How menswear retailer Rothmans has avoided the department store death spiral

0:04Hello, everyone, and welcome to the Modern Retail Podcast.

0:30been known for its classic styles and really keeping with the trends while remaining, I guess, very classic, you could say. You know, it's never been one to go shooting for something that isn't there or something that might fade away at night. But it's a really fascinating company, especially given that it's focused on brick and mortar. And it also, I believe last year just launched a new smaller retail concept called Rothfins Next, which I really want to get into and talk about because that's focused on younger generations. And I also just want to talk about what it's like to be behind a brick and mortar business, one with very few locations, and still remain in the zeitgeist being top of mind and having the type of attention and the type of following that it does, because that's hard in this current environment.

1:09But I'll shut up now. Ken, how are you doing? I'm doing great. Thanks for having me. Thanks for coming. I'm really excited to have you here. So let's start with you. You're one of those rare people where when I check your LinkedIn, you have only one experience, which is the store. So can you just give, I guess, a history of yourself, but also a history of the store as a whole? Well, the funny thing is I'm one of the few guys you'll meet that's only had one email. Wow. That is actually, and so for a journalist, that's a really great thing because sometimes we go through like 10 different old emails until we find the most current one.

1:40So for you, it's easier. So my background, I was actually, I graduated from college, moved back to Boston where I was from, and I worked five years as a banker. And then I was about to go to business school. I was probably going to go into like international treasury or something like that. And my parents said to me, hey, you know, your grandfather's store down in New York, they had a good run of about 50 years and they're about to go out of business. It's been a long run. Grandpa's 82 and his brother who works with him is 80. Could you come down and help us close the store? Because you're a businessman.

2:15I'm like, I'm not really a businessman. I'm a bond trader, a foreign exchange trader. I don't really know anything about anything. So I came down to New York for what was supposed to be like two or three weeks to help close the store. And at that point, I was into business school, I had my deposit down. But I kind of got into, you know, being my own boss and being an entrepreneur. And at the time, it wasn't, this is in the mid 80s. And it wasn't like cool to be an entrepreneur people, it wasn't really a word that was out there then. So there was no status in starting a new business. But I kind of got the hang of it and liked the creativity of it.

2:57So I spent the next four or five months closing the store that my grandfather had started many years ago that had been a great store in New York in like 1926, believe it or not, and had been in its heyday probably in the 50s and 60s. In the 70s and 80s, it had become kind of an old man's store, and it was definitely on its last legs. So I kind of got this crazy idea, what happens if I did a new version of this store? And I was young enough and dumb enough to not know what I was up against. It's where I was 26 trying to start this business in New York. You know, I had an article on my wall that a guy wrote called We're All Faking It.

3:39and it said if you blew a whistle in New York City and asked everyone that didn't really know what they were doing to stop, the whole city would come to a standstill because we're all faking it and that was sort of my mantra. I literally had that on my wall for probably 10 years. So I just kind of did my best to figure out the best way to accomplish what I was trying to do and I put together pieces that my grandfather, relationships that he had and I tried to do a new version of it starting out as kind of a hip young discounter trying to sell the guys like me who were in their 20s and 30s in New York.

4:14And again, I didn't really know what I was doing, but I just kept going ahead, plowing ahead. And that was sort of the start. All right. So walk me through, how did you go from being a discount men's retailer in the 80s to where you are now? Was there a distinct point where you were like, this is what we're going to do? So like, how did that evolve into where it is now? That's a great question, because there was never one point where we said, okay, it's time to switch. We were a discounter, and now we're going to change. We just kept evolving, and I think that's why we keep surviving. We started this discounter, and then there were tons and tons of discounters in New York.

4:55If you remember the names like Mo Ginsberg and BFO and NBO. And then along came Men's Warehouse and a few of these other guys that are now since out of business. And we started to see that as our customer was getting older, the younger guys were getting older, they wanted a little better stuff. We just kept edging up and up. And there was never a moment where we said, we're not going to discount anymore. Our thinking was, we always wanted to provide like the best value for people. Our customer was the key. So we always thought about how can we make their shopping experience best? And ultimately, we kind of got away from, well, maybe our guy isn't really just looking for the lowest price.

