Assignment: Post COVID-19 Case
The Clubhouse: Merchandise Management in Uncertain Times By Mary Anne Doty, Texas A&M University - Commerce
Christopher Montgomery, founder of The Clubhouse specialty men's clothing store, faced a dilemma in early June as he evaluated his merchandise orders for the last half of 2020 and beginning of 2021. Following 2 months of being closed as a non-essential business, Christopher had reopened in mid-May to try and make up lost sales during his state's stay-at-home order. Some of his merchandise was made-to-order, "bespoke" clothing that normally required a two-or three-month lead time for the exclusive fabrics. Nearly all fabrics were made abroad, and the supply chains had stopped or slowed down during the worldwide pandemic. The same was true of a majority of his ready-to wear merchandise. Most of the brands he carried were made in Italy, hard hit in the pandemic. These items set The Clubhouse apart from other competitors since his exclusive agreement with vendors meant no other stores in the region could offer their clothing.
Retail Strategy
The Clubhouse opened in Lexington, Kentucky in early 2012, following a successful pop-up store during holidays. Located in an upscale neighborhood of renovated old homes-turned-trendy boutiques and cafes, The Clubhouse sold more than clothing. It sold a unique experience and lifestyle in addition to the combination of custom suits and sports coats, and high-quality brands rarely found outside of New York and California. The store features a bourbon bar and sophisticated vinyl records, along with personalized service. Christopher's good looks and fashion sense are among his biggest advantages as he personally serves his customers.
This is a small business that thrives due to his high customer satisfaction and high profit margins. In addition to the owner, the store employed two tailors (one for custom clothing, one for alterations), a salesman, and a bookkeeper. Suits average over $2000 each, although a bespoke suit with really expensive fabric can be much higher. Made-to-measure sportscoats start at around $650 but can be priced at $3,000 or more depending on the fabric. Customer measurements are kept on file to facilitate quick ordering in the future.
In addition to selling seasonal dress and sport clothing, The Clubhousealso carries a variety of accessories, including belts and shoes, cologne, shirts, and ties. The only inventory available online is the two co-branded collections of ties celebrating the Breeder's Cup annual horseracing event and the Lexington Polo Club (priced at an average of $175 per tie).
For promotion, Christopher relies heavily on social media, particularly Facebook, Twitter and the company's website. Brand image is enhanced with sponsorship advertising in the program at exclusive sporting events (Polo Club), cultural events, balls and galas that his customers enjoy.
Target Market
Customers are successful men from Central Kentucky who tend to be in their late-30s or older. Demographically they have high incomes and represent a variety of backgrounds: physicians and bank presidents, attorneys and entrepreneurs, successful business people and horse farm managers, even the state university basketball coach. Clothing is sold for numerous social events, from football tailgate parties to charity fundraisers, country club parties, and especially horse racing fans celebrating Keeneland Racetrack and Churchill Downs meets. Some of the merchandise is appropriate for business as well as leisure.
Competitive Advantages and Disadvantages of The Gentleman's Shoppe Strategy
The major advantage that Christopher enjoys is that he knows his customers personally and enjoys a high degree of customer loyalty. He has records of their measurements and previous items sold, which puts him in a position to be a personal shopper for most of them. Especially important in a time of high unemployment and economic fears, Christopher's customers are less affected by the economic downturn or job loss.
Disadvantages, aside from lost sales during the shutdown that affected other specialty clothing stores, include a limited online sales platform (only used for specialty ties), the death of one of the tailors from COVID-19, and changes in customer tastes or needs as a result of continuing restrictions in their social lives.
Reopening Plan
Once businesses were allowed to reopen, Christopher made sure customers felt safe entering his store. For the first few months, hours were limited. The public could shop between noon and 4 pm, 5 days a week. Appointments could be made for one-on-one attention between 10 am and noon, and later between 4 and 6 pm, also Monday through Friday. Christopher hoped to sell his spring inventory during late May and June, along with merchandise ordered before the shut-down. Fabric and clothing aren't perishable in the same way as food, but seasonal items would have to be marked down if they weren't sold by mid-summer. For example, clothing was ordered to be worn to Derby and graduation parties, along with racing seasons that did not allow spectators. Large gatherings were still discouraged, including church attendance and crowded restaurants and bars. Even though the reasons for buying a new sport coat or tie might not be happening, Christopher's marketing campaign sold hope for future fun: "People Will Dress Up Again".
Business has been steady in the initial reopening weeks but uncertainty about the future makes ordering difficult. Will there be a college football season and resulting parties, or will the Southeastern Conference decide to defer football until the next season? Will there be Derby parties for the rescheduled race in September? Will customer worries about the economy result in fewer clothing purchases? If people work from home, do they need business suits?
Merchandise management requires ordering the right items in the right quantity and sizes, in the right place and time to meet financial goals. Money is invested in inventory, which must be sold to pay expenses and provide resources to order for future sales. Inventory that doesn't sell must be marked down in price to speed up financial returns and keep the cycle going. In ordinary times, sales forecasting doesn't require a lot of adjustment to prices and inventory, particularly for staple merchandise. For fashion merchandise, timing is more important because late arriving items may not sell at full price. Orders must be placed in June or July to have sufficient inventory for the big selling season in December.
Opportunities to Consider
In spite of uncertainty about the retail environment, Christopher has identified several options to consider as he allocates money and plans for 3Q, 4Q and beyond.
1) Christopher can upgrade his business website to include off-the-rack items in his eCommerce platform. This could include both moderately priced merchandise, such as belts and ties, along with clothing such as shirts and sweaters that don't require alterations.
2) The store could expand high quality casual for working from home, such as cashmere sweaters and fine wool slacks, as well as sports clothing for golf (an activity that is compatible with social distancing).
3) The store could continue a focus on clothing for social events, assuming a fall/winter return to parties, football and horse racing.
4) If a new tailor is found, the store can offer a line of masks made with expensive fabric purchased for custom clothing that wasn't made.
5) If another lockdown occurs, Christopher could increase personal shopper services for his best customers. This tactic would protect the business in a lockdown since clothing could be selected and delivered without the store being physically open to customers.
Discussion questions
Write a summary of the key problems Christopher faces in ordering merchandise for fall. Include discussion of these questions in your summary. Then conclude with your evaluation of two opportunities you would recommend and justify your choices.
1) Why is it difficult for The Clubhouse to rely on data from previous years' sales in planning for 3Q and 4Q inventory levels?
2) Does it matter whether what type of merchandise planning system Christopher is using? For example, is most of his inventory considered a staple or fashion?
3) How does the brand strategy impact the merchandise ordering process?
4) Which categories or opportunities should Christopher emphasize for the end of 2020 and beginning of 2021?
5) Are there any strategies that will help the store survive if both business and social activities are restricted later in 2020?
6) What insights about consumer retail behavior after COVID (PowerPoint) can you apply to the dilemma for The Clubhouse as they plan their inventory for late 2020 and early 2021?
Format your assignment according to the give formatting requirements:
1. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the course title, the student's name, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.