Talbots learns brand lesson

The lifestyle company has avoided a retail swoon by knowing its customers and learning from its mistakes.

By MARK ALBRIGHT

© St. Petersburg Times, published July 16, 2000

When the Japanese retailing conglomerate Jusco Co. Ltd. acquired Talbots Inc. 12 years ago, the new owners installed Arnold Zetcher as chief executive. The former chairman of legendary fashion retailer Bonwit Teller parlayed the women's apparel chain into one of the best, but perhaps least-known, investments made by "Japan Inc." during a 1980s buying spree in the United States.

Talbots specializes in classic clothes that are stylish but don't go out of fashion quickly. The clothes are priced in the better category ($170 to $225 for a blazer, for example), the upper end of what's stocked by department stores such as Burdines and Dillard's.

Zetcher built the modest-size New England retailer and mail-order catalog merchant into a national chain. He doubled sales to $1.3-billion by 1999 and its storecount from 165 to 673. The next goal is $2-billion in annual sales and 1,100 stores by 2005. While retail stocks have languished, Talbots has traded recently at a premium of 38 times earnings. It closed Friday at $58.88, up 50 cents.

Like its onetime corporate cousin, Eddie Bauer Inc., Talbots is a lifestyle retailer. It sells only products bearing its own label and designed for the aspirations of a certain personality. The Talbots Woman is defined as someone of any age who dresses conservatively. She could be a career woman, stay-at-home mom or a child. The look long ago made former first lady Barbara Bush a regular customer.

Under Zetcher, Talbots added to its original "misses" collection, opening stores that specialize in petite and plus sizes, children's clothes and now accessories. Talbots uses its catalog customer list to judge demand in choosing sites for new stores.

In addition to four stores in the Tampa Bay area, the Hingham, Mass., company has a local corporate presence. Its catalog operations center and new Internet retailing Web site are based in an office building in Tampa's Westshore district. Zetcher, 58, spoke with the St. Petersburg Times while he was in Orlando for a recent seminar sponsored by the University of Florida Center for Retailing Education and Research.

Q: As a retailer, how do you build a chain into a brand?

Zetcher: Literally everything we do is based on how it reflects on our brand. Every detail of interaction we have with our customer must reinforce that we are the headquarters of the classic look for women. Our stores look like the inside of a classically decorated New England home. We create the feel of a small town, one-store retailer that is carried out in customer service. We have a warm, comfortable-looking red front door at every store that's become our icon. We're trying to build trust with customers that we think like they do. Our advertising assures her that she can be confident she will look good and be appropriately dressed no matter what she pulls out of her closet. But building a brand takes a lot of discipline to walk away from many tempting ideas and opportunities.

Q: How so?

Zetcher: We adapt fashion trends to fit our customer. Our buying staff walks a difficult balance between fashion trend research and what they have learned is our customers' preference. Our customer will not let a trendy fad make her look ridiculous. So when shoulder pads got big, ours only got a little bigger. When cropped pants became a trend, we cut our cropped pants a little longer. Our fit is never fashion-forward, which usually is tight and form-fitting. Our selections are cut to be more ample and forgiving.

Q: What happened in 1997 when your sales and stock price dropped like a rock?

Zetcher: We blew it. We got too fashion-forward, tried to look too young, and our customers let us know immediately. It was a disaster.

Q: Your sales recovered within a year. Normally, it takes several, especially for a company like Talbots that makes decisions for its manufacturers a year in advance. What did you do?

Zetcher: The hardest part was recognizing that we had a problem. The top executives in the buying organization were in a state of denial. They kept saying "Give it another week." After looking at the entire collection in a store in Knoxville, Tenn., I knew we had a disaster. It was not Talbots. The pastels were the wrong shades and the styles too flashy and tight-fitting. So we sought out customer feedback in surveys, stores, focus groups and letters. We learned customers had taken it very personally in abandoning us. Many said, "You jilted me. You don't respect me anymore." We ate crow and did a lot of apologizing. We created links within the organization so sales associates in the stores who know the customers best are plugged directly into the merchandising decisions. We wrote them to try us again once we thought we had everything fixed. I don't think we could have done it had we not had such a deep bond with our customers.

Q: You have been among the last big catalog operators to open an online retailing site. When you finally did last winter, you didn't promote it. Why?

Zetcher: We didn't want to be the pathfinder, yet we knew as a catalog company we could get online very quickly because we are very good at order fulfillment and customer service on the phone. Unlike the e-tailing start-ups, we had an established brand, so people knew what we stand for. But I held back because I wanted to be certain we did it right. I wanted a site where customers didn't have to get to the end of the transaction to discover we didn't have an item in stock. I insisted the site be easy to navigate and operate seamlessly with our stores. I also wanted live chat so customers can ask any question and get an immediate answer.

Q: What sort of research did you do?

Zetcher: I bought a computer and for a year spent almost every night shopping at home. Now I've got a closet full of stuff I have no idea what I'm going to do with.

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