Hubris

Sometimes the biggest mistakes begin with thinking you’re too smart to make them.

TL;DR: This week’s column isn’t really about men’s clothing. It’s about the moment confidence turns into certainty—and how quickly smart companies can stop asking smart questions.

In the late 80s, Men’s Wearhouse (MW) had a competitor of sorts in Southern California. It was C&R Clothiers. The competition was “of sorts,” because we hadn’t faced each other head-to-head in the same city.

C&R had about 40 stores in Los Angeles and San Diego; we had over 80 stores, but in Northern California, Seattle, Portland, Houston, and Dallas. C&R had gone public several years earlier and was in sound financial condition. MW had come close to bankruptcy about five years earlier—a story I told in From the Brink of Bankruptcy to Boom. We were in much better shape by now, but not exactly flush with cash.

Then everything changed in one fell swoop when C&R entered the San Francisco market.

I’ve looked up the word “hubris” from several sources, and all point to the same thing—overt pride or self-confidence. As if rules and common sense don’t apply. What the definitions also point to is a fall of some sort as the consequence of hubris.

Kinda like when the Titanic hit the iceberg.

When C&R decided to open in the San Francisco market, they were the Titanic, and MW was the iceberg. We were merely floating in the retail ocean, minding our own business, growing at a pace we could afford as a private company. We were always keeping an eye on C&R, but never dreamed they’d enter the SF market the way they did.

Their foray played out exactly as the definition of hubris reads. It was a slow-motion train wreck we watched in real time. And the move flew in the face of everything they had done as a company that had made them successful up to that point.

While I could probably write a book about it, I’ll keep the sad saga of C&R Clothiers to the “Hubris 5.” You’ll get the point.

HUBRIS #1: Opening many stores at once.
After decades of opening one store at a time in the Los Angeles market, C&R moved into the Bay Area, opening about 20 stores literally overnight. While I have no idea what it cost the company financially, I remember walking into their stores and speaking with sales associates who were woefully underprepared for their jobs. This was also C&R’s first attempt at opening stores more than a short distance from the company headquarters. This was before email, so communication was critical and much more difficult. We had learned that lesson the hard way a few years earlier, when we opened stores in the San Francisco Bay Area—far from our Houston offices.

HUBRIS #2: Stores in regional malls.
C&R bought out a well-known Bay Area chain—Grodin’s. It had been the foremost place for men to shop until MW came to town in the early 80s. It took about eight years after we entered the Bay Area, but Grodin’s teetered and finally fell. Rents in regional malls are always more than rents in strip shopping centers, and the average size of the Grodin’s store was larger than the average C&R store. C&R was now paying much higher rents than they had in Southern California.

HUBRIS #3: Believing they were “different” than MW.
(Or “The Warehouse” as they called us, disdainfully). We knew their vendors. They were the same as ours. We knew their prices. They were the same as ours. We knew their advertising MO and what they paid for advertising. Both companies spent almost all of their marketing dollars on TV. The rates weren’t different. We weren’t different, by any stretch of the imagination.

HUBRIS #4: Advertising spend.
Immediately after opening in the Bay Area, C&R outspent us on TV advertising by a factor of 3:1, maybe 4:1. We had no way of knowing exactly, other than the quantity of ads we saw on TV. To our credit (and much to the chagrin of our media consultant, Jordan Morganstein), we resisted the temptation to greatly increase our advertising expenditures. Jordan wanted us to “fight fire with fire” and triple our advertising budget. We smiled, ignored him, and increased our budget by 20%.

HUBRIS #5: The message.
C&R’s TV commercials featured slow-motion film of manly men doing manly things, like holding a chainsaw or lifting weights, only to be magically transformed into manly men wearing manly C&R apparel.

All set to the song, “What a Difference a Day Makes.”

Beautiful spots. Who did they appeal to? Uh…women. Not men. Because the last thing a man wants is to have his female significant other telling him to shop at a store so he can look like a man she wants him to look like.

Early sales results at C&R couldn’t have gone well. MW business remained at the levels before the C&R openings, and no doubt the strain on the company’s capital must have caused a panic at C&R. They began an advertising campaign, taking a direct aim at MW—about how their prices were lower, and their quality better. None of it was true, and in the end, it didn’t matter much anyway. What C&R failed to realize was that by highlighting the difference between the two companies and by spending 3-4 times what MW was spending, they were also drawing attention to us.

But this move by C&R also resulted in our one very large mistake in this Shakespearean tragedy. We knew better, and I still kick myself about this. They goaded us into a needless scrum. We took the bait and countered their commercials with ones of our own, attacking them. Of course, this led to C&R suing MW, MW suing C&R, and the legal wrangling became my full-time job for several months. As with most frivolous lawsuits, nothing came of it. We finally settled out of court, agreed to stop mentioning each other in future ads, and moved on.

C&R lasted in the Bay Area for a few more years, continuing their huge advertising spend on the “what a difference” campaign. Then one day, they quietly closed all of their stores and retreated back to LA. At the same time, MW had already opened several stores in San Diego, and we then began opening stores in Los Angeles. In 1992, C&R first filed for bankruptcy, and did so again in 1996, selling off some of their stores to MW in 1997.

Their remaining stores closed soon after.

This tale is worth talking about, not only for this specific case, but as a general rule about underestimation—whether it’s people or organizations.

Hubris. Know thyself. It didn’t take the Oracle at Delphi to pave the way for this tragedy to play out. Looking back, C&R stopped questioning sound business strategies and started believing their own mythology. I’m still saddened by how this just didn’t have to happen. I took no delight in seeing a once great company fall apart as it did.

This was also a lesson about believing in yourself and your strategies and not allowing events you can’t control to alter them. It wasn’t easy for us not to counter C&R’s advertising blitz. We were pressured not only by Jordan but by our Bay Area store personnel. And I received a few calls from the reps at the TV stations, egging us on, as well. But we had to think about the whole company, not just the Bay Area stores. And we knew C&R couldn’t keep up the blitz forever.

Not to be outdone, MW suffered its own bout with hubris in 2013—the ouster of George, followed by the ill-advised purchase of Jos A. Bank. Covid put the shaky situation over the edge. I covered that mess in From IPO to Oh No.

Hubris. Careful—it can sneak up and bite you on the butt if you’re not paying attention.

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