JoS. A. Bank Launches Factory Store Concept
JoS. A. Bank Clothiers, the no-week-goes-by-without-a-sale
retailer, is looking to burnish its credentials as a company
that saves guys money on high quality clothing with the
launch of its first factory store concept in Riverhead,
NY.
“We are excited about kicking off our factory store initiative,” said
R. Neal Black, president and CEO of the company, in a statement. “We believe
this concept could represent a significant long-term opportunity for the company
and could result in an additional 50-75 factory stores in the U.S. Further,
we feel that the locations we have chosen as part of the initial test phase
reflect a good representation of the target market.”
While the company
is opening the first of the concept stores, it also launched a new website, www.josbankfactorystores.com,
that gives consumers the options of buying the same items online. The website
boasts of “Everyday values direct from our factories.” As a point
of comparison, dress shirts on the factory store site are priced at $29.99
versus $79.50 on www.josbank.com.
Factory
store openings scheduled for this month include one at Jersey Shore Premium
Outlets inTinton Falls, NJ and another at Philadelphia Premium Outlets in Limerick,
PA. The company is also looking to open two other factory stores this year
at locations in Maryland and Texas.
Discussion Questions: Is JoS. A. Bank making the right move with its factory
store initiative and website? What will it need to do to make this concept a
success without negatively affecting its flagship business?
From the pricing on the website, it appears that JoS. A. Bank is taking an “everyday low price” approach to its factory store concept. The pricing looks similar to the “sale” prices that are trumpeted in their regular stores. Outlet stores can be a growth vehicle, if Joseph A. Bank chooses its sites carefully to avoid overlap with its full-line stores.
But the company needs to be careful not to let everyday low prices undermine the perception it has built its brand around–that it is offering huge savings when it puts merchandise “on sale.” I would advise the company to be careful about the content it develops for the factory stores–other than using them as liquidation centers, there ought to be a lot of “everyday low” content that can’t be found in their regular stores.
When a retailer has a deal addiction they are programming the consumer. Automobile manufacturers leaned this the hard way. A warehouse store for selling male apparel is not a great idea since many of the purchases are by females. Having a store in an outlet mall is not a bad idea, but the most successful outlet stores try to be like the primary or lead stores. The real question is, does always having deals impact sales long term? Kohl’s gets away with it, but they have a much larger store format and SKU count.
I agree with Richard. The danger here is that the “really low price” image may be undermined by a campaign suggesting there is a “really, really, low” price available.
The other thing to remember is that the discount is self-proclaimed. Those $79 dress shirts are available from lots of other retailers from Macy’s to T.J. Maxx for $19 – $39.
Sometimes you don’t want your customers thinking too hard about your offer.
Being known as a retailer that offers great sales keeps consumers looking and checking on your offering. Being known as a “factory” or outlet store means consumers can come when they want and expect low prices. Does JoS. A. Bank really want to make this switch?
As someone who ran a chain of both factory and full-price for Bose Corporation I like the move to the factory outlets. The centers offer great traffic with consumers who are out to spend money.
I’m on the fence on the website. Obviously they don’t have to worry about upsetting their distribution like a lot of factory outlet retailers, but I do think the website blurs the line between the regular channel and the factory outlets.
I think the website needs to better communicate the difference, or if not, I’m not sure why a consumer would feel the need to pay higher prices (or perceived higher prices) at their regular stores.
The factory outlet and web channels should create incremental revenue and not end up competing against your other stores.
Kuppenheimer, Barry Mens Wear–ring a bell! I like JoS. A. Bank. They have been successful during tough times and are to be applauded for that. But I just don’t know or see the advantage of outlets for them especially when their website seems to not reflect their everyday brands. Bank, in my area just advertised 2 shirts for $40. Didn’t find anything like that on the web site. Maybe they should look at expanding their regular stores instead of creating special inventories for outlet stores.
This could be a good move, as long as the focus remains on their key shopper, a value-conscious consumer who appreciates better quality. As previous panelists said, this move may take them to close to the edge where quality–at the heart of the JoS. A. Bank brand equity– can be rapidly diluted by the new messaging. Saks has done a good job with its positioning at very high-end fashion stores, and keeping the message coherent across the online, specials, promotions, and its Off 5th “Premier Outlets.”
Once upon a time JoS. A. Bank was Baltimore’s Brooks Brothers. Today it is something quite different. Today’s special is buy One Suit (Sport Coat or Tuxedo) and get TWO FREE.
Opening Factory stores is just a matter of location. In many people’s minds, JAB is already a factory store. This is a price retailer. This is not a quality retailer and any shopper who thinks they are getting upscale merchandise for downscale prices are kidding themselves.
The move with the alternative website indicates that the JAB realizes that and is indifferent to where they sell their products. Further, the ease of comparison between the product selections suggests that they would prefer the bulk of their business to come from their low price site. They will use the other site to sell to whoever is foolish enough to pay the fictional prices.
I don’t know how a factory outlet store could do anything extra since it appears from their over-the-top highly annoying ads that they already give their merchandise away. Will they be paying people to take their clothes at the factory store?
Sounds interesting, though my guess is it will be some time before we see anything like that here in AZ. My big complaint with JAB is that their designs and fabrics are SO old fashioned. It’s good, solid, well priced stuff…but oh is it boring. Maybe boring and cheap are synonyms.
This is a great idea! Consumers love value and both a website and a retail store that offers great values from a name brand is a sure winner. The only question is, can the store turn enough of a profit to maintain its structure vis-a-vis the Internet website?
“As a point of comparison, dress shirts on the factory store site are priced at $29.99 versus $79.50 on www.josbank.com.”
I’m going to third Richard’s and Ryan’s comments that this move may make the customer think too much; in particular, this (potential) customer is already thinking they’ve made their store prices seem too high…Uh oh!
Jos. A. Bank launching the factory store concept is going to be a good opportunity for the consumer. But I have serious reservations about the long term effect it will have on total sales. It seems to me the consumer is going to have a problem sustaining sales and growth year to year in their conventional store if the buyers can save significant dollars by buying from the factory store.
There was a men’s clothing manufacturer located in Baltimore years ago named J. Schoeneman. In fact, there offices were not that far from where Jos. A. Bank is currently. J. Schoeneman did not sell retail. They did open their factory once, maybe twice a year, to the general public. The buys were excellent. The sales were excellent. The PR Schoeneman received made it all wroth while. And they were able to deplete some excess inventory. There is a major difference between the two concepts. Schoeneman did not compete against themselves. Jos. A. Bank has to list themselves among their many competitors. How do you combat that without having a negative effect on one part of the business?
As a consumer, I’ve been an online customer and found their products of the quality represented and I made my purchase at a fair price. However as a business consultant, I strongly question the logic of inducing self-competitive behavior as a strategy. Also, the constant barrage of “sales” only work to train the consumer to wait for the better deals, the practice leaves a great deal of corporate profit on the table and destroys JAB pricing credibility.