Brooks Brothers is a classic name in retailing. The 202-year-old company pioneered ready-made suits and its clothes have been worn by dozens of U.S presidents, including Abraham Lincoln and Theodore Roosevelt, as well as tycoons ranging from the Astor’s to the Vanderbilt’s. As one retail industry analyst put it, “Brooks Brothers has been a way of life, representing the traditional, old-line way of dressing.”
Unfortunately, the company is suffering from three key problem:
• The Current Market – Like all retailers, they had to close store during the lockdowns due to the virus. This was the final blow that forced them to recently file for bankruptcy, but it was not the fundamental reason. The following two issues that have clearly led them into serious problems.
• The Decreasing Role of Stores – Brooks Brothers has operated 500 stores globally, with 200 in the U.S. While late to the party, they have developed an online option. The management recently noted: “Retailing has been changing a lot over the last four to five years, and we are in the process of adapting.” That is not a very aggressive attitude toward the tsunami that online has represented to retailers. Today Brooks Brothers gets just above 20% of its revenue from online sales.
• The Increasing Role of Casual – The fact is corporate America has turned increasing casual. The markets for suits, ties, dress shirts, etc. have taken a real beating, and the virus/stay-at-home issues have added momentum to the trend. As the Managing Director of the retail measurement firm Global Data Retailing put it: ”When it comes to taste and style, Brooks Brothers has been swimming against the tide. Its formal, old-school approach found favor among mature and traditional demographics, but is increasingly out of step.”
Stepping back, there is no question that Brooks Brothers is guilty of not following the most fundamental rule of business: If you want to continue to thrive, you must spot important trends early, and aggressively get out in front of them, rather than get buried by them.
The Brooks Brothers debacle brings to mind some of the famous examples of ignoring key trends and getting run over, such as: Blockbuster ignoring CD’s then streaming and getting wiped out by Netflix; Kodak ignoring digital photography and going bankrupt as Canon digital cameras led the transformation to digital; Best Buy thriving by early-on adopting a unified online and retail model, driving Circuit City, CompUSA and Radio Shack to bankruptcy; Tesla embarrassing the big auto manufactures as it has led the electric vehicle boom, etc.
Brooks Brothers is privately owned, and no doubt the brand name is well recognized. The current owners hope to clean up the finances with bankruptcy, and then reemerge. I hope they recognize the herculean task they face in completely changing the image, product offerings, retail practices, and management, all of which clearly need dramatic overhaul.