A U.S. retail chain is betting that bigger is better when it comes to men's clothing as it stakes out new territory in Canada, threatening to steal business from incumbents.
Destination XL Group Inc., the leading U.S. retailer of big and tall men's wear, is launching its first two stores in this country starting with one in Ajax, Ont., on March 13 and another in Mississauga next month, aiming to lure what it says is an underserved customer.
DXL Men's Apparel, which used to be known as Casual Male, caters to men with a waist of 38 inches and up but is counting on a strategy of focusing more than ever on men who are in the lower range of the plus-sizes – what the company calls its "end-of-the-rack" customer. With a waist of between 40 and 46 inches, that shopper spends 120 per cent more than men with wider waists, David Levin, the chain's chief executive officer, said.
"This guy is frustrated," Mr. Levin said. "He's underserved. He can't go to the mall and find anything … Every time we bring in one of these end-of-the-rack guys, he is worth two of our older customers."
DXL of Canton, Mass., is entering Canada at a time when arch-rival Grafton-Fraser Inc., owner of this country's largest big-and-tall men's wear chain – George Richards Big & Tall – is insolvent and restructuring under court protection while other players are vying for more business in an increasingly tough apparel market that is being squeezed by less traffic to brick-and-mortar stores and more online rivals.
Despite the challenges, sales in the overall Canadian men's wear market are picking up a little faster than those in the women's wear market, although the growth in both is due mainly to price increases rather than actual volume gains, said Tamara Szames, fashion industry analyst at researcher NPD Group.
Sales in the big-and-tall men's-wear sector climbed 3 per cent to $645-million in 2016 from a year earlier, representing 8 per cent of the $8.5-billion men's apparel sector, her data found. But unit volumes declined by 5 per cent in both the big-and-tall and total men's apparel markets while overall men's clothing sales also grew at about the same rate as those of big-and-tall men, she said.
Amid the lacklustre growth and digital pressures, incumbents say they're ready for the new U.S. competitor.
"Bring it on," said Richard Bull, vice-president of merchandise at the 126-store Moores men's chain, owned by U.S.-based Tailored Brands Inc. About 15 per cent to 18 per cent of Moores' $214.5-million (U.S.) annual sales are made up of suits that are size 48 and up as well as sportswear that is XXL and up. "If it makes more men aware of the availability of those sizes and the availability of fashion goods in bigger sizes, that may not hurt us."
"It keeps you on your toes," added Lance Itkoff, president of Toronto-based Grafton-Fraser, which plans to continue operating about 50 of its George Richards, Mr. Big & Tall and Kingsport Big & Tall stores (and is closing some of its Tip Top Tailors regular men's-wear stores). "Ultimately, the customer wins." He is even looking at expanding its upscale Kingsport.
Nevertheless, all players, including DXL and Moores – which doesn't offer e-commerce – feel the pinch of Amazon.com Inc. stepping up its big-and-tall men's wear offerings, Mr. Bull said. "Amazon as an online player – they're for real and they're big and they're good."
In recognizing the Amazon factor, DXL teamed up with the U.S.-based e-commerce powerhouse a few years ago, selling its goods on its site. DXL also offers online shopping in Canada from its own U.S. site.
Other changes are at play in the evolving men's wear market. More upstart and incumbent retailers are expanding into made-to-measure clothing, which can include large sizes. At Moores, for example, its custom-fit business is "exploding" despite soft overall sales, Mr. Bull said.
Vancouver-based Indochino, one of the fastest growing among made-to-measure men's wear specialists, has opened 10 physical stores, with more to come soon, said CEO Drew Green, adding: "2016 was the year made-to-measure has become mainstream."
Indochino considers about 20 per cent of its customers to be big and tall – 6 feet, 2 inches and 250 pounds and up – even though the retailer doesn't specifically pitch to that niche, Mr. Green said.
Department stores carry big-and-tall men's clothing but suppliers such as PVH Corp., whose lines include Calvin Klein and Tommy Hilfiger, have scaled back on shipments to those stores, said Richard Deck, president of PVH Canada.
DXL stocks a wider range of brands and prices than Grafton-Fraser, such as jeans from $70 to $250, said John Archer of retail consultancy Three Sixty Collective. And DXL is familiar with the Canadian market, having operated boutiques in Sears Canada stores more than a decade ago.
Still, DXL, which is still converting its Casual Male stores to larger DXL outlets, is at a disadvantage because not enough people are familiar with it, even in the United States, said Bernard Sosnick, an analyst at Madison Global Partners in Hauppauge, N.Y. "Brand awareness has been a key sticking point." And the overall apparel retailing sector is "pretty awful," he added.
DXL has felt the pinch of fewer people heading to physical stores and stalling growth in sales at existing outlets. But CEO Mr. Levin said DXL has outperformed other clothing retailers.
In its third quarter, DXL's loss narrowed to $4.5-million from $5.5-million a year earlier as the company continues to invest in converting Casual Male stores to the bigger DXL; existing store sales rose 0.9 per cent compared with 4.3 per cent a year earlier.
Mr. Levin said the average DXL customer age has dropped to 47 from 55 in 2010, when the conversion to DXL stores – with a wider array of styles and brands – began.
In Canada, Mr. Levin sees the potential for as many as 35 stores here if the first two take off, compared with 350 in the United States. "We know it will take time to build awareness," he said.