days are over. Today, it's about efficiency. Show me the good stuff and make it easy for me to buy it. And that's really what we've tried to do. But back to your original question about how do we manage our inventory? It's really about buying the right amount upfront, using data and math to figure out what is the right capacity? How many units do we need? What's the UPT?

11:59What's the AOV? And what's the flow need to look like? What's your turn plan? How quickly do you plan to turn through this inventory? In the event that you're burning through it faster, how do you get backup orders out there? How do you work with your partners, in our case, like Dynamic, to prioritize goods, to push them through? There's a lot of different components to it. And we're learning a lot in this last year. We, too, in the past, I think, were playing the game the way many retailers were, which was pile it high, watch it fly. We are, as I said, much more nimble than we were in the past, much more liquid and turning much faster.

12:35And it creates a better shopping environment for the customer. It keeps it exciting. It gives you a reason to go back. I know if you look at a lot of our more moderately priced off-price competitors, every time you go in, they're different. And I know just from myself and people in my family, you never walk out of those stores without something. The conversion is high because they keep it exciting and the inventory is constantly changing. So that's the secret sauce for us. Keep it exciting. Keep it fresh. keep it moderately or appropriately priced, and provide a frictionless shopping environment, and the customer will keep coming back.

13:14You mentioned store layout, and the store is smaller than it was. Yep. Were there any other layout changes that you made that made it so that you avoided that trapped feeling, that windowless feeling? Was it just wider aisles? How did you approach that? A little bit of everything here, too. So historically, the old Century 21 downtown had seven floors, The store has four. So we do have much less space. And we do hear that from the customers, not in a negative way, but in a surprised way. Oh, the store is smaller. But we started with a blank floor plan, obviously. Tried to determine how big we thought each business would be using data, using history, using historical penetrations to the total by FOB to plan it out and really laid it out in a way that made sense to us.

14:02We knew that shoes was a big business for us, and we put shoes on two-thirds of the lower level and really created a shoe world. In the past, shoes was in a few different buildings in the basement and on the first floor on Broadway and Church Street, and it was very difficult to navigate, and the ceilings were low. So now we've got one nice big shoe world. We also put kids in the lower level because we believe kids is a destination. If you have kids, you know that, and you know you're looking for merchandise for them, and you'll go there. The first floor is really all about accessories, handbags, sunglasses, small leather goods, our vintage pre-owned handbags.

14:42It's really a world for our female customers, but clearly men by sunglasses as well. But it's really about women's accessories and fragrances on that main floor. And then the entire second floor is for women. Everything that she needs, dresses, European designers, contemporary sportswear, active, lingerie will land there once we get it in, as well as seasonal coats and swim. And then the third floor is all men's. And that was really the big difference. Men's had been on our first floor in the past. So it's living in about 20 ,000 square feet on the third floor right now with a similar assortment to women's, dress up, casual, designer, contemporary.

15:20One of the things that we did was make the checkout easier for our customers. And that had been a pain point for us in the past. And I think it is for a lot of retailers. You know, when the customer's done, including ourselves, when we're customers, we're ready to leave. And in our case, that's our last chance to make an impression on the customer. If they come in and they find an amazing deal, an amazing designer, and they're thrilled with what they found, it can all fall apart at the checkout. And we knew we had issues there in the past. So we made some strategic decisions to put the registers right by the door on the first floor, one on Cortland Street and one on Day Street, and really are using technology, again, through our new POS partner, which is called RetailPro, to really simplify the checkout and make it more efficient.

16:07We're testing for a year. We've been testing self-checkout selectively at different times throughout the day. We're learning, trying to figure out if we want that to be a part of our model in the future. And then we also put a small bank of registers on the men's floor because we believe men. When they're done, they don't want to have to navigate through the whole store to find a line to get into. They want to check out and leave. So I think by making the aisles a little wider, cleaning up the environment. It's very neutral right now, gray floor, white walls. It's very, you know, it's easy to find your way around the store.

