Men’s Wearhouse: Shareholder Centric Versus Customer Centric

For those of us who have worked in and around corporate environments, it’s not uncommon to hear shareholder centric comments like “the shareholders aren’t happy” or “what will our shareholders think?” Those investors who support your business are important to keep in mind, but, ironically, they aren’t always the best judge of what your customers want.

If there is too much emphasis on the stockholder and not enough emphasis on customers, it is inevitably a losing strategy.

shareholder centric

 

Men’s Wearhouse and Shareholder Centric Strategy

George Zimmer was a scrappy entrepreneur who took one store in Houston in 1973 and built it into a multibillion dollar empire. It was successful for many years, but in recent years it suffered from many symptoms of a shifting customer landscape. Casual Fridays in offices gave way to wear-what-you-want dress codes everyday. Weddings, an important part of their tuxedo renting business, have been decreasing in both frequency and cost due to the lagging economy. And let’s face it, many people are unemployed and don’t need more suits!

When Zimmer was removed from his very public executive position earlier this year, the board members who made the decision weren’t talking. Zimmer himself implied it was over conflict about strategy of where the company was heading, but it’s impossible to know the real story. And now, Men’s Wearhouse seems to continue to be a downward spiral, reporting a 28 percent drop in profit at the end of the last quarter.

shareholder centric

 

Here’s what I noticed.

In all the talk about what the shareholders wanted, there was little mention of customers. It’s easy to discuss “market trends” and other factors without ever really thinking about what customers really want. There is a distance allowed between numbers and people which makes it easier to dismiss what customers really want. Saying “our earnings went down” to your employees is very different than saying “we missed the mark with our customers.” (Click to Tweet!) Yes, we need to absolutely understand the market and pay attention to the real business results of earnings and shareholder value, but not without connecting those dots to customers and the real way they interact with our brands.

There seems to be a glimmer of hope when reviewing their social media channels, which are shifting away from the yelling about sales and promotions constantly and moving into a more customer-centric focus with content and conversation. It’s a sign they may realize customers are the only true path to profit.

shareholder centric

Customers have a voice like never before.

And they aren’t afraid to use it. Movie studios got away with producing terrible movies for a long time. As long as they made a splash on opening weekend, then shareholders were happy and they could move on to the next project. Now, thanks to Twitter and Rotten Tomatoes, movies are hastily recognized as the dogs they are before making it to the Saturday matinee. Snakes On A Plane, the Samuel L. Jackson movie from 2006, generated possibly more buzz online than any movie before it. The campy title inspired parody fan videos and had investors predicting major success.

But the movie itself wasn’t that good. So right away, customers reported their “meh” responses and discouraged others from going to see it. Industry analysts had predicted an opening weekend to earn between $20 million and $30 million, but that weekend only earned a little more than $15 million. Thanks to our peers, we have early warning signals as customers.

It’s time we understand who the real “bosses” are and appreciate the input customers try to provide. Shareholders would be wise to pay attention.

 Image Credits: qwekiop147,  AndreasPoike and speakupglobal via Creative Commons

Jeannie Walters

Jeannie Walters is the Chief Customer Experience Investigator™ and founder of 360Connext, a global consulting firm specializing in the cornerstones of customer experience: customer engagement, employee engagement and connections like social media. 360Connext serves mid-market companies and larger by helping them evaluate their true customer experience. The evaluations always lead to improvements which then lead to results like increased online conversions or loyalty.

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4 comments
TimPio
TimPio

Hi Jeannie: I agree with you that when a retail business is more concerned about shareholders than customers, it's going to be a problem.

A few years back I had one of my best retail customer service experiences at Men's Wearhouse.  I purchased a couple suits and the sales associate gave me the type of advice that I once considered paying a "fashion consultant" to give me. I did spend a decent amount of money at the store, but I walked out of the store feeling very good about my experience.  I'd be curious to find out if there's still an emphasis on this type of service at MW.  

I hope more organizations recognize that without customers, there will be no shareholders.  Thanks for your post!

dbvickery
dbvickery

I just wrote a blog post about brand monitoring, and another one about how I rely on customer reviews, that makes the same point. Listen to your customers, and then make sure your goals are aligned with what the customer wants from you as a brand.

Take care of your customers, and the revenue will take care of itself. And it starts by listening to the conversations and reviews happening RIGHT NOW.

jeanniecw
jeanniecw moderator

@TimPio Thanks for the comment, Tim! I'm happy to hear you had such a great experience. I went shopping there years ago with a boyfriend and had a similar experience. Their advertising, while decidely going "younger," seems to be missing some of the personal touch George Zimmer provided. I wonder if that also has seeped into their in-store experience. Great observations. Thank you!

jeanniecw
jeanniecw moderator

Exactly, Brian! It's super important to pay attention to what customers are actually discussing, not what shareholders are complaining about. Thanks for the comment!

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