Sy Syms, 83, founder and chairman of the apparel chain SYMS Corp., died of heart failure November 17, 2009, in New York City.
Syms founded his business in New York's financial district in 1959, and was the first retailer to sell off-price men's clothing. He created the well-known slogan, "An educated consumer is our best customer," which he narrated in his first television commercial in 1974 and which is used to this day.
In 1983, when SYMS had expanded to 11 stores, Syms took the company public. He remained chief executive of SYMS Corp. until 1998, when he was succeeded by daughter, Marcy. He continued as the company's chairman until his death.
Forbes magazine published this Richard Behar profile of Syms and his company in its September 9, 1985, issue.
Hi, This is Sy Syms: Welcome to the off-price clothing empire of Sy Syms, where an educated consumer could use a refresher course.
"IT'S THE BIGGEST-SELLING suit we carry, barks the salesman as he holds up a Pierre Cardin suit for $139 and beams approvingly. "Why should I care how good it is?"
This is a Syms clothing store, where "an educated consumer is our best customer." Lyndhurst, N.J.-based Syms Corp. is riding high these days on its reputation for selling brand-name clothing, mostly menswear, at big discounts. It has 14 stores stretching from Fort Lauderdale to Buffalo to Chicago, and whenever a shopper telephones one, the phone is answered with the same earnest incantation: "An educated consumer ... " Radio and TV commercials sound the message home--oh so earnest, but oh so friendly--from the very own lips of Sy Syms, formerly Sy Merns, the company's founder and CEO.
Over the past five years, Syms' sales have nearly tripled, to $204 million, while net earnings have risen even more steeply, to $13 million. This year revenues will be up another 10% despite the sluggish economy.
Bear, Stearns & Co. and Rothschild Inc. jointly took the firm public on the NYSE in 1983, at 28 times earnings. Syms overnight became a centimillionaire, pocketing around $25 million and keeping control of 80% of the stock, currently worth about $170 million. The stock has slipped since its new-issue days, but at a recent 12 still sold at a high 16 times projected earnings and 4 times book value.
Syms' profit margin is among the highest in all of retailing--about 13% on sales last year before income taxes--and over the past five years it has had an average return on equity of about 30%.
Quite a trick. How does Syms do it? Company literature explains that Syms sells "a broad range of first quality ... nationally recognized designer and brand-name merchandise at prices substantially lower than generally found in traditional retail stores." The question is, how do you sell cheaper and yet make more money? The answer, unfortunately, is: by sometimes hood-winking its "educated consumers" and sometimes selling them inferior-grade garments that can be mistaken for top-of-the-line goods.
Educated consumers? Syms has cashed in on an ill-informed lust for prestige labels on the public's part and on the discreditable willingness of many designers and their licensees to bastardize the brands for a bigger return. Syms' tricks are played with suits bearing such famous names as Givenchy and Brioni, which can be found sprinkled among lesser-known garments by the dozen.
Syms' off-price business is built, in theory at least, on the fact that manufacturers routinely produce 5% to 10% more garments and piece goods (uncut fabrics) than they can dispose of through normal channels. Some manufacturers sell the piece goods on the secondary market, at 20 cents to 50 cents on the dollar, to so-called jobbers. These people in turn typically resell the goods to other manufacturers to be stitched together and sold under labels in discount stores and elsewhere. But it's often more profitable to cut and funnel the goods directly through offprice outlets like Syms at prices 20% to 50% below wholesale, which is better than prices available through jobbers.
Many manufacturers prefer to dump their surpluses through Syms because of Syms' willingness to pay cash up front, buy in huge quantities and give manufacturers great flexibility in the styles and sizes produced. To cool the wrath of a manufacturer's regular clients, Syms agrees not to advertise brand names. The code of silence he observes with his vendors is usually a two-way street; the manufacturers keep mum about the specifics of their deals with Syms.
