One morning when Greg Shugar was eating breakfast, he spilled coffee on himself, ruining the expensive tie he had just purchased. Frustrated at the prospect of spending a few hundred dollars on another one, he and his wife, Gina, thought up the idea for a company that would sell men’s ties at an affordable price point.
Eleven years later, that company is The Tie Bar, the e-retailer the Shugars founded in 2004 and later sold to a private equity group in 2013. Though The Tie Bar grew at an impressive pace since it first began offering ties through its e-commerce site, the company began to see breakneck sales in 2010, says Michael Alter, who joined after it was acquired.
Now its chief executive officer, Alter is tasked with ensuring that The Tie Bar continues to grow its brand and sales in the future. For Atler, who was appointed CEO in 2014, there’s a lot to manage on a daily basis at The Tie Bar, which now offers a variety men’s accessories, including scarves, belts, socks, and — fittingly — tie bars, all at an affordable price point.
We recently got the chance to sit down and talk with Alter about his background, The Tie Bar’s history, and its future plans.
What makes The Tie Bar unique?
Well, we are a vertically integrated retailer, or e-tailer, if you will. That means that the majority of our business is e-commerce related. We do have a flagship store in Chicago. We also have the fortune of having some wholesale business. You can find a number of our products on Nordstrom’s e-commerce site, for example.
The thing that really sets us apart from everybody is that we design all of our own products. We contract manufacture them overseas, and then we sell them direct. We have the highest quality products, and because we cut out all of the middlemen — again, we’re vertically integrated — we’re able to deliver great, high-quality products at ‘wow’ pricing. So, a typical tie that you might find at a major department store or high-end retailer for $75 to $150, our ties would compare favorably — if not be viewed as better than those from a quality perspective — yet we charge $19.
Why should someone buy a tie from you instead of a traditional department store or suit maker?
What our model has really allowed — that great style and great price point — is that it makes it fun for guys to try to find their style. If you have to have two ties for work, and they’re each going to cost you $150, you’re only really going to have two ties. That’s a lot of money to spend on ties. If you wanted to spend $19 with us, you can have ten different ties. And you have the opportunity to try some variety and to test different styles and different looks than you might otherwise have worn.
We do that with all men’s accessories. We’re not just a tie company, though two-thirds of our business is ties. We sell socks — one of our fastest growing categories — we sell pocket squares, belts, tie bars — pretty much all of the things that help a guy to find his style and to accessorize.
Do you see growth potential outside of selling ties?
We think there’s a huge opportunity for what we do — offer great design and high quality at a low price point — in these other accessories, as well. It’s very hard to find a high-quality, well-designed, and well-made pocket square for $10, but we do that. It’s sort of a natural evolution of our business, in terms of what our customers are really asking for.
If you think about the trends in menswear over the last few years, ties have come back; dressing more formally and looking good is acceptable for guys nowadays. People don’t necessarily dress up because they have to, they dress up because they want to. And one of the biggest trends in dress wear that women’s wear has had for years is the high-low concept. So, you have your Armani suit, but you can make it look different if you have multiple ties or different pocket squares, belts, and ties. So, we are sort of the high-low in that formula. That’s why it makes sense for us to be in a number of categories.
Who’s your target demographic?
About one-third of our customers account for roughly two-thirds of our revenue. Our customers are guys — about 80% of them are men — so it’s not always women buying for men. In our case, it’s men buying for themselves. And they are usually 25 to 45 years old. The average customer of ours has an income over $100,000 a year. They know what they like; they understand what their style is, what it feels like to look good. About one-fifth of our customers even have a piece of custom clothing in their wardrobes. These are the kinds of guys who shop at Nordstrom, that shop at Saks, and that are buying the very expensive suit, and then they’re pairing the $19 tie with it — that high-low combination.
What’s the biggest challenge for you moving forward?
I think the challenge with any business is how do you keep growing and building the business? And you reach a point where it requires more investment in infrastructure, more investment in people, potentially more investment in awareness marketing. I will tell you that the challenges for us today are really around generating awareness and getting people to understand the value of what we deliver.
What I mean by that is how do I tell the world who The Tie Bar is, and how do I do that cost-effectively? And when I tell someone I have a $19 tie, most people think it’s going to be a poorly made, inexpensive, acrylic product that you’re just going to throw away or wear to a costume party. Yet our products are on the cover of GQ this month, so it certainly is high quality.
So, how do I convince somebody once they’ve heard of us that this $19 thing is a wow product? And it is that way because we’re a vertically integrated retailer and we don’t have the same cost structure as a big brand, so we can deliver this value? I’ve got a challenge of how to tell people who I am. And, once I tell people who I am, how do I convince them that they’re getting quality?
How are you overcoming those obstacles?
One way we’re doing that is by putting more marketing dollars into paid media to drive awareness of who we are. The second piece is the stores and pop-up stores strategy, which allows people to walk in and touch and feel the breadth of our products. At our original store in Chicago, 70% of the customers had never bought from us before. So, talk about a great way of driving awareness and getting people to understand that value concept. And again, once they’ve touched it, felt it, and know how good it is, we’re very confident they’ll come back and buy directly online.
We really use our stores for driving awareness, but anytime you get a chance to see who your customers are it’s useful. My head of merchandising will just hide around the store and listen to what they say about the different products, and she’ll use that later on to make sure we’re better appealing to our target demographic.
The third piece is all around strategic wholesale. So, again, we’re putting our product where our customers and our guys are shopping. One of those places that we’re really excited about is Nordstrom. Being on the Nordstrom e-commerce site is a big deal for us, and there are other strategic wholesale partners we’re working with to broaden the brand and expose them.
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