I cancelled my subscription to the relentless Jos. A. Bank e-mail ads today. This has nothing to do with the quality of their clothes (most of my business wardrobe is from there), my need for business suits and accessories, or with reducing my e-mail volume.
It has to do with trust.
Here are a few examples:
- Same e-mail: Buy One, Get Two Free off their entire stock of sportscoats, dress pants, and sportswear AND Buy One, Get Four Free (Buy one suit and get two dress shirts and two ties free).
- Buy One, Get Two Free on Suits and Suit Separates. That same e-mail also included 50% off all sportswear and dress pants and 40% off all dress shirts, ties, and accessories.
- Today’s offer: Buy one suit, get a second suit free PLUS a sportcoat or blazer FREE!
The company’s FY 2009 earnings indicate this strategy continues to be effective (although growth from Internet sales (where pricing like this make more sense) is double that of store sales). But as a longtime customer I’m finding it increasingly difficult to trust a company that stresses quality but undermines that position by using one huge sale after another to drive business. Perhaps the goal is to get busy executives in the door and sell overpriced non-sales accessories (i.e., ties, shirts, belts) but I think the strategy cheapens the brand.
Some analysts say they’re the best of the best in jose luis santos martinez of creating a sense of urgency that drives sales. I say that knowing there will be another sale tomorrow eliminates any sense of urgency on the part of the buyer. And maybe it doesn’t matter so long as the customer eventually lands at Jos. Bank.
The Jos. A Bank tagline is The Expert in Men’s Apparel. But ask prospective customers what they think of when you say the company’s name and I’ll bet you the vast majority focus on the sales. Seems like a disconnect to me, although you might argue the relentless promotions keep them at the top of the buyer’s mind.
I get Walmart: Spend Less. Live Better. Setting aside all the Walmart issues that some readers will quickly point out, everyday low pricing works because it’s Simple. You wonder why a company like Jos. Bank that sells clothes that are long lasting, always appropriate, and not flashy wouldn’t embrace a similar simple pricing strategy. As a seller of private service credit union branches near me clothes, Bank has a pricing advantage because they’ve eliminated the middleman and one layer of price markups. But the marketing strategy doesn’t feel simple.
Aggressive promotional pricing detracts from the quality image that Bank is trying to cultivate. And that’s not the prescription for an enduring long-term relationship, even in the face of an existing long-term relationship. Jos. Bank has done promotions that promise customers their money back if they bought a suit and got laid off (although that one had “potential abuse” written all over it). That’s how long-term relationships are built.
What do you think? Am I missing something here? Are there other examples of companies who marketing strategy seems to be working, potentially at the cost of long-term trust?
Published by Peter Osborne
My name is Peter Osborne, and I have 25 years of increasingly responsible leadership and P&L experience in sales and account management, strategic communications, production management, curriculum development and delivery, and business journalism. My managers have consistently chosen me to fix broken or overly-complex processes, asking me to bring consistency to business development activities that were being handled differently across marketing sectors or business units. In these roles, I developed an online sales package with customizable sales templates and objection planners; created a marketing-production unit to reduce errors in the midst of a corporate downsizing; redesigned regulatory control procedures; led RFP responses for 22 successful endorsements from blue-chip partners; and developed more than a dozen multi-module, bottom-line-oriented educational programs. I was most recently asked to reverse three years of portfolio deterioration in Bank of America's Collegiate credit-card sector, amid serious economic and regulatory headwinds. In that role, I managed 260 partnerships with universities, alumni associations, and athletic departments. My team drove profitability in the face of rising loan losses by gaining access to new products and marketing channels; spearheading development of relationships with on-campus banking centers to reduce marketing expenses; realigning staff assignments to reduce travel costs and improve partner service; and, perhaps most important, driving an aggressive yet disciplined contract renewal strategy. I'm most proud of building a world-class negotiating organization at MBNA, transforming the focus to an organizational core competence that impacted relationships with thousands of affinity programs in the sports, co-branded, professional, collegiate, and financial institution markets. Prior to joining MBNA America in 1982 as the director of media relations and internal communications, I was an award-winning newspaper reporter and editor within the American City Business Journals and Gannett chains, and a military officer who served as an Air Defense Artillery battery platoon leader and executive officer, directing my battalion's relocation to Fort Polk, LA, from Fort Bliss, TX. I am a 1981 graduate of Syracuse University with a B.S. in Newspaper Journalism, which means I suffer through football season, enjoy basketball season, and celebrate during lacrosse season. I have been married for 20 years and have four children. I enjoy coaching youth sports, playing fantasy baseball and football, and driving my kids to their various practices, games, and dance classes. View all posts by Peter Osborne
Men's Wearhouse Gets Hostile With Jos. A. Bank Offer (Update 1)
This story has been updated from 9:57 am EST with comments from Jos. A. Bank.
