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Friday, June 21, 2013

A Seemingly Impossible Business

George Zimmer, Men's Wearhouse, and the Power of Marketing

Well, it finally happened. Men’s Wearhouse has pushed out its own founder and famed spokesman George Zimmer. He owned 3.5 percent of the company stock but was not in a position to object. It’s the end of an era—the closing of 25 years in which this wonderful entrepreneur built a fantastic company. Let’s reflect on what made his approach so great.

To many men, buying clothes is painful, like going to the dentist. Most guys would be happy to wear jeans and a sweatshirt all the time—stuff you can buy at the thrift store or a big box on the fly. Anything else seems too feminine, fussy, or just embarrassing. Most men feel a bit ridiculous being too dressed up and also more than a bit uncomfortable. Plus, to persuade them to take off time from work, sports, golf, and general lounging and instead actually shop for clothes requires a special touch.

This is why I’ve dedicated this piece to understanding a company I’ve really come to admire, Men’s Wearhouse. It is a paragon of retail success and reveals just how tricky and ingenious the world of marketing can be. It is as important as the products you are selling, because, as it turns out, it is not the case that “if you build it, they will come.” On the contrary, you must find a way to get them in the door. It is thereby useful to consider how this company has been able to succeed where so many fail. 

Even in my own town, I’ve seen attempts to specialize in men’s clothing start and flop many times. The salespeople sit there with nothing to do and the suits gather dust until the place finally shuts its doors. 

Apparently, Men’s Wearhouse has found that special touch, the marketing savvy to push good-looking clothing up the value scale of male preferences from way down low to number one. That is amazing. 

The company was founded in 1973 and has made huge inroads over the last 10 years to create 1,200 stores today. It is a case study in how successful business is not just about offering stuff for sale that people want. It is about figuring out how to make potential customers really want the things you are selling. You have to make the market happen, not merely find it and fill it. 

So how did Men’s Wearhouse do this? Look at its competition. There are department stores, which (again speaking from experience) men especially loathe. There are the big boxes. But among stores focusing exclusively on menswear, you have places like Brooks Brothers, its discount knock-off JoS. A. Bank, or places like Burberry where you feel like you have to affect an accent to fit in. The marketing ethos in these places suggests the need to upgrade your wardrobe, be respectable, be professional, be presentable, look wealthy, and change your values. The clothing itself is rooted in a kind of fashion avoidance: The English gentleman as the safe choice to suggest accomplishment and overall decency. 

That’s obviously effective to some degree and among some people, but these stores fill a niche and they don’t quite reach the common man. Everyone needs clothes and everyone needs to dress up from time to time. Surely there is a path to success here. That “everyone” market is what Men’s Wearhouse has captured. 

It was a long time coming. Only 20 years ago, this company served its own niche: an urban population looking for formalwear at discount prices. It placed its stores in low-rent areas. Designer labels on the racks were not common. It offered dress-up glitz on the cheap. But gradually this changed. It broadened its market, changed its offerings, and redefined its strategic vision. The stock price reflects that change and confirms its effectiveness, even through the rough waters following the 2008 recession. 





The commercials feature the founder—the bearded, groomed, and yet slightly gruff George Zimmer (significantly: an older man, a father figure)—speaking in plain terms: “You’re going to like the way you look. I guarantee it.” This direct promise from the guy at the top seems to tap into the masculine sense of an eye-to-eye bond. As he told Businessweek in 2004, “I have more credibility than a hired actor.”

And notice that his statement is not that “others will like the way you look”; instead, it is about you. It is personal. This plays right into the individual sense that many men have about what they wear: It must please them as individuals; they are not going to get dressed up to play some role or to please others.

Plus, Zimmer himself has a plain way of talking. It’s not effeminate and it’s not about fanciness or fashion. He seems like he might otherwise be hunting or following the sports page were he not making a commercial. His demeanor puts the typical male ego at ease. He is not going to be dressed by some Milquetoast but by a real and regular man who shares his values.

Notice the name of the store. It is spelled “Wearhouse,” but it sounds like “warehouse.” Warehouses are places that some guys think are pretty great, places with trucks and boxes and storage. The term also suggests the absence of fuss and decor. It is just stuff and that’s all. Chalk up another point for attention to the masculine sensibility. And notice the logo: It is not at all fussy. It is spelled in black in all capital letters, as if no ad company was paid to do anything fancy. It is just the plain thing and nothing more. 

What’s most surprising is what you find when you walk in the door. It is not a warehouse. It is not plain. It is not cheap. The racks are filled with premium designer clothes—big-name suits at above-market prices. It’s not unusual for a suit to run $650, which is pretty expensive by today’s standards. What’s inside is perhaps the opposite of what you might expect from the outside. Certainly there must be high margins here, and that helps the company’s business model. 

My theory on the high prices: Most men do not shop for clothing regularly, so they don’t have any sense of what to expect. They certainly don’t want to hop from store to store. It’s enough of a pain to go to one store. Once in, they accept the prices as a given and the ego tends to keep customers from showing shock. And since they are there already and have no interest in price comparison, they are willing to pay extra to avoid search costs. 

And why the designer labels like Kenneth Cole and Calvin Klein? These provide extra reassurance that the clothes are acceptable, pre-picked, and already vetted as being the right thing to wear. The labels help to relieve men’s insecurities. In fact, this is the purpose of designer labels in general: to help overcome consumers’ fears of their own ignorance. As for styles, when buyers go to market, they have thousands of styles to choose from, but the buyers for Men’s Wearhouse know their stuff. They’ve chosen blues, blacks, and grays. 

All men need clothes, right? Seems like a snap, an easy business proposition. It isn’t, not in a world in which covering yourself can be done by scouring thrift stores or picking up some rags from the discount mart. The real genius is putting today’s average man in designer suits that cost many hundreds of dollars.

This takes some doing. It takes finding (or intuiting) that special button to push insides customers’ heads and hearts. There’s genius in doing it well. And as with all marketing, it all seems obvious in retrospect. The market economy is always tending toward ever-greater expertise in meeting human needs, even ones we didn’t know we had.

This is the genius of capitalism, wrote Ludwig von Mises: its principle of marketing. It is mass production for the masses. It was only a few generations ago that women would save their flour sacks to make dresses and men would have one or two changes of clothes to their names. Now, we face a bounty thanks to people like Zimmer. Yet we still have to be sold. And the men are buying at last. 

Zimmer is out of the business now, but he leaves a lasting mark. His enterprise changed our culture and changed the way we think about a fundamental human need.