betting the store

Casual Male Big & Tall has been down once before, and the company has vowed not to let it happen again. After filing for bankruptcy protection back in May 2001, the retailer—newly reorganized as Casual Male Retail Group (CMRG)—picked itself up, brushed itself off and came roaring back to defend its corner of the apparel market—plus-sized clothing for men who stand taller than 6'2" and have waistlines of 44 inches or greater.

Last spring, the company signed two-time former heavyweight boxing champ George Foreman, a big and tall guy himself, as pitchman. Since the George Foreman Signature Collection was introduced, the line's linen camp shirts, tuxedo jackets and satin boxing trunks have been flying off the racks.

But just as it was getting back on its feet (CMRG recently announced its first quarterly profit in three years), the company found itself fending off another body blow—this time in the form of encroachment on its niche in the apparel market. With America's population aging and its citizens losing their collective battle with the bulge, CMRG's niche—plus-size clothing—has begun to look like a gold mine. That hasn't gone unnoticed by other clothiers. Heavy hitters like Old Navy, Sears, Lands' End and Eddie Bauer are all reportedly adding more big and tall sizes to their clothing lines. And the battle's shaping up to be the retail equivalent of 12 rounds in the ring with Joe Frazier.

But for CMRG, losing is not an option. It's already planning its next attack—one that will come from an unexpected corner: distribution management. In a bid to strengthen brand loyalty among its core clients, CMRG is rolling out an unprecedented in-stock guarantee. Beginning this month, the retailer is promising customers that they'll find their size in stock in stores. If they don't, the company will arrange to have its distribution center ship it out straight away. To distinguish its program from the usual bland marketing assurances, CMRG has put some teeth into that promise. "If we don't have it on our shelves and we can't deliver within five days," says Dennis Hernreich, CMRG's executive vice president, COO and CFO, "then it's free."

Tall order for the DC
As innocuous as it may seem, that marketing promise carries enormous risk. With pants starting at about $45 per pair and sports coats costing upwards of $200, CMRG stands to lose a lot of money if its supply chain group fails to deliver. And that's not the half of it. Unlike most men's clothing stores, which carry 15 or so sizes, Casual Male Big & Tall carries 49 different pants sizes alone. Throw in shirts, jackets and all the accessories required by a sharp-dressed man and you have the makings of an inventory management nightmare.

What makes the guarantee all the more remarkable is that CMRG doesn't exactly boast a long track record of world-class inventory management. Back in 2002 when retail store operator Designs Inc. bought Casual Male and formed CMRG, Hernreich made the disturbing discovery that Casual Male was running its business not on state-of-the-art retail systems, but on a mainframe computer and legacy information systems. It quickly became obvious that the company would have to dismantle these systems—which lacked the scope and capacity to incorporate distribution best practices—and replace them with up-to-date warehouse management (WMS) and enterprise resource planning (ERP) systems.

Right from the start, CMRG made re-engineering its business processes and updating its technology infrastructure a top priority. It installed a new warehouse management system from Manhattan Associates, which has been up and running since last July. It also invested in JDA Portfolio Replenishment Optimization software by E3, which helps the retailer keep products in stock at the store level. The JDA system, which replaced a homegrown replenishment application, analyzes how trends, seasonality, promotions and projected inventory positions affect CMRG's daily demand flow.

The new technology infrastructure has improved CMRG's ability to communicate with its core base of 50 vendors, which include Nautica and Polo Ralph Lauren. "Building enough confidence in our vendors is another key component of the program," says Hernreich. "We can't ship to the stores what we don't already have in the warehouse. If the vendors don't deliver what we need and when we need it, then the program is going to fail. We are constantly working with our vendors to improve the forecasting for individual SKUs."

Back in fighting shape
So far, at least, it appears that CMRG's confidence in its new distribution capabilities may be justified. Though it's been in place less than a year, the new WMS has made a world of difference. Take the receiving process, for example. In the past, it took workers two to three days to unload trucks and sort the merchandise into piles of shirts, pants and jackets before repackaging and shipping the items out to the stores. Now with the automated system in place, it takes only two hours. Not only does that save time and labor, but it also reduces the amount of inventory in transit, which ultimately reduces inventory investment.

There are other benefits as well. "Our costs per unit have dropped by about 20 percent," Hernreich reports. "Our ability to move products through the warehouse has improved tremendously. We've achieved some great productivity gains and the resulting capacity gains and labor savings have been substantial." That added capacity meant the company's 700,000-square-foot DC in Canton, Mass., had no difficulty absorbing the extra inventory when CMRG acquired the 22-store Rochester Big & Tall chain in November.

And now that the retailer has better supply chain visibility, the next step will be to harvest the information it collects to improve customer service. Hernreich explains that wireless networks will feed vital customer information into handheld PDAs issued to sales clerks. When a return customer enters a store and supplies an ID number or phone number, the customer's information— including size, favorite colors and past buying history—will appear on the PDA.

A hefty commitment
At press time, the new systems were still not quite ready for prime time. With the in-stock guarantee's rollout just weeks away, Hernreich admitted that the clothier still needed to tweak its supply chain (the out-of-stock rate remained stuck in the double-digits). But he's confident that the company will be able to cut that out-of-stock rate in half soon, eventually settling at less than 5 percent.

Once its new programs are in place, Hernreich believes that CMRG will easily dominate its corner of the market. "What we are after is growing market share for the niche that we cater to, and there is no other player that can get even close to the level of execution we're targeting," says Hernreich. "That's where we differentiate ourselves from all the other retailers—by executing at a very high level."