Retailers Becoming Suppliers

It was a sad day when Steve & Barry’s filed Chapter 11 last month.

From the first time I wrote about the company, in a July 2006 leadership profile of company president Andy Todd, I thought the concept was a winner. I became even more convinced when I spoke with co-founders Steve Shore and Barry Prevor for our December 2006 cover story.

I couldn’t wait to visit one of their stores, and in 2007 I got my chance when I was traveling through Ohio. The store, located in a basic “B” quality power center just outside Cincinnati in Florence, Ky., lived up to my expectations, and I purchased T-shirts for my daughter, son and husband. Roughly one year and countless laundry cycles later, those three shirts are still in stellar condition.

Earlier this summer I had an opportunity to visit another Steve & Barry’s location, a recently opened store in Winston-Salem, N.C. For me, the day of that visit was even sadder than the day Steve & Barry’s filed for bankruptcy.

The store was located in a run-down enclosed mall, in such questionable surroundings that my 16-year-old daughter and I almost didn’t get out of the car. Inside, the design of the store was still on par—but the merchandise mix had changed.

A year ago, it was hard to purchase just one of the fun and funky T-shirt designs as a gift for my daughter. This summer, it was hard not to cringe at the sheer crassness of some of the selections.

However, the quality of the fabrics—for the “grand-opening price of $8.99—was easily comparable to higher-priced clothes at Old Navy or Sears.

Perhaps, as some have suggested, a future for Steve & Barry’s might be as a private-label manufacturer for a value-priced retailer. Maintain the quality of the brand and the competitive price points, lose the tacky (and in some cases blatantly offensive) slogans—and there could be a viable partnership in the making.

If so, Steve & Barry’s might learn from another retailer that has donned the distributor hat and begun to sell its branded products through other retail stores.

Papyrus, which is based in Fairfield, Calif., and operates 170 stores nationwide, is distributing its high-end, premium greeting cards and paper products to other retail stores, including a mass merchandiser. This particular retailer, which did not allow its name to be released, had several reservations about adding a high-end line to its stationery and greeting-cards area. What effectively resolved the retailer’s reservations was vendor-managed inventory via a scan-based trading solution from Prescient, West Chester, Pa.

Jane Hoffer, CEO of Prescient, explained, “Through scan-based trading, there are benefits for the supplier and the retailer. Basically the supplier, in this case Papyrus, becomes a team-member with the retailer’s buyers.”

With scan-based trading, the retailer’s POS information triggers the supplier to be responsive. For instance, the supplier can actually restock the shelves as needed so that the retailer’s store associates do not have to take time to replenish inventories.

When Hoffer and I spoke, Papyrus had completed the rollout of scan-based trading to 200 stores and expected to have its product in a total of 1,500 of the mass merchant’s locations by the end of the third quarter.