16:42Bringing the registers to a more visible location so that when you walk in, no matter if you come in on Day Street or Cortland, you see the register, you know where to pay and how to get out. And then making that experience at the register as easy as it can possibly be are big differences from where we were in the past. You mentioned self-checkout. I've seen various attempts at doing self-checkout in the more apparel space. For example, we have Uniqlo where you just drop everything into a bucket and then it just automatically gets it somehow. Is that what you're doing or are you doing it individually?

17:16We're not. That's an amazing concept using RFID tags. We are not a vertical retailer like Uniqlo, so we don't source tag anything. We did look into that and quite honestly, really thought about, should we, with our logistics partner dynamic, think about using RFID? Would it help with the checkout? Would it help with shortage? Would it help with just inventory in general? We made the decision to not do that. So we are using self-checkout similar to what you would find at other retailers, Target, Walmart, Lowe's, Home Depot, where it's true self-checkout. We are limiting the amount of items that you can take there.

17:57And we're not calling it self-checkout. It's assisted. We don't want you to be fumbling around trying to take hard tags off or deactivate soft tags or mess around with the hanger. But we do think that customers that have one or two items do appreciate the opportunity to skip the line. And we don't have tremendously long lines, but some people don't want to wait at all. And if you're buying just a pair of socks or just a pair of shoes and you want to run over to self-checkout, it's available to you. We do have someone there to monitor and assist so you're not all alone. And as I said, we're still experimenting with it.

18:33It's been a learning year for us to see how this will work in an apparel retailer. I cannot really identify any non-vertical retailer that's had great success with it. I think what Zara does and Uniglo, to your point, which is really all RFID tagged and it's efficient for them, is really not an option for us. But we believe in testing and learning, and we didn't want to just not do it. So we've got a year of testing and learning, and we'll be making some changes in the future in terms of how we use it. But we intend to continue down this path of trying to figure out a way to create a frictionless checkout experience for the customer in an apparel store.

19:15We're going to take a quick break and we'll be right back. You mentioned the testing and learning a year in. You know, this is a two-part question. First is the bigger one, just like, how has the last year been? But also, would you say the chopper has changed since pre-pandemic? Like, I feel like one of the reasons you guys closed was because the tourist traffic had dropped so precipitously in New York City. Is it still a highly touristic customer base? Are you looking at more locals? Or is it a different type of shopper you're seeing now than you were three years ago? And how has that translated into the overall performance of the store?

19:53I would say yes to all of the above. If you live in or work in or visit New York, New York is a different place in 2023 and 2024 than it was pre-COVID. And that's not all bad, certainly. The customer has changed. The traffic patterns have changed. The way people live, work, and shop has changed. their needs have changed. One thing the pandemic did was teach everyone how to stay home and never leave your house and really shop online for things that maybe you would have never purchased online. It really helped, I use that word loosely, at getting people comfortable with really buying anything online.

20:34And clearly, e-commerce and online businesses have been growing for 10, 15 years now, but it really grew dramatically during COVID and then post-COVID. So we do not have a website at the moment. We did have c21stores.com as our e-commerce business in the past. We had intended to reopen the brand and relaunch the brand as an omni-channel retailer, but for a variety of reasons, we had to put the website on the back burner. So we're working with a partner called Shop Shops now, which is an app-based shopping platform to at least get some digital revenue in and be out there to an audience beyond what you get in New York City.

21:17But back to your original question around New York, it's really been about understanding the needs of the customer, the shopping patterns in terms of traffic. And one of the things that we've noticed is, you know, in the past, we opened our store downtown at 7.45 in the morning, and we were busy by eight o 'clock. You know, again, New York was different. The sidewalks were full. The path train was full. You know, the N, the R, the 1, all of the main trains that were coming downtown were full. And there were office workers as well as tourists who knew to get to Century before 10 in the morning, you know, for the best experience.

