BALTIMORE – They both sell suits, but in consumers’ minds, Jos. A. Bank and Men’s Wearhouse are distinct brands.
That’s an advantage that the two biggest menswear chains should strive to keep as they join forces in a $1.8 billion deal, retail experts said.
Hampstead, Md.-based Jos. A. Bank Clothiers Inc. accepted a takeover bid from its bigger, Houston-based rival, ending months of high-profile hostilities between the two companies. The Men’s Wearhouse Inc. will pay Bank stockholders $65 a share in cash.
Men’s Wearhouse said it plans to make the business marriage work by cutting costs in sourcing and supplying merchandise, advertising and running the back-of-the-house corporate functions. It’s hoping to boost sales and profits by attracting shoppers to each of the store brands, keeping the Jos. A. Bank banner and promising “no rebranding or remodels.”
“That proposal of keeping two brands separate does make sense from a consumer perspective,” said Tammy M. Tan, an associate partner at Vivaldi Partners, a New York-based brand strategy consulting firm. “There is an established identity. It’s a way to retain the consumer base and association with these particular brands.”
Retaining brand identity may be less important in a merger of airlines or banks, but in retail, a blurring of brands could cause consumer confusion or defections, Tan said.
“Clothing is an expression of self-identity,” she said. “The clothing you buy is personal because it’s an expression of self. A person might affiliate himself with Jack Spade versus Brooks Brothers.”
The smaller, older East Coast-based Bank, which runs 629 stores, is seen as the more traditional clothier, the kind of shop customers stick with as they progress in their life and career. It traces its roots to 1905 when a Baltimore tailor started a clothing manufacturing business that was taken over by his grandson, Joseph A. Bank. Bank sold suits to other retailers before selling out of its factory and opening outlets in the 1960s.
Men’s Wearhouse was founded in 1973 by George Zimmer, the pitchman and chairman who was ousted by the board last June, and was designed to put at ease men who disliked the suit buying process. The chain tends to attract a younger, more trend-conscious consumer. Its high-margin tuxedo rentals make up nearly a quarter of the company’s sales. It runs 1,124 stores, with executive offices in Fremont, Calif.
Men’s Wearhouse, which also operates Moores and K&G stores, would continue to target different segments through different brands in the way Gap Inc. operates Banana Republic, Gap and Old Navy, she said.
“Each has a distinct proposition in the marketplace,” she said. “You would never mix up Old Navy with the look and feel of Banana Republic, and they did not transform Banana Republic into a Gap. Each brand has a specific role.”
Men’s Wearhouse, “needs to continue marketing and promoting the brands and bringing in the customer base,” she said. “A lot of common owners maintain different brands and target different customers.”
Ray Conaway, a 19-year-old Baltimore resident and student at Baltimore City Community College, has been shopping at both Jos. A. Bank and Men’s Wearhouse since high school. He sees each chain as having better selections on certain merchandise and fulfilling different needs.
“If I’m looking for a rental or tuxedo, I go to Men’s Wearhouse, but if I’m looking to buy a suit or a shirt and tie, I prefer going to Jos. A. Bank,” Conaway said. “It’s just something I’ve stuck with doing for so long.” He noted though that his friends have more of an affinity for Wearhouse.
Both chains have been highly promotional and will likely continue that to some extent, experts said. The strategy, successful during the recession, has brought Bank diminishing returns and drew fewer customers through the doors in recent years. By the end of last year, sales had begun to improve as the chain shifted to a less promotional strategy.