But the silence ends on the shop floor. There the customer sees the label, but the recognizable names on the racks are not always attached to the kinds of high-quality garments that made the manufacturers famous in the first place.
Take the prestige suitmaker of Italy, Brioni Roman Style. Its largely handmade suit is among the best and priciest in the world. It takes about 18 hours just to make the jacket, and merely 200 suits are produced a day from a factory in Penne, Italy. Some 15,000 are sold annually in the U.S., starting at $1,200 retail ($600 wholesale). Syms, however, carries a sound-alike suit tagged "designed by Brioni' for $299. "The quality and value is the same," says Robert Merns, Sy's son and a company vice president. "That's the magic. We're working for the man in the street."
How can Syms sell a "Brioni" at $299 that apparently wholesales for $600, and still reap a high profit? He can't. His "Brioni" suits carry a price tag that says they sell elsewhere--but nowhere in particular--for $650. Consumers gobble up the garments, but although they are decent enough suits, they aren't the real McCoy--"Roman Style by Brioni." Fabric is sent to an unassociated factory in Italy, which churns out around 5,000 cheaper-quality "Brioni" suits specifically for Syms each year. These are Syms' "Brionis."
Syms is also America's largest dumping ground for "leftover" Givenchy suits, but they, too, are visibly of lower overall quality than the Givenchys that are sold in department stores. Even to a reporter's untrained eye, the fabrics and stitching look cheaper, the linings appear flimsier. We asked Al Cohen, head of Givenchy's licensing group, about this. Not surprisingly, he didn't like the question. Suggested he: "Why don't you just say that Givenchy produces a special suit for Syms. The people don't see the difference. All they are interested in is the label.
"That's why we like to sell Syms," says Cohen. "Once that suit goes out of the store, there's no identification." No identification? That's because Syms agrees to snip off the Givenchy label before the customer is permitted to take the suit out of the store. The little charade impresses the customer and keeps Givenchy happy as well.
Are there no true bargains in a Syms store? There are, but they often come from lower-priced designers or they are the low-end products of high-priced designers. By carefully sifting through the pipe racks, a consumer can find real bargains but only by being highly selective.
Since Syms is so successful, why doesn't he have more imitators? Many try to imitate him, but they lack his financial clout. Dash's Designer, a chain of five discount mens-wear stores in Washington, D.C., took Intercontinental Apparel to court recently, charging that the Hartmax division, which sells suits under the Pierre Cardin label, violated antitrust laws by price discrimination in Syms' favor. Dash's lost round one in February; it's now appealing.
At the trial, top Hartmarx executives presented conflicting testimony as to whether Syms' Cardins were of equal quality to regular Cardins sold by other retailers. On balance, though, it seems clear that a good deal of Syms' merchandise is, in fact, manufactured specifically for it and is not "leftover" in the accepted sense of the word. Syms' Robert Merns confirms this. He admits to FORBES that Syms cannot rely only on "leftovers" of big manufacturers.
Many traditional retailers are catching on to the off-price approach. But there are only so many genuine leftovers. How far will designers and licensees go in lowering their own alleged standards in order to supply labeled but chintzier goods? Quality men's stores like Barney's in New York City are now shunning many labels that are increasingly found in stores like Syms.
"Designer names were once a surrogate measure for quality and value," says William Ress, a major retailing consultant. "But too many designers essentially prostituted themselves in the late Seventies and early Eighties by selling their names and not getting involved in design or product quality. They are no longer a reliable surrogate." But nobody explained all this to Syms' "educated" customers.
In spite of repeated requests, Sy Syms refused to talk with FORBES about his business. "But you better get it right," he threatened, "because I've got great lawyers." [rc]
We've got it right.
Sy Syms (1926-2009)
Sy Syms, Founder of SYMS Corp., Dies at Age 83
2009 Forbes.com LLC™
December 2, 2009
USA: Sy Syms, Founder of SYMS Corp., Dies at Age 83
.