21:51We don't see that today. And we knew that that would be the case. So when we relaunched the brand, we started opening at 10 o 'clock. We've now just backed that up to nine because we are seeing some early morning folks outside that we were not seeing in 2023. But, you know, we continue to learn and evolve. And what makes it great about relaunching and only having one store versus 13 is that we can be faster with our response and quicker to make changes, which we've done. We've changed our store hours twice. We've moved some things around in the store. You know, we've done a few sample sales. We've have a great off-price partner called Two Authenticators that has a constantly changing assortment.

22:30So we're using data, as I've said a few times, listening to our customers. We just finished a survey that went out to about 950 ,000 c21stores.com email subscribers to really get their impression of the store in this first year. And we'll be using that data to continue making changes. But I believe the more nimble you can be, the more you can listen to your customer and use data to make smart decisions will help pave the road to success. And that's the road that we're on. Have you looked at the findings from that survey yet? No, it's funny. No, we just closed the survey on Monday of this week.

23:07So we're very excited to get it. I was hoping to have it today. We've had thousands of responses. The qualifying question was that you visited the store since the relaunch because we really wanted your opinion about the new Century 21. We hear from lots of people about the old Century 21. I'm sure they have a lot of opinions about that. Yes, yeah. But, you know, nothing stays the same. And I think a smart retailer is an evolving retailer. And clearly, it was not our choice to be a victim of the pandemic and have to even go through this relaunch. But we believe in thriving in the situation that we're in.

23:45And to reopen the store as it was would have been a mistake. You mentioned, you know, the e-com is on the back burner for a variety of reasons. You have shop shops. What did e-com look like before when you did have an e-com presence? And what is your vision about what it possibly could look like when you're able to invest more in it? Well, the challenge for e-com, for us specifically as an off-price retailer, is that the vendors really don't do anything for us. So it is very labor intensive. You know, our buyers buy the goods. The allocation folks would allocate inventory to e-com. We had a group of folks that would have to pick a sample, take all the photography, write all the copy, do all the retouching, put it all away in a warehouse somewhere.

24:34And then there's the whole, the picking, the packing, the shipping, the free postage. If you're over$75, it is an expensive proposition. A mentor of mine comments a lot on LinkedIn on some retail posts about a lot of retailers who took their eye off the ball as it relates to what's going on in the store to fund the less profitable online business. And every time I read this from him, I think he couldn't be more right. That there seems to be this misconception from a lot of folks, certainly not people in retail, but other folks, that it's less expensive for the company to run an e-com business.

25:13And it certainly is not. We are, at the end of the day, here as a company to make money. And if we cannot figure out a way to do e-com efficiently, frictionless for our customers, and profitable for Century 21, then we won't do it. So we've got a few things still to figure out. As I've said, it's on our radar. We want to do it because we know the customer expects that from us. We see it in our social media comments every day. People love what we're featuring, but they want to buy it online. They don't live in or near the city. So it's difficult for them to transact with us. So we want to bring Century 21 to everyone like we did in the past.

25:51We just need to figure out the right way to do it. Yeah, I just struggle to, and I'm sure you'll figure out some way, but I struggle to understand how that could profitably work for a business like yours, just because of what you said. And, you know, there are others who go the opposite way who say, you know, definitionally, we will not do e-com. It's a treasure hunt. And your store isn't really a treasure hunt, I would say, but you have like a, or it is, but it's also like less messy, I guess I would say. It's definitely less messy. We have no tolerance for, if the store is not ready for the customer, then we've failed each morning.

26:32And we work hard to present a well-presented store. It's important to me. It's important to our owners. And it's important to all the folks that work in our store. But to your point on e-com, we will figure it out. A lot of our off-price competitors are not in that business. There's a lot of specialty stores out there. that come to mind that I won't mention, but that are also not in that business for a variety of reasons. We feel we need a digital revenue stream. We just need to figure out the right way to do it. And we're happy to work with ShopShops right now. They're an amazing partner. I don't know if you're familiar with them, but they do live broadcast from our store three or four times a week where they'll get thousands of people to watch this kind of our version of the Home Shopping Network.