5:39He's looking for the best value. Our modus operandi was always, you know, let's just treat our guys the best we can. And what that turned out to be was let's give them great product for a great price, but just still emphasis on great product and great service. But there was never a moment where we just said, all right, we're no longer a discounter. Got it. And was there ever a thesis about assortment? It's menswear, but it's sort of more on the formal worky side. But like, how did you think about assortment when you were and especially given I imagine you're kind of competing with department stores when they're kind of in their heyday, right?

6:13Wouldn't you say? Yes. Our biggest competitor was probably, you know, Bloomingdale's and all those guys at the beginning. But I do think you're accurate in that we started out selling mostly tailored clothing because that was kind of the niche that my grandfather came out of. And then we're like, oh, well, things are getting a little more casual. So we started sliding that way a little bit. I think sort of one of my thesis was always, we want to make the shopping experience efficient and rewarding for our guy. So part of efficiency is, you know, getting it all done in one place and doing it quickly.

6:49And that's what our guy wanted. And he also wanted us to be the place that did the curating. Because it goes back almost to that Warren Buffett thing where you don't need to know jewelry, you need to know your jeweler. And so what we were working to be was the guy for all these guys. So they needed to trust us. So we kept looking for the way to make their shopping experience efficient and rewarding. Got it. And that's the other thing I want to talk about because one of the experiences at Rothman's is that the in-store experience, you're very focused on the customer experience, making sure there's kind of a one-to-one and that they get, you know, it's different than the nameless Macy's counter where someone might accost you and say, you want this blazer, here, take it.

7:34So has that always been part of it or how did you go about making it so that there was a very bespoke and Rothman's-esque customer experience? I think part of it is we come at this from a different perspective than most. I don't want to go very far without mentioning my brother who joined me about five years after I started. So I have a brother who's eight years younger than I am. And that's one of the keys to success, my brother, Jim. And the funny thing is, we're kind of business guys in the fashion industry as opposed to fashion guys in business. And so, you know, our approach was very different than people that have come out with fashion backgrounds.

8:14Before the word analytics was popular, we were kind of analytical about it and say, how can we just make this a great experience for these guys? you know, that was more of the business side than the fashion side. Because you see so many stores that like, we have great taste, and we're going to create a store. And that was really not where we came from. So, you know, part of that customer experience thing was we can learn how to out service anybody. And, you know, probably my favorite business book is Danny Meyer's book called Setting the Table. And it's not a book about fashion, it's a book about hospitality.

8:49And I say all the time, we're in the hospitality business. That makes a lot of sense. Something I wanted to ask you, probably I thought we'd get to it later on, but I think that we're at this point now, which is that Rothmans has bucked some trends in the retail business, namely two that come to mind, which is one, the downfall of department stores and two, the downfall of mom and pop stores as a whole. And so was there a cohesive thesis or strategy behind this? Or was it just, you know, you had a popular store, you began to grow a following. What were the elements at play here? I'd like to say there was a thesis and a big plan, but there really wasn't.

9:24I think of more of that we just keep bobbing and weaving and we react and we're small enough that we can react and we think of ourselves as nimble. And, you know, we've been through a lot and we keep getting back up. We were in business for 9-11. We were in business for the 2008 financial crisis. We were around for COVID. And all of these were really close to putting us out of business. but you know you got to stay humble and you got to be nimble and we just kept getting back up but there were many times where we thought we were done and you know part of our mentality is we don't believe any of our hype and we're always cautious and thinking about what our next move is but you know we're we're never sitting back and resting on our laurels thinking that we've got it figured out.

10:14Got it. You have the Union Square store and you have a Scarsdale store. When did you decide to open another one? And have you ever thought about opening many stores? Or has it always been this focus on one to two that we do well? So I started in Union Square. And the funny part was, you know, we came down to this neighborhood in 1986. I'm in Union Square now. and Union Square was a dump in 1986. I mean, it was, I mean, it was the best place to buy drugs in New York was Union Square Park. It was known as Needle Park. And, you know, the funny part was like Max's Kansas City was across the street, like the famous nightclub where Bruce Springsteen did one of his early concerts.