NEW YORK, NY / Forbes Magazine / Faces in the News / Obituary / December 2, 2009
From Our Archives
'Hi, This Is Sy Sims'
A Richard Behar profile of Sy Syms, the pioneer discount retailer who died November 17, 2009, first published in Forbes magazine, September 9, 1985 and republished November 18, 2009.
Sy Syms, 83, founder and chairman of the apparel chain SYMS Corp., died of heart failure November 17, 2009, in New York City.
Syms founded his business in New York's financial district in 1959, and was the first retailer to sell off-price men's clothing. He created the well-known slogan, "An educated consumer is our best customer," which he narrated in his first television commercial in 1974 and which is used to this day.
In 1983, when SYMS had expanded to 11 stores, Syms took the company public. He remained chief executive of SYMS Corp. until 1998, when he was succeeded by daughter, Marcy. He continued as the company's chairman until his death.
Forbes magazine published this Richard Behar profile of Syms and his company in its September 9, 1985, issue.
Hi, This is Sy Syms: Welcome to the off-price clothing empire of Sy Syms, where an educated consumer could use a refresher course.
"IT'S THE BIGGEST-SELLING suit we carry, barks the salesman as he holds up a Pierre Cardin suit for $139 and beams approvingly. "Why should I care how good it is?"
This is a Syms clothing store, where "an educated consumer is our best customer." Lyndhurst, N.J.-based Syms Corp. is riding high these days on its reputation for selling brand-name clothing, mostly menswear, at big discounts. It has 14 stores stretching from Fort Lauderdale to Buffalo to Chicago, and whenever a shopper telephones one, the phone is answered with the same earnest incantation: "An educated consumer ... " Radio and TV commercials sound the message home--oh so earnest, but oh so friendly--from the very own lips of Sy Syms, formerly Sy Merns, the company's founder and CEO.
Over the past five years, Syms' sales have nearly tripled, to $204 million, while net earnings have risen even more steeply, to $13 million. This year revenues will be up another 10% despite the sluggish economy.
Bear, Stearns & Co. and Rothschild Inc. jointly took the firm public on the NYSE in 1983, at 28 times earnings. Syms overnight became a centimillionaire, pocketing around $25 million and keeping control of 80% of the stock, currently worth about $170 million. The stock has slipped since its new-issue days, but at a recent 12 still sold at a high 16 times projected earnings and 4 times book value.
Syms' profit margin is among the highest in all of retailing--about 13% on sales last year before income taxes--and over the past five years it has had an average return on equity of about 30%.
Quite a trick. How does Syms do it? Company literature explains that Syms sells "a broad range of first quality ... nationally recognized designer and brand-name merchandise at prices substantially lower than generally found in traditional retail stores." The question is, how do you sell cheaper and yet make more money? The answer, unfortunately, is: by sometimes hood-winking its "educated consumers" and sometimes selling them inferior-grade garments that can be mistaken for top-of-the-line goods.
Educated consumers? Syms has cashed in on an ill-informed lust for prestige labels on the public's part and on the discreditable willingness of many designers and their licensees to bastardize the brands for a bigger return. Syms' tricks are played with suits bearing such famous names as Givenchy and Brioni, which can be found sprinkled among lesser-known garments by the dozen.
Syms' off-price business is built, in theory at least, on the fact that manufacturers routinely produce 5% to 10% more garments and piece goods (uncut fabrics) than they can dispose of through normal channels. Some manufacturers sell the piece goods on the secondary market, at 20 cents to 50 cents on the dollar, to so-called jobbers. These people in turn typically resell the goods to other manufacturers to be stitched together and sold under labels in discount stores and elsewhere. But it's often more profitable to cut and funnel the goods directly through offprice outlets like Syms at prices 20% to 50% below wholesale, which is better than prices available through jobbers.
