Oh, Canada!

It wasn't luck—it was the right people making the right decisions at exactly the right time.

By the late 90s, Men’s Wearhouse (MW) was cranking. Years earlier—1992—we went public and used the proceeds to open stores at a torrid pace. Fifty stores a year for the next five years, after opening only 110 in our first 19. Yes, it was a frantic pace, but in the two years before the IPO, we had created the infrastructure, so the frenzy was under control. It was a very busy and exciting time for everyone.

But one of the downsides of being a public company was that Wall Street always wanted “more.” As I wrote in From IPO to Oh No, going public came with plenty of unintended consequences. The 50 stores per year was the “more” already factored into our IPO. So we began to set our sights on growth outside of MW stores.

We looked North.

Moores was a chain of men’s stores in Canada. Founded in 1980, they were very much like MW—4000-5000 sq. ft. stores located in “Class A” shopping centers, as opposed to regional malls. And like MW, Moores had stores from coast to coast.

There was one major difference between Moores and MW. They owned a factory in Montreal, where all the suits, sport coats, and slacks for the stores were made. Essentially, Moores was a chain of factory-outlet stores. No judgment from us at the time, just information.

Our Chief Financial Officer, David Edwab, oversaw the financial due diligence. His team had already once been on the ground looking at Moores, but that deal fell through. This time around, things moved faster, and thanks to information gleaned a few years earlier, they noted the purchase of Moores could be a boon for MW. Maybe even a quite large one.

Charlie Bresler (head of store ops), Jayme Maxwell (CMO), and I put together a plan for what we would do in terms of advertising once the deal closed. It wasn’t rocket science. Moores’ advertising consisted solely of millions of what they called “fliers,” sent out via regular mail, to nearly every mailing address in the country. These were pre-printed multi-page color ads screaming SALE. They were packed to the gills with copy and pictures. The models looked like they had wandered out of a 1957 JCPenney catalog and been beamed into the Great North in the late 20th century. Clearly, not a ringing endorsement for quality.

Moores’ marketing department loved the fliers and proudly told us how much business was generated when they were sent. When we asked, “How much business does the company do in between the flier events?” The answer was “not much.” Yup, Moores had trained its customers and potential customers to sit at home and wait for the latest Moores fliers to show up in their mailbox before shopping.

Thus was born one of the easiest marketing decisions I was ever involved with. Canadians had televisions, but no men’s apparel stores seemed to notice. It reminded me of being in Houston with MW back in 1977. We suspected that the TV stations in Canada would welcome us with open arms, much the same as in Houston back then. And we were right.

We also had the creative team of our agency, Red Ball Tiger (RBT), who had already proven their bona fides with MW stores a few years earlier (a story I told in Ask the Right Questions).

We set up a series of focus groups with RBT in Montreal, Toronto, Calgary, and Vancouver, to speak with the Moores’ current customers as well as non-customers. To me, conducting these focus groups felt like a solution without a problem. But I went along with the idea, mostly because we were a publicly traded company, and I thought MW owed it to our shareholders to reality-check our assumptions. The travel was fun, too. The four cities were dramatically different.

I learned the following during the focus groups:

• How to spell “Canadian.” For some reason, I hadn’t ever gotten it right. My brain kept insisting on ramming in an extra “a.” I had been spelling it “Canadaian.”

• Canadians are really nice. Which was mildly irritating because it meant all the stereotypes are true.

• Customers of Moores didn’t have a fond attachment to the store, and were unenthusiastic when discussing their experiences. It was the place they went to buy their clothes, but only when there was a sale. Not a surprise, considering the only time the company spoke to the public was through fliers screaming “price”—not value, quality, or much else.

• The people who weren’t customers had no idea who Moores even was. For a company having been in business for almost 20 years, this was remarkable.

• “Made in Canada” meant something to both customers and non-customers. Perhaps a given, but our sense was this was even more the case than how Americans felt about “Made in America” when it came to apparel.

When the focus groups wrapped up, we put our plan into place. The fliers flew out the window. Not a difficult decision. We hired a media buying agency in Vancouver to implement a one-year television buy across all of Canada. We worked with three of the savviest media buyers I had ever come across (all women, btw), and eventually convinced them to leave the agency and become full-time MW employees. Clearly, an unintended “gift with purchase” from buying Moores.

RBT came up with a series of commercials. And once again, they proved their mettle. We filmed them not only in the factory, but on the street. The metamessage, by showing “beauty shots” of fabric, closeups of workers sewing clothing, and handsome men walking the streets in their finely made Moores clothing, was that because Moores made their own clothing in Canada, customers got the benefit of “Made in Canada” at direct-from-the-factory prices. The tagline for the ads was “Well Made, Well Priced, Well Dressed. Moores.”

It was perfect.

The results over the first year were phenomenal—double–digit same-store sales growth—a metric appreciated by Wall Street. But even more important were the financial results. Because nothing was on sale, the gross profit soared. And the overall advertising expense decreased. Those beloved fliers were more expensive—by millions of dollars—than reaching the same people via television over a one-year period.

There was another significant benefit—the North American Free Trade Agreement (NAFTA). It eliminated the tariffs placed on goods made in Canada and shipped to the US. The Montreal factory began to make suits and sport coats for MW stores. Their quality rivaled anything MW was already buying from US manufacturers, and the fact that the profits from the Montreal factory were now staying in MW was significant.

The Moores employees were justifiably leery of our aggressive approaches, but as the results began to appear, they understood our logic. And as the contagious MW corporate culture began to spread across the borders, the synergies soon emerged.

A giant home run all around.

If everything MW did from that point on was as successful as the Moores transaction, how different the arc of the company would have been.

But you know the old saying about “if” and the queen…

Or, as RBT might have said, “Right time, right people, right decisions.”

Want more Curmudg between Wednesdays?
Check out Notes—random musings, timely observations, and the occasional revisit of an older column that still feels uncomfortably relevant.