Sathish:
“You had an incredible journey, from buyer to leading merchandising at Saks Fifth Avenue. What actually drew you into the retail sector?”
Tom:
“When I graduated, there was a time period called Black Monday. The stock market went down 30 plus percent, and all the bankers put big black X’s on their recruiting charts and said sorry, we are not hiring anymore. A college lacrosse teammate was recruiting for the Lord and Taylor executive training program and said it is not just all about fashion, there is a lot of numbers in it as well. So I went, I interviewed, and I got the job. I live in a neighborhood where most of my neighbors are bankers. I always joke and say I am the pauper of the neighborhood, but I have the best stories.”
Sathish:
“Suppose I am a manufacturer outside the US and want to get in. What are the big misconceptions I would be carrying?”
Tom:
“The size of our market and the buying power of our consumer is intoxicating. But before you get here, you really have to do your homework. We are like five marketplaces in one: the Northeast, the Southeast, the South, the Midwest, and the West Coast. You need to understand seasonality. With love in my heart, we do business with so many Italian brands. They really struggle with understanding the US marketplace from a seasonality perspective because at home they will wear coats until the end of May. For a guy down in the south, he wants to get a lightweight knit shirt on as quickly as possible. Then there is sizing. We have the all-stars from around the world here. You want it to look the same on a little guy as it looks on a big guy. To understand the grading in the paper and the design is really super important. Brands coming here need what I call boots on the ground. They probably need a trusted local person to take them through the nuances of the US marketplace.”
Sathish:
“How does a US retailer pick a manufacturer? What goes through a buyer’s head?”
Tom:
“It is really hard to enter the marketplace because every day they have so many people knocking at their door. You need to be persistent, you need to have stick-to-itness, and more than anything you need to be patient. It is going to take three seasons or 18 months to really enter the marketplace. Whether it is the dollar store or super luxury Bergdorf Goodman, at the end of the day there is one common denominator: value. Customers will spend a little bit more if they can understand what went into that product. The customer is smarter than we give them credit for.”
Sathish:
“Is there a brand you worked with that got it right?”
Tom:
“A men’s tailored clothing brand called Isaia. I started with them in 1995 with about $150,000 worth of business, and by the time I was done with that group in 2018, we had grown to about $25 million. They really understood the marketplace. Fits, finishes, fabrics. They worked with the top sellers in the stores so that they became partners in the whole process. There was a time where they had cash flow problems and asked if we could prepay on orders, and we did. It was about true partnerships through the years and trusting your partner.”
Sathish:
“What does a real retail relationship actually look like?”
Tom:
“One of my key trading partners at the time of 9/11 called me the first day we were back in the office and said tell me what I need to do, tell me how much goods I need to cancel. I did not even ask him. That comes from decades of working with people and jumping through hoops for one another. And a lot like dating. You meet, you develop trust, you think about the next journey. An old boss used to tell me you cannot kiss all the girls. If you are a brand, you need to pick and choose your partners, treat them differently and respectfully.”
Sathish:
“On pricing, what mistakes do manufacturers generally make when negotiating with US retailers?”
Tom:
“Some people do a straight-line retail price point stateside. That might include tariffs, duties, transportation, and it could come out to $10.37. They will put $10.37 on the price tag. Clearly it needs to be $9.95. That is worth everything. I call it smart pricing. You need to work in partnership with retailers to hit smart pricing. If there are 50 brands selling at $9.95 and you really cannot answer why your $9.95 item should compete, you probably should rethink your approach.”
Sathish:
“Should manufacturers start by selling direct to consumers online or go straight to retailers?”
Tom:
“In that premium to opening luxury zone, I would say open up your own stores here first. A physical store coupled with your ecom business. The reason is to have a footprint, to demonstrate to the marketplace what the product is all about, to learn and listen, and then to think about retail distribution. Almost the first question out of a buyer’s mouth will be where is your Instagram site, what influencers are you working with.”
Sathish:
“How is AI going to affect retail and the retailer-manufacturer relationship?”
Tom:
“As the business becomes more commoditized, AI will have major impact. What may have taken weeks to do can be done in hours. In luxury, the art part trumps anything conventional. But AI will help the luxury sector base decisions on analytics they maybe never saw before. I am really excited about AI in social selling. If you are on Whatnot and Johnny Smith is in a garage doing a terrible job presenting a $5,000 sport coat, now imagine Maria Grazia on the Arno River in Florence showing you the product. That is there. That is a huge capability from AI to professionalize social selling. Will AI be as big as ecommerce? I believe even more so.”
Sathish:
“If you had three pieces of advice for a manufacturer entering the US, what would they be?”
Tom:
“Number one: prep work. Do as much advanced work as possible on understanding the marketplace, your reason for being, and why you want to come to the states. Number two: embrace ecommerce, marketplace, dropship. It has to be a priority. Number three: get that boots-on-the-ground person you trust implicitly to guide and navigate your business stateside. Those would be the three rules of engagement.”