Many manufacturers prefer to dump their surpluses through Syms because of Syms' willingness to pay cash up front, buy in huge quantities and give manufacturers great flexibility in the styles and sizes produced. To cool the wrath of a manufacturer's regular clients, Syms agrees not to advertise brand names. The code of silence he observes with his vendors is usually a two-way street; the manufacturers keep mum about the specifics of their deals with Syms.
But the silence ends on the shop floor. There the customer sees the label, but the recognizable names on the racks are not always attached to the kinds of high-quality garments that made the manufacturers famous in the first place.
Take the prestige suitmaker of Italy, Brioni Roman Style. Its largely handmade suit is among the best and priciest in the world. It takes about 18 hours just to make the jacket, and merely 200 suits are produced a day from a factory in Penne, Italy. Some 15,000 are sold annually in the U.S., starting at $1,200 retail ($600 wholesale). Syms, however, carries a sound-alike suit tagged "designed by Brioni' for $299. "The quality and value is the same," says Robert Merns, Sy's son and a company vice president. "That's the magic. We're working for the man in the street."
How can Syms sell a "Brioni" at $299 that apparently wholesales for $600, and still reap a high profit? He can't. His "Brioni" suits carry a price tag that says they sell elsewhere--but nowhere in particular--for $650. Consumers gobble up the garments, but although they are decent enough suits, they aren't the real McCoy--"Roman Style by Brioni." Fabric is sent to an unassociated factory in Italy, which churns out around 5,000 cheaper-quality "Brioni" suits specifically for Syms each year. These are Syms' "Brionis."
Syms is also America's largest dumping ground for "leftover" Givenchy suits, but they, too, are visibly of lower overall quality than the Givenchys that are sold in department stores. Even to a reporter's untrained eye, the fabrics and stitching look cheaper, the linings appear flimsier. We asked Al Cohen, head of Givenchy's licensing group, about this. Not surprisingly, he didn't like the question. Suggested he: "Why don't you just say that Givenchy produces a special suit for Syms. The people don't see the difference. All they are interested in is the label.
"That's why we like to sell Syms," says Cohen. "Once that suit goes out of the store, there's no identification." No identification? That's because Syms agrees to snip off the Givenchy label before the customer is permitted to take the suit out of the store. The little charade impresses the customer and keeps Givenchy happy as well.
Are there no true bargains in a Syms store? There are, but they often come from lower-priced designers or they are the low-end products of high-priced designers. By carefully sifting through the pipe racks, a consumer can find real bargains but only by being highly selective.
Since Syms is so successful, why doesn't he have more imitators? Many try to imitate him, but they lack his financial clout. Dash's Designer, a chain of five discount mens-wear stores in Washington, D.C., took Intercontinental Apparel to court recently, charging that the Hartmax division, which sells suits under the Pierre Cardin label, violated antitrust laws by price discrimination in Syms' favor. Dash's lost round one in February; it's now appealing.
At the trial, top Hartmarx executives presented conflicting testimony as to whether Syms' Cardins were of equal quality to regular Cardins sold by other retailers. On balance, though, it seems clear that a good deal of Syms' merchandise is, in fact, manufactured specifically for it and is not "leftover" in the accepted sense of the word. Syms' Robert Merns confirms this. He admits to FORBES that Syms cannot rely only on "leftovers" of big manufacturers.
Many traditional retailers are catching on to the off-price approach. But there are only so many genuine leftovers. How far will designers and licensees go in lowering their own alleged standards in order to supply labeled but chintzier goods? Quality men's stores like Barney's in New York City are now shunning many labels that are increasingly found in stores like Syms.
"Designer names were once a surrogate measure for quality and value," says William Ress, a major retailing consultant. "But too many designers essentially prostituted themselves in the late Seventies and early Eighties by selling their names and not getting involved in design or product quality. They are no longer a reliable surrogate." But nobody explained all this to Syms' "educated" customers.
In spite of repeated requests, Sy Syms refused to talk with FORBES about his business. "But you better get it right," he threatened, "because I've got great lawyers." [rc]
We've got it right.