10:58And at the other corner was Andy Warhol's factory. So it was a really cool place. But in the first year, I couldn't afford the pull down gates at the beginning. So in the first year, we were broken into five times. And I used to come down in the middle of the night. I was a young guy and I'd sit in the window with a baseball bat waiting for the guy to come fix the windows. And we were also able to go to Union Square because it was not, you know, like Fifth Avenue or anything else. So we got in early to Union Square. And as the neighborhood changed, we changed. And then probably like 10 to 12 years in, I had moved to the suburbs and everyone said, well, you can't, you can't open a store in the suburbs because all the guys that live in the suburbs just hop on the train and shop on Madison Avenue.

11:46And I was like, I don't know. I think there's no great store in Westchester County. So we opened a store in Scarsdale and it's been great for us. It's an easy store for us. It's much easier than running a New York City store. And then about five or seven years ago, we opened another smaller store in Bronxville called Harry Rothman's Project, named after my grandfather, Harry Rothman. And that was meant to be a little more experimental. But in reality, it's really just another version of our Scarsdale stores. So we have the three stores. We did have a store, a COVID store in Manhattan West, which is the new neighborhood next to Hudson Yards.

12:26We signed a two-year deal that was a good short-term deal. And when it came up, we decided it probably wasn't worth our while. So we just kind of let it go. But we don't have any grand aspirations of multiple stores. We're too focused on the customer experience, I think. And it's hard to replicate what we do in our three-store situation. I wouldn't say never, but it might change. And I have my son working for us now, too. So that makes a difference. So maybe if someone wants to go someplace else and try and do exactly what we do, we're very proud of our in-store experience. But it's hard when it gets out of your reach.

13:08And that's where we get a little crazy. Got it. And can you just give so that the listeners know, like, how would you describe the in-store experience? Like, is it markedly different from any other menswear retailer that you would go to? Is it just a focus on offering the type of customer service one would expect for nicer clothes? Like when you're talking with someone and trying to train them, what would you say is the key to it? Yeah, I would say the key is hospitality. Think of it as a restaurant or a hotel and welcome people to our house. And we're pretty laid back and friendly guys. So we try and communicate that.

13:41Like the first thing I say when someone starts working for us is please, please, please don't say, can I help you? Because that's not what we do. We want to welcome them to our place and we want them to enjoy the experience. So before we start talking about what are you looking for, just welcome to the place, feel the place. And there's a certain casualness about it. And again, we don't vibe like super fashion, even though we have some of the most progressive brands in the world in here. And we are very proud of our ability to get ahead of the curve and find great brands just as they're emerging.

14:17We don't vibe like, oh, you're walking into a fancy clothing store. We more vibe, welcome to our house. And that's kind of what we pride ourselves on. So we work really hard on getting that casual approach. I also like to think that we don't really shoot for that top 2 % of fashion customers, the guys that are super plugged in, know everything about fashion and are on to the next wave three months later. We're not going to be able to get a ton of loyalty out of that guy. And I think if we shoot to please that guy, we'll lose the much bigger middle. And so, again, I think it's like we're hip clothes for more of the regular guy who's not like the fashion guy.

15:03Not that I don't love that guy. It's just I don't know that we can keep him happy all the time. Yeah. And so can you talk about how you've approached assortment with that? Because I feel like there are certain brands that would work for a type of, you know, suit, blazer, etc. And there are types of brands that maybe are a little bit too a field avant-garde or just, you know, might go away six months from now or not be in the zeitgeist. So I have a list of brands that I think probably would work with that. But are they all the bigger guys? How do you attract the smaller ones? Do they know who you are?

