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Pinching pennies: Steve & Barry's use many methods to cut customer costs

Monday, September 19, 2005

Cheapskates.

In a July issue of "Forbes" magazine, that's what a tongue-in-cheek headline labeled the owners of Steve & Barry's University Sportswear, a rapidly growing clothing apparel chain that plans to open a store at the Westfield West Park in Cape Girardeau later this year.

The story by the business magazine was on how Steven Shore and Barry Prevor use several unusual methods, including maneuvering around the world's worst tariffs and pinching pennies in other ways, to keep the cost for all of their items under $10.

Prevor, 42, said that cheapskates isn't the word he'd use. But it's also not one he objected to.

"We roll with the punches," Prevor said. "But the bottom line is we take pride in our ability to keep our prices low."

In a recent interview with "Business Today" editor Scott Moyers, Prevor talked openly about how he and his partner are changing the retailing landscape, stifling the competition their plans for storming the Cape Girardeau market.

Prevor's comments have been edited only for space considerations.

BT: In the "Forbes" article, the author wrote that you have turned tariff manipulation into a sport. Do you agree with that assessment?

Prevor: To be honest, "Forbes" focused on the tariff element because it's a business publication. They thought it would be a good thing to bring to their readers. But, of course, running a business is a lot more than that. There are a whole lot of different variables. Basically, we realized that there are millions of square feet of retail space out there for customers to choose from. We also realized the last thing they needed was another clothing store. Unless it was exceptional. It had to be unlike anything they had ever seen in their lives. They wanted quality and prices that aren't only less than other stores, but a price that is less than a quarter of other stores. If that weren't the case, we wouldn't expect people to pay much attention. But that is the case.

BT: Everything in Steve and Barry's is less than $9.98. That includes hundreds of items, from T-shirts, varsity jackets, button-down shirts, sweatpants, jeans, work boots, tennis shoes, backpacks, you name it. At the same time, do you think there will be an element that thinks if it cost less than $10, it can't be any good?

Prevor: There will always be some people that are really not smart enough and say something like that. But most people are smart customers and have been to enough stores to know the difference between good and bad merchandise. But people will come to our store and will be overwhelmed at how good the quality is.

BT: Your store is set to open in October. What should your new Southeast Missouri customers expect when they walk into the new store at our mall?

Prevor: The usual response is, when people walk in, their jaws drop. They look around and say this can't be true. Literally, people pull out their cell phones and start calling. ... The store we're opening at West Park is 80,000 square feet. That's almost as big as three football fields. We don't mix and sell things like plates, silver ware, bed sheets or towels. We're all clothing. There will be wood floors, everything on wooden hangars, not plastic hangars. There will be vintage graphics that show the history. We hope it's an unbelievable experience.

BT: How did you hook up with the Westfield here?

Prevor: We're partners with Westfield in many other locations. We are in a big store in St. Louis with Westfield. But we did research and looked at the area and knew it was full of smart consumers that would fall in love with Steve & Barry's.

BT: What will it look like inside?

Prevor: Like I said, there will be wooden floors, like a basketball court. There will be plasma screen TVs hooked up to satellite. On Saturday, there will be eight different college football games and on Sunday we'll have eight pro games. Throughout the week, we'll have video games. It really has a fresh new look with nice wide aisles. There will be a lot of sports focus.

BT: How do you keep the prices down?

Prevor: We do everything we can to take all of the costs out of the equation. Bring the price that the consumer pays very close to the price that the garment actually costs. We go to the factories that are making jeans for top-name brands. We tell them we want the exact same jeans, but we don't need the name brand. We pay money up front for projects. We let them ship in larger shipments, let them pack more in a box to save on freight. In the end, we're able to buy the product for a really, really affordable price. Then, because our stores are so large, we call sell much larger volumes at much lower costs. It's not unusual for department stores to make $20, $30 or even $40 on a single piece of clothing. Ours can be as little as $1. But we sell enough volume for it to work. We look at it like we don't have to hit a home run on every sale. We already eat three good meals a day. We're OK with making a tiny, tiny bit of profit.

BT: You're really growing. You guys started as a Long Island flea market. Last year, you guys doubled the store count to 65. You're adding 70 more stores this year, including ours. But you are growing without benefit of advertising. I read that less than 1 percent of your budget goes to advertising. How is that?

Prevor: We're offering customers a very, very different experience than what they are used to at other stores. Other stores don't have much to say, there's not much word of mouth. So they have to do this big advertising thing. People come to our stores and tell other people about it. Someone discovers us and they have to tell their friends about us.

BT: I also heard you guys are a big draw. One other mall manager said your store alone brought in 25 percent more traffic.

Prevor: Yeah, and that's not uncommon. That is the normal experience. We expect to do the same thing with West Park. We expect the mall will have the busiest holiday season it's ever had.

BT: I also read that you feel like you're changing the retail landscape.

Prevor: Look at Home Depot. When it came into existence, it changed the world. It changed expectations of what customers could expect of a hardware store. It changed shopping patterns. They were doing things that have never been done before. We think we're causing similar changes to apparel.


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