Sy Syms (1926-2009)
Sy Syms, Founder of SYMS Corp., Dies at Age 83
2009 Forbes.com LLC™
Sy Syms, 83, founder and chairman of the apparel chain SYMS Corp., died of heart failure November 17, 2009, in New York City.
Syms founded his business in New York's financial district in 1959, and was the first retailer to sell off-price men's clothing. He created the well-known slogan, "An educated consumer is our best customer," which he narrated in his first television commercial in 1974 and which is used to this day.
In 1983, when SYMS had expanded to 11 stores, Syms took the company public. He remained chief executive of SYMS Corp. until 1998, when he was succeeded by daughter, Marcy. He continued as the company's chairman until his death.
Forbes magazine published this Richard Behar profile of Syms and his company in its September 9, 1985, issue.
Hi, This is Sy Syms: Welcome to the off-price clothing empire of Sy Syms, where an educated consumer could use a refresher course.
"IT'S THE BIGGEST-SELLING suit we carry, barks the salesman as he holds up a Pierre Cardin suit for $139 and beams approvingly. "Why should I care how good it is?"
This is a Syms clothing store, where "an educated consumer is our best customer." Lyndhurst, N.J.-based Syms Corp. is riding high these days on its reputation for selling brand-name clothing, mostly menswear, at big discounts. It has 14 stores stretching from Fort Lauderdale to Buffalo to Chicago, and whenever a shopper telephones one, the phone is answered with the same earnest incantation: "An educated consumer ... " Radio and TV commercials sound the message home--oh so earnest, but oh so friendly--from the very own lips of Sy Syms, formerly Sy Merns, the company's founder and CEO.
Over the past five years, Syms' sales have nearly tripled, to $204 million, while net earnings have risen even more steeply, to $13 million. This year revenues will be up another 10% despite the sluggish economy.
Bear, Stearns & Co. and Rothschild Inc. jointly took the firm public on the NYSE in 1983, at 28 times earnings. Syms overnight became a centimillionaire, pocketing around $25 million and keeping control of 80% of the stock, currently worth about $170 million. The stock has slipped since its new-issue days, but at a recent 12 still sold at a high 16 times projected earnings and 4 times book value.
Syms' profit margin is among the highest in all of retailing--about 13% on sales last year before income taxes--and over the past five years it has had an average return on equity of about 30%.
Quite a trick. How does Syms do it? Company literature explains that Syms sells "a broad range of first quality ... nationally recognized designer and brand-name merchandise at prices substantially lower than generally found in traditional retail stores." The question is, how do you sell cheaper and yet make more money? The answer, unfortunately, is: by sometimes hood-winking its "educated consumers" and sometimes selling them inferior-grade garments that can be mistaken for top-of-the-line goods.
Educated consumers? Syms has cashed in on an ill-informed lust for prestige labels on the public's part and on the discreditable willingness of many designers and their licensees to bastardize the brands for a bigger return. Syms' tricks are played with suits bearing such famous names as Givenchy and Brioni, which can be found sprinkled among lesser-known garments by the dozen.
Syms' off-price business is built, in theory at least, on the fact that manufacturers routinely produce 5% to 10% more garments and piece goods (uncut fabrics) than they can dispose of through normal channels. Some manufacturers sell the piece goods on the secondary market, at 20 cents to 50 cents on the dollar, to so-called jobbers. These people in turn typically resell the goods to other manufacturers to be stitched together and sold under labels in discount stores and elsewhere. But it's often more profitable to cut and funnel the goods directly through offprice outlets like Syms at prices 20% to 50% below wholesale, which is better than prices available through jobbers.
Many manufacturers prefer to dump their surpluses through Syms because of Syms' willingness to pay cash up front, buy in huge quantities and give manufacturers great flexibility in the styles and sizes produced. To cool the wrath of a manufacturer's regular clients, Syms agrees not to advertise brand names. The code of silence he observes with his vendors is usually a two-way street; the manufacturers keep mum about the specifics of their deals with Syms.
