THE MEN'S WAREHOUSE

The Men's Warehouse: Success in a declining Industry/HR5 by Jeffrey Pfeffer

The Men's Warehouse: Success in a declining Industry/HR5 by Jeffrey Pfeffer

Company and Industry Background

George Zimmer's father was in the retailing business, at one point working for Robert Hall Clothes, and then ran his own raincoat manufacturing business. George Zimmer opened his first store in Houston in 1973 when he was 24 years old on an initial investment of $7,000. In the summer of 1997, Zimmer's 3.2 million shares of Men's Wearhouse stock was worth about $100 million. At the time Zimmer began the business, he was living in Dallas and representing his father's raincoats in several southwestern states. Zimmer was an economics major at Washington University in St. Louis in the late 1960s during the height of the protests against the Vietnam War. He maintained that growing up at that time affected his philosophy and perspective on life(Needham, 1995).

Charlie Bresler, an old friend with a PhD in psychology who was senior vice president for human development at the Men's Wearhouse agreed: He'd grown up in the mid-sixties to early seventies, had been involved in the antiwar movement and was definitely interested in alternative forms of social organization. He brought that with him when he opened the Men's Wearhouse. He brought an unorthodox personalityhe's very iconoclastic as well as an unorthodox management point of view. In the early 1980s, Zimmer opened his first stores in the San Francisco Bay Area.

Initially, the firm's offices were in his house. Because those first stores were in the South Bay, the company eventually developed a headquarters in Fremont. In 1997, the company had part of its corporate headquarters in Houston (mostly finance and information systems as well as warehousing and distribution) and part in Fremont, California, focusing on store operations, merchandising and advertising, purchasing, training, and employee relations.

The company initially grew slowly, mostly in Texas and California. At the time the company went public, it had about 85 stores. Since going public in 1991, the pace of expansion had increased considerably, with the company opening around 40 to 50 stores per year. By the end of the company's 1995 fiscal year, it was operating 278 stores in 71 cities in 28 states. It had 315 stores open at the end of the third quarter in November 1996, and 345 stores in operation by the end of the 1996 fiscal year. The company's strategy was premised on the idea that men do not like to shop. Consequently, it offered its merchandise at prices that were typically 20 to 30 percent below department store prices using an everyday low price policy and eschewing special sales and promotions men did not want to watch for sales(Paine, 1995).

The stores were relatively small, typically about 4,500 to 5,000 square feet, and not located in major, large malls that the shopper would have to walk through in order to get to the store. In its 1995 annual report, the company noted that those ...