15:34How does that work? You know, the fun part for us, and part of this has been the changes, we used to go to the trade shows 20 years ago, and nobody would talk to us. They're like, there's another discount or walking down the row. And now the fun part for us is we've become like, the pretty girl at the dance. Everybody wants to talk to us now. And that's been a really fun change. And you know, it's nice to come a long way in that regard. So now we go to the trade shows. We sometimes go to Italy. We do a lot of appointments in New York. But when we go to these big trade shows, either in Vegas or in Chicago, the menswear shows, there are thousands, literally thousands of brands.

16:12And we'll probably meet with 100 of them and then get down to 20. And, you know, then we'll probably buy 10 or 15 of them. Like literally today, an hour from now, we are going over our spring 25 buy, you know, but we take incredible amount of pride in finding emerging brands. So like, you know, the brand Fairty, for example, you know, I think we were the second store to carry that brand. So we get in early. Fair Harbor is a great swimwear line. We got in, And we're like the first or second store to carry that. So we're proud of those kinds of things. And then there's plenty of brands that we thought were awesome were early and they don't quite make it.

16:59So we've seen lots of those stories, too. But I would say 10 percent of what we put on the floor are emerging brands that, you know, 50 percent chance whether they're going to be there in a year or two. So, you know, we treat everybody well. We try and pay the small guys really quickly. Yeah. But when we went to this Chicago collective about a month ago, we start at eight in the morning and we go till six at night and we have an appointment every half hour. So we're really seeing people. And after a while, you develop an ability to get a pretty good handle on what you think is going to work. If I were an emerging brand and I just wanted to ask you, what are the elements you are looking for that would give me a good chance of signing a deal with you, what would they be?

17:48Price value relationship is key. It doesn't really matter how high a price you are, as long as you're giving great quality for that price. And our experience gets us to the point where we can tell the difference and know whether we're going to make and keep a customer by selling your product. So price value is important. And foresight in fashion, too. Doing something that's a little bit different or doing a basic incredibly well. So, you know, between the team, we have, you know, myself, my brother, then we have a phenomenal buyer, Lacey McAngus, and then my son Will is dealing with a lot of the more progressive lines that I might not understand as well.

18:31But yeah, to answer your question, I mean, I always think it's hard for these emerging brands, you start by emailing one of us or, you know, we're New York, you could walk into the store and say, hey, you know, I don't want to bother you, but I have this great line and you happen to have a sample with you. And that's, we started with this amazing hoodie company called Software, Wear Software. And she walked in the door about five years and we probably sold a thousand of those sweatshirts. And we were the only ones that had them. It was really fun to have something that no one else had in the whole country.

19:04And that was a walk in the door kind of situation. And occasionally we'll do like a pop-up with you know like a whole group of emerging brands another thing that we do a lot of are these pop-ups where someone comes to us we're not quite so sure whether it's going to work and so we pitch the idea of them coming in and doing a month with us maybe the goods are on consignment because we don't want to take the risk and so we put in a bunch of their goods, give it a nice carved out area, activate it with emails to our client list. And it can really help a brand get a kickstart in New York. And sometimes it's kickstart in the United States.

19:46We just did one with a Portuguese brand called Y Chroma about two months ago, where we were literally their first attempt to be in the United States. And we put out beautiful display for a month together for them. And when did you start that pop-up program? Because it seems like kind of a low risk way and also a good way to just test out a brand. Has that always been part of the playbook? Yeah, we've been doing pop ups for probably 10 to 15 years. I love the concept because obviously, like you said, it's low risk on inventory. We have a pretty big store here in New York, so 11 ,000 square feet.

20:20We should be able to find 500 square feet for someone that's just testing this out. A good example also is someone like Billy Reed, American designer. We started with a pop-up and now we buy it every season because we love the line. One thing that you're known for is you have some well-known people, but especially sports media like anchors from ESPN, Fox News. So was that just word of mouth where one guy in the industry was wearing you and then it went from there? How did that come to be? I think originally the ESPN thing started with a stylist who ESPN had hired and she liked the store because, you know, nowadays we're one of the stores that really carries inventory.

