Throughout the industry, retailers are reinventing strategies, changing formats and resizing footprints. While many are downsizing prototypes, Casual Male Retail Group is transitioning from traditional 3,500 sq. ft. Casual Male XL stores to a big-box Destination XL format. Dennis Hernreich, who holds the dual titles of COO and CFO for Casual Male Retail Group (CMRG), talked with Chain Store Age contributing editor Connie Gentry about the opportunities and challenges of transforming the business to better serve an expanded market.
The Casual Male brand has been around for decades, and the company’s IPO was in 1987. When did your involvement begin?
David Levin, our president and CEO, and I acquired CMRG out of bankruptcy in August 2002. Previously, we were at Designs, the operator of Levi’s and Dockers outlet stores, but we were dissatisfied with the growth prospects of that business. With Casual Male, we saw a business that was under-invested, under-managed and with great potential because it was already No. 1 in its sector.
Tell us more about the Big and Tall sector.
It is a microcosm of the male population overall, meaning our customers come from all demographics and all lifestyles, and they just happen to be big or tall. That dictates how we approach the merchandising assortment. It shouldn’t be focused on young or casual or contemporary; it needs to embrace all of those elements to truly capture the Big and Tall market. Generally speaking, our customers are at least 6 ft. tall and/or their waist measures 40 ins. or bigger.
What is the Destination XL prototype?
Destination XL stores, which are 8,000 sq. ft. to 10,000 sq. ft., have an enormous merchandise selection that canvasses all lifestyles and price points. For areas across the country that have a bastion of lifestyles and socio-economic groups within commuting distance, a DXL store is necessary to capture every potential big and tall customer in that market.
What is the rollout strategy for DXL?
Four DXL prototypes opened in 2010, followed by 16 in 2011. This year, we plan to open 35 to 40 DXL stores and close 60 Casual Male stores. The transformation is well under way, and the level of activity planned for 2012 will continue for the next several years.
What kind of reception have you had to DXL?
Our customers love it, and markets where DXL stores have opened are exceeding sales on a comp basis by 15% to 20%. But that’s not surprising: Big and tall men have never had a store where selection and size is no longer a challenge; they feel like a regular-size guy. Another example of success is the DXL stores are being copied — J.C. Penney and Men’s Wearhouse are trying to emulate the DXL format. Frankly, we aren’t concerned because they don’t have the focus on this sector to compete directly against the DXL stores. Big and Tall is not their core business, and to stay in stock by size and selection you have to focus on this segment.
Are you considering expansion outside the United States?
First we will concentrate on expansion in the states and then look at global aspirations. There will be DXL stores in Canada at some point. Presently we do business in Canada through the Sears Canada website and catalog. We also have a presence in Europe through websites plus one store in London, and we intend to enter the European mainland at some point.
Has the culture of your company changed as you transitioned to DXL?
Yes, our culture has changed dramatically. We’ve shifted from a task-orientation culture to an assisting orientation and a focus on customer engagement. To do this, our store associates have to know the product so there is an enormous > amount of training material that we distribute and update about the product we are selling. And we had a tremendous amount of turnover in the last two or three years because the staff was more task-oriented than people-oriented.
What is your leadership style?
I talk a lot and I lead by example because I am a very hands-on manager. I want to know details about what is happening whether it is within my pyramid or not, and I spend a lot of time studying the business. As CFO I’m able to pierce any line, so I use it to the benefit of the organization — to challenge the organization to think of how we do things better for the customer.
How often do you visit the stores?
I was just in stores yesterday, and on an average basis I’m in two markets per month, and in each market I will visit four to six stores. In a year, I’ll travel to around 150 stores — roughly one-third of our chain.
What are you most excited about?
The opportunity to transform the business, and we’ve finally found the right format to expand our market. Our marketing strategy has made a paradigm shift — less direct marketing to existing customers and more outreach to noncustomers who are big and tall people. The DXL stores are spacious, the dressing rooms are oversized — everything speaks to our big and tall customer.
Since you are not an XL-size customer yourself, where do you like to shop?
I am very agnostic and tend to shop several places — Nordstrom, Macy’s, J.Crew, Banana Republic and at times I’ll even shop Old Navy. Also, I am a big Web shopper, although I enjoy going to the stores as well.
What does your favorite wardrobe consist of?
I’m mostly a business casual dresser, and I’m very comfortable in slacks with a v-neck sweater and T underneath. Oh, and I like pink. On the weekends I wear jeans, but not at work. I’m not a flashy guy, but not a sloppy guy either — and I’m not afraid of fashion.