But the silence ends on the shop floor. There the customer sees the label, but the recognizable names on the racks are not always attached to the kinds of high-quality garments that made the manufacturers famous in the first place.
Take the prestige suitmaker of Italy, Brioni Roman Style. Its largely handmade suit is among the best and priciest in the world. It takes about 18 hours just to make the jacket, and merely 200 suits are produced a day from a factory in Penne, Italy. Some 15,000 are sold annually in the U.S., starting at $1,200 retail ($600 wholesale). Syms, however, carries a sound-alike suit tagged "designed by Brioni' for $299. "The quality and value is the same," says Robert Merns, Sy's son and a company vice president. "That's the magic. We're working for the man in the street."
How can Syms sell a "Brioni" at $299 that apparently wholesales for $600, and still reap a high profit? He can't. His "Brioni" suits carry a price tag that says they sell elsewhere--but nowhere in particular--for $650. Consumers gobble up the garments, but although they are decent enough suits, they aren't the real McCoy--"Roman Style by Brioni." Fabric is sent to an unassociated factory in Italy, which churns out around 5,000 cheaper-quality "Brioni" suits specifically for Syms each year. These are Syms' "Brionis."
Syms is also America's largest dumping ground for "leftover" Givenchy suits, but they, too, are visibly of lower overall quality than the Givenchys that are sold in department stores. Even to a reporter's untrained eye, the fabrics and stitching look cheaper, the linings appear flimsier. We asked Al Cohen, head of Givenchy's licensing group, about this. Not surprisingly, he didn't like the question. Suggested he: "Why don't you just say that Givenchy produces a special suit for Syms. The people don't see the difference. All they are interested in is the label.
"That's why we like to sell Syms," says Cohen. "Once that suit goes out of the store, there's no identification." No identification? That's because Syms agrees to snip off the Givenchy label before the customer is permitted to take the suit out of the store. The little charade impresses the customer and keeps Givenchy happy as well.
Are there no true bargains in a Syms store? There are, but they often come from lower-priced designers or they are the low-end products of high-priced designers. By carefully sifting through the pipe racks, a consumer can find real bargains but only by being highly selective.
Since Syms is so successful, why doesn't he have more imitators? Many try to imitate him, but they lack his financial clout. Dash's Designer, a chain of five discount mens-wear stores in Washington, D.C., took Intercontinental Apparel to court recently, charging that the Hartmax division, which sells suits under the Pierre Cardin label, violated antitrust laws by price discrimination in Syms' favor. Dash's lost round one in February; it's now appealing.
At the trial, top Hartmarx executives presented conflicting testimony as to whether Syms' Cardins were of equal quality to regular Cardins sold by other retailers. On balance, though, it seems clear that a good deal of Syms' merchandise is, in fact, manufactured specifically for it and is not "leftover" in the accepted sense of the word. Syms' Robert Merns confirms this. He admits to FORBES that Syms cannot rely only on "leftovers" of big manufacturers.
Many traditional retailers are catching on to the off-price approach. But there are only so many genuine leftovers. How far will designers and licensees go in lowering their own alleged standards in order to supply labeled but chintzier goods? Quality men's stores like Barney's in New York City are now shunning many labels that are increasingly found in stores like Syms.
"Designer names were once a surrogate measure for quality and value," says William Ress, a major retailing consultant. "But too many designers essentially prostituted themselves in the late Seventies and early Eighties by selling their names and not getting involved in design or product quality. They are no longer a reliable surrogate." But nobody explained all this to Syms' "educated" customers.
In spite of repeated requests, Sy Syms refused to talk with FORBES about his business. "But you better get it right," he threatened, "because I've got great lawyers." [rc]
We've got it right.
Sy Syms (1926-2009)
Sy Syms, Founder of SYMS Corp., Dies at Age 83
2009 Forbes.com LLC™
