How Brooks Brothers Redesigned Itself for a Brighter Future
At the start of this millennium, Brooks Brothers, a retailer of menĂ˘â‚¬â„˘s business apparel, was on shaky ground. The company had sold classic suits to most of the American presidents and was considered a style innovator, having introduced such concepts as ready-to-wear suits (in 1890), wash-and-wear shirts (1953), and no-iron cotton dress shirts (1998). But its reputation had been slipping, along with its revenues. In 1818, when Henry Sands Brooks founded the company, he did so with a mission: Ă˘â‚¬Ĺ“To make and deal only in merchandise of the finest quality, to sell it at a fair profit and to deal with people who seek and appreciate such merchandise.Ă˘â‚¬Âť Under the ownership of his sons, that mission continued. After the company was purchased by a retail conglomerate, it still grew. But when Marks & Spencer bought Brooks Brothers in 1988, the new owners tried to join the trend toward business casual, cutting prices and quality along the way. Consumers went elsewhere, and beginning in the late 1990s, the company operated at a loss with a market value below what Marks & Spencer had paid.
In 2002, Claudio Del Vecchio bought Brooks Brothers and became chief executive officer. Del Vecchio, from a wealthy Italian family, had revered the brand but saw what other former customers did: Fabrics and designs no longer were of high quality. His vision was to restore the company to its former greatness by reinforcing its culture and rebuilding its capacity to innovate and deliver great products, so Brooks Brothers and its reputation would outlast him.
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Del Vecchio and the executives he hired worked with designers and suppliers, many from Italy, to upgrade specifications for the companyĂ˘â‚¬â„˘s apparel. They improved tailoring and balance so the clothing would perform better. Along with business classics, they developed Golden Fleece and Red Fleece lines to appeal to younger customers. After about six months, they began shipping new items to stores, and within a year, the stores were fully stocked with better offerings. Designs included slim versions of shirts and suits to appeal to younger businessmen. Customers began returning, and by the following year, Brooks Brothers had begun reporting profits.
Part of the brandĂ˘â‚¬â„˘s appeal is its Made in America label. Its ties, made at a factory in Long Island City, New York, bear such a label. However, in choosing factory locations, managers consider a variety of factors. The companyĂ˘â‚¬â„˘s top-selling no-iron shirts are made in Malaysia, where low wages keep the price moderate. But U.S. factories are ideal for customized and high-end products such as suits, and the majority of that work has been reshored, or moved back to the United States from other countries. For that purpose, Brooks Brothers purchased a Massachusetts garment factory and updated it to improve efficiency. As owner, the company can have its own managers enforce quality standards.
Brooks Brothers also has been increasing efficiency and responsiveness by modernizing processes for getting products to consumers. Instead of routing all products from factories to its warehouses to stores to consumers, it now fills orders with the nearest inventory, whether from factories, warehouses, or stores. Using stores to fill orders from customers who arenĂ˘â‚¬â„˘t near the companyĂ˘â‚¬â„˘s two warehouses has shaved days off delivery times. Store employees use new software that lets them check inventory in their store and other stores, so they can quickly place orders and retrieve items for pickup. In addition, information technology is improving decisions about what to make and where to ship items. A new computer system helps managers rapidly adjust to sales patternsĂ˘â‚¬â€ťfor example, timing production so goods can be sent straight to the store that will sell them, bypassing time spent in a warehouse. The system also uses artificial intelligence to help predict what will sell where.
In 2018, when Brooks Brothers celebrated its 200th birthday, it was operating 50% more stores than in 2001 and was also selling in upscale department stores and on its retail website. It had built the brand in new markets, with 35% of revenues coming from sales in 50 countries outside the United States. E-commerce will be a key part of Brooks BrothersĂ˘â‚¬â„˘s future; online sales already account for the companyĂ˘â‚¬â„˘s largest share of revenues and are growing faster than store retailing. E-commerce and store retailing drive growth together, because most Brooks BrothersĂ˘â‚¬â„˘s customers visit stores to get ideas and then complete purchases online. Together, these signs suggest that effective operations management is helping Del Vecchio realize his vision.
Questions for Discussion
What measures did Brooks Brothers take to improve product quality? Suggest one other method it could employ to further improve quality.
How is information technology helping Brooks Brothers improve responsiveness to consumers?
What benefits can Brooks Brothers obtain from reshoring operations (bringing production back into the United States from other locations)? Why is improving efficiency an important part of such moves?