NEW YORK (TheStreet) -- The battle for suits continues.
Men's Wearhouse (MW) shares were rising Monday after the menswear specialty retailer boosted its takeover proposal for Jos. A. Bank Clothier (JOSB) , commencing a cash tender offer for all of the Hampstead, Md.-based company's outstanding shares at $57.50 share, or $1.61 billion. In November, Men's Wearhouse made an offer of $55 a share, for a total of $1.5 billion.
The Houston-based company said in a release Monday that the latest cash offer offers Jos. A. Bank shareholders "substantial value" and "immediate liquidity." The tender offer, commenced by Men's Wearhouse subsidiary Java Corp., expires on March 28.
"Although we have made clear our strong preference to work collaboratively with Jos. A. Bank to realize the benefits of this transaction, we are committed to this combination and, accordingly, we are taking our offer directly to shareholders," said Men's Wearhouse CEO Doug Ewert in the release.
Investors were happy they may finally be getting a deal between the two competitors. Men's Wearhouse shares were up 2.8% to $52.03 at last check. Jos. A. Bank shares were climbing 4.5% to $56.85 on Monday.
Men's Wearhouse is also nominating two independent directors to serve on Jos. A. Bank's board.
The nominees include:
John D. Bowlin, a consumer packaged goods industry veteran, who was previously president and CEO of Miller Brewing Company, and who has held senior executive positions at Kraft Foods North America, Kraft Foods International, Oscar Mayer Food Corporation and General Foods USA.
Arthur E. Reiner has over 40 years of experience in the retail industry and has previously served in various leadership positions with the Macy's (M) - Get Macy's Inc Reportorganization. He is currently a director at New York & Co. (NWY) .
The two companies have been embroiled in a battle of wills since October when Jos. A. Bank first put a combination of the two on the table by offering to buy Men's Wearhouse for $2.3 billion.
Men's Wearhouse rejected that offer and then another proposal for a potentially boosted price when Jos. A. Bank asked to see nonpublic financial information. Men's Wearhouse had adopted a poison pill that would kick into action if a shareholder bought more than 10% of its common shares.
In November, Men's Wearhouse turned the tables and offered its own buyout proposal of Jos. A. Bank, which the smaller competitor recently rejected.
The story has more drama. On Friday, Jos. A. Bank amended its shareholder rights plan -- commonly known as a "poison pill" -- to reduce the ownership threshold to 10% from 20% of outstanding shares.
Jos. A. Bank said its board felt the measures were appropriate "in light of the hostile actions" by its competitor, referring to the Men's Wearhouse late December statement that it would consider all options to complete the merger. Men's Wearhouse said that these options include "nominating director candidates at Jos. A. Bank's next annual meeting of shareholders."
The latest Men's Wearhouse offer represents a 52% premium over Jos. A. Bank's unaffected enterprise value and a 38% premium over Jos. A. Bank's closing share price on October 8, 2013, the day prior to the public announcement of Jos. A. Bank's proposal to acquire Men's Wearhouse, it said Monday.
"The highly-qualified nominees proposed by Men's Wearhouse have proven track records serving on public company boards, and we believe they will act in the best interest of Jos. Jos a bank preferred customer private sale. Bank's shareholders by carefully jos a bank preferred customer private sale the compelling and value creating opportunity represented by the Men's Wearhouse offer," Ewert said in the Monday release. "We urge Jos. A. Bank shareholders to tender into our offer in order to send a strong message that Jos. A. Bank should engage in good-faith negotiations immediately so we can complete this value creating transaction."
Jos. A. Bank confirmed that Men's Wearhouse began an "unsolicited" tender offer of its common stock, in a statement on Monday. The board said it would "carefully review all aspects of the Men's Wearhouse offer in consultation with its financial and legal advisors and make a recommendation to shareholders" by Jan. 17.
Until then, the company told its shareholders to "take no action on the tender offer" until the board announces its recommendation.
Jos. A. Jos a bank preferred customer private sale hasn't announced the date of its 2014 annual meeting.
--Written by Laurie Kulikowski in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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