The current economic landscape is putting pressure on retailers, especially as consumers pull back their discretionary dollars. Yet this bleak outlook is not strong enough to kill some retailers’ passion for growth—at least, not at Casual Male Retail Group.
As Casual Male prepares to “go global” with six new e-commerce sites that target the European Union, the chain is relying on the power of business intelligence (BI) to find new customer sources and target them with optimized assortments.
Canton, Mass.-based Casual Male is a specialty retailer of big-and-tall men’s apparel. The company, which generated $464.13 million in revenue for fiscal 2007 ended Feb. 2, 2008, operates 397 Casual Male XL retail stores, 65 Casual Male XL outlet stores, 26 Rochester Big & Tall stores, and a direct business, which includes several catalogs and e-commerce sites.
Like other specialty competitors, Casual Male offers a broad selection of sportswear, dress clothing and footwear. However, Casual Male’s target shopper “has distinct physical characteristics,” said Dennis Hernreich, the chain’s COO/CFO/executive VP.
“He has a waist size that starts at 42 inches, and he stands at least 6 ft., 2 in. tall,” he explained. “Since we focus on our customers’ physical characteristics, our shoppers can be found across all demographics and sociographics.”
That said, it is not uncommon for Casual Male to feature an assortment that is three or four times bigger than most chains carry. “We carry approximately 30,000 SKUs [stock-keeping units] per store, and merchandise targets all lifestyles of shoppers, from trendy and casual, to sportswear and business styles,” Hernreich said.
A tough economic landscape has been putting pressure on shoppers. They are currently spending more on necessities, such as fuel and food, and less on discretionary purchases, including apparel. The U.S. Department of Commerce reported that personal spending rose a mere 0.2% in April.
These factors are challenging mature retailers operating in the United States, according to Hernreich. “There is limited growth potential, but mature retailers still want to evolve,” he added. “The next logical step is to look at options beyond domestic borders.”
Casual Male is no stranger to operating overseas. The company has been operating a Rochester store in London for approximately four years. But when the chain was ready to go “all in” on its globalization efforts, it turned to the power of e-commerce rather than invest in more real estate overseas to get the ball rolling.
“We don’t want to take on a real estate risk until we can better define the market,” Hernreich said. “In today’s world, e-commerce is the perfect platform to better understand the marketplace.”
Casual Male decided to leverage its online success to expand its presence in the marketplace. The chain has been a multichannel retailer since 1999, and Hernreich describes e-commerce as “a viable, robust channel for consumers.”
“Three years ago, not everyone shopped online,” he added. “Today, I don’t know of many who don’t. Whether shoppers are browsing or ultimately making a purchase, the Web has become a critical part of consumers’ shopping behavior.”
The learning curve: While many companies are setting their sights on emerging markets such as China and India, Casual Male decided to bolster its presence in the European Union.
“We use shopper data to make sure we can cater to our niche,” Hernreich said. “We have market data for shoppers in Europe, but it is not as easy to obtain market information for regions like China.”
As a result, Casual Male will make its direct-business debut overseas through the launch of six separate online stores that will serve the U.K., Spain, Germany, France, Italy and the Netherlands. All six sites are expected to launch by early August.
While Casual Male has some understanding of the European marketplace, there were many issues behind the scenes that it had to educate itself on.
“There is a different way of doing business outside of the U.S.,” Hernreich reported. “There are different cultures and labor issues, as well as taxation, which is very different than the U.S.”
Rather than tackling these challenges blindly, the chain enlisted the help of GSI Commerce, an e-commerce service provider based in King of Prussia, Pa. Through this partnership, GSI is providing Casual Male with an e-commerce platform, as well as translating communications to coincide with the languages and nuances of each country, and establishing a dedicated distribution center.
But the infrastructure is only one piece of the puzzle. The only way to manage the business and stay on top of trends and customer preferences is to leverage BI.
Casual Male uses analysis tools to gain insight into detailed business data. Using information that has been gathered and stored in a data warehouse, the chain can make informed decisions and predictions about trends, or better plan business operations. It has been using BI to manage its domestic operation since 2003.
“Our store-level transaction data flows into our BI tool, which allows us to extract information from it,” Hernreich said. “Here, we can determine what merchandise or stores are doing well or under-performing, the effectiveness of pricing, as well as analyze inventory positions down to style levels. The details enable us to manage our business from store and merchandise points of view.”
Casual Male will now apply BI to its global e-commerce business. The chain tapped long-time partner, Oco, Waltham, Mass., and is using the Direct Channel module from Oco’s Retail Solution BI tool.
On a nightly basis, Oco’s solution will pull data loads from the various e-commerce sites, and organize information into a single data warehouse. Each morning Canton, Mass.-based executives will log into a Web-based system to conduct reporting and analytics surrounding performance, sales, promotions, and merchandise and category movement. Users can also break out data on a country-by-country basis, and match data to predicted plans and budgets.
More importantly, the solution will act as the foundation Casual Male needs to effectively manage its overseas operations from afar.
“We will use many of the same BI practices that we use domestically, and we expect that this will help our learning curve when it comes to understanding what is different and distinctive to the European market, and how to grow this business,” Hernreich said.
Setting the tone: With the launch of Casual Male’s European Web sites only weeks away, the chain appears to be in good shape. At presstime, Hernreich reported that GSI’s platform was in place, and the chain was working with the vendor to set up processes to support operations in the overseas distribution center and call center.
Additionally, all merchandise was ordered and being shipped to the distribution center. All warehouse systems were installed, and the six sites were conducting information link tests to ensure data could flow seamlessly between the sites and the U.S. corporate headquarters.
“Dummy tests took place in May, and we conducted full transaction testing last month,” Hernreich said. “Our plan is to flip the switch on our Casual Male sites first, followed by our Rochester-branded sites.”
Once the sites are online, Casual Male expects to see financial gains similar to those it has experienced on its home turf. For example, over the last two years, the chain has grown its profit margins by 3.5%. The chain credits the use of BI as a contributor to this gain.
Without access to critical business information, Casual Male would have a difficult time properly managing its business. The same holds true for its global e-commerce strategy.
“When you enter a vast new market like this, there will be different types of styling and sizing requirements across each country,” Hernreich said. “We need to react to what we learn. BI will help us to watch our business on a daily basis, and react to the market with changes that are appropriate to meet the demand that we detect.”
Hernreich also plans to expand the chain’s e-commerce presence to the rest of the European Union.
“We intend to be patient, but we also have high expectations that we will grow our market share substantially over the next three to five years,” he said.