More from Steve & Barry
Steve & Barry's University Sportswear, a low-cost, casual-clothing store, has been sprouting in malls across the country. It has been dubbed "the fastest growing retailer you've never heard of," and its 42-year-old cofounders–two childhood friends from New York–have been called ingenious "tariff engineers." The privately held company has 80 stores and plans to open 60 more by the end of this year. With markups that are 30 to 40 percent lower than the industry average, it's quickly forming an impression on competitors like Old Navy. Barry Prevor, who along with Steve Shore is the co-CEO of Steve & Barry's, talks of their lucrative venture–from its origins to its future.
How did you first get the idea for the store?
Steve and I were friends when we were 15 years old, and we always loved to talk about business, along with sports and girls. And so it was pretty natural that as we were in high school and in college we did different types of small businesses together, primarily selling T-shirts at flea markets in Long Island.
Did you design the clothes yourself?
Yeah. Actually, I used to think that I was an artist. And I made T-shirts in my basement with my art on them.
Where did you get the start-up capital to open your first store?
It started very much on a shoestring budget, where the capital wasn't that much of an issue because it was probably $100 or less. Over the years, we've just been very careful about reinvesting the money that we've made and keeping expenses very low.
Can you explain this concept called "tariff engineering" that you've come up with?
The U.S. has something called the Harmonized Tariff System, which is a system that classifies goods among all different countries, and basically there are different duty rates on different types of goods. Part of our ability to bring low-cost products is to focus on the items that bring in great values to consumers, and that might mean mixing more cotton than polyester in a garment or fashioning a garment to be waterproof to be able to take advantage of more economical duty classifications.
Do you ever plan to take the company public and become multimillionaires?
We have no particular plans to do so, but we're certainly exploring all our options in terms of raising capital and expanding beyond 80 stores to the 800 or 8,000 stores that we believe the company has the potential to achieve.
How do you advertise?
Word of mouth is the primary way that we have grown and the primary way that we intend to grow in the future. We're still a much smaller company than most of our mall-based competitors or the department stores or certainly the giant mass-market stores–they can put a lot of dollars into marketing that wouldn't be realistic in our business model. So, our marketing centers on what has been called "guerrilla" marketing, where things are taken to the street and the customers help spread the word.
What's the environment in your office like? What do you wear to work, for example–do you wear clothes that are from your store?
We're a very casual company, and we absolutely encourage people to wear anything from our stores. Many times we'll all come to work in cargo shorts and T-shirts, but when it's time for fancy business meetings, we put on Steve & Barry's chinos and the Steve & Barry's oxfords.
You probably won't reveal to me how much you earn, but is it in line with the company's low-cost strategy?
Let me put it this way: I drive a 1993 car to keep expenses down. And I'm going to continue to keep the overhead down to be able to bring great values to our customers. –Divya Watal
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