21:04We have every size in suits. We have every size in sport coats. And a lot of these guys are former athletes, so it might be tougher to fit. But I think she found us. And then, you know, these guys started dressing a little better than their cohorts. And they, you know, they started asking where they were getting it. And then they all started coming to us direct. We also, CNBC, we outfit a whole bunch of those guys. We don't really put it out there too much like, you know, saying we're dressing this guy, but we take a great deal of pride in it. You know, you start to see like all the ESPN guys are all wearing sneakers.

21:38And I think, you know, with their suits, whether you like that look or not, I think we were really early on that and potentially started that look for the sports guys on TV. And then, you know, so much word of mouth. We do get so many TV guys. we outfit a lot of TV shows because the stylists, there are a lot of great fashion stylists in New York who get hired by shows and TV networks. And we have a lot of inventory from a lot of different brands. And that makes it easy for them to carve out. You know, they're walking into basically a huge 11 ,000 square foot closet of menswear. I feel like it's rare to hear a major retailer boasting how deep their inventory is, because I think everyone's trying to.

22:24So can you just can you just talk a little bit about that? Because I feel like that's cutting against the grain of what we're hearing a lot of these days. Yeah, I mean, the, you know, there's one, there's a few things, great things about being independent. And one is not having to go by industry metrics. And, you know, you carve your own way. Like, you know, I was thinking as I was preparing for this podcast, I said, He's probably going to ask me, you know, like sales per square foot and inventory turn and stuff like that. And we don't think about that at all. You know, as a small business, we watch our cash flow very carefully, but we believe in inventory.

23:01We do not like when somebody walks in and can't find five suits in their size or a pair of pants and, you know, in a size 40 waist. and you know a lot of the press in fashion goes to these you know wonderful small stores that are hanging 12 units we hang like 12 units per inch you know it's like so you know fortunately we've been doing it long enough that we think very carefully about what we buy but we are not afraid to commit so that i think that's the key to why so many of these stylists like us you know if you asked me to name names, I wouldn't even know where to start, you know, because in New York, the great thing is, you know, you look around and there's the guy from Game of Thrones walking in.

23:52You know, you don't even recognize them, but they're in here. And like Julia Roberts was in here last week. Oh, my God. You know, you just kind of go, wow, that's cool. So that's the beauty of New York. And you don't make a big deal about it. But it's fun. No, that is the beauty. Yeah, You have to act completely cool when Julia Roberts is right there. She's supposed to be there. We had a guy working the door, opening the door for us, the front door, and he was dressed really well. And Julia Roberts walked in the first time and she just goes, whoa, that is a great outfit. So for the next month, all we've heard is about how Julia Roberts complimented his outfit.

24:29Yeah, I would not shut up about that if she said that. Can you talk about just the demographic or who you're seeing? Especially when you're in menswear, you've been around for over 30 years now. The demographics change. People age out. People retire. Who are you seeing the most from? Is it still the 30 to 45 men going to work? We're seeing a resurgence in menswear being talked about on social media and especially new types of menswear. Is that impacting your assortment and who you're targeting in the stores? Well, I mean, I don't know if I'm the first to say this, but menswear is the new women's wear.

25:03I mean, people care about what they're wearing now. young people are so into it. And, you know, that's probably one of the benefits of social media. The really exciting part for us has been, you know, when we started, I had so many of my peers, I, you know, I became a New York guy, I met a lot of people. And so my peers shopped here. And what we're getting now is their kids. And it's hard to be a store where your father shops there and it's still cool enough for you. And I think we've walked that line really well. We do a ton of wedding business. And so all these guys that trusted us for 30 years, now their kids are getting married.

25:45You're going with me to my store. And the guy may be like, what, dad, come on, your store and my store are not the same thing. But, you know, we have the selection to keep any 25-year-old interested. So I would say that the one demographic that, you know is starting to diminish for us is the guy who's 60 plus because he's just he's wearing less clothes he's wearing you know he's not dressing up as much you know i don't i don't like it when people say well i don't really come to the store anymore because i don't wear suits and like suits is probably 10 of our business i know pre-covid we were the largest denim seller for like j brand joe's and citizens jeans i mean like the number one in the country for one location So we sell a lot of denim in this store.