Bob Mitchell, Co-CEO of Mitchells Stores, Outlines the Company’s Secrets to Success

GREENWICH, Conn. — At this point, the story has become retail industry legend.

It was 1958 when Ed and Norma Mitchell opened a haberdashery in an 800-square-foot former plumbing supply store in Westport, Conn., with “three men’s suits, a coffee pot and a dream.”

Over the years their family has built what is arguably the most successful independent multibrand luxury retailer in the U.S., one that includes Mitchells and Richards in Connecticut; the former Marshs on Long Island; Marios in Portland, Ore., and Seattle; Wilkes Bashford in San Francisco and Palo Alto, Calif., and most recently, the Dallas-based Stanley Korshak.

All told, the stores have sales in excess of $250 million with what is believed to be the highest sell-through rate in the industry.

But how have the Mitchells done it, when many other independent retailers have disappeared over the last six decades? And as luxury faces a slowdown, how have they managed to continue to grow amid the more-challenging environment?

Here, Bob Mitchell, grandson of the founders and co-chief executive officer of the chain with his brother Russell, gives an inside peek of the company’s secrets to success.

WWD: Over the past 67 years, your family has built what is viewed as the U.S.’s most successful multibrand luxury specialty store chain. How did you do it?

Bob Mitchell: First and foremost, we’re a values-based company. About 10 years ago, we changed our mission statement, which is to make people feel great. We believe we’re in the people business and if we make our people feel great — meaning all of our associates, who number around 400 now — then they make the customer feel great. It sounds silly, but most people buy nice clothes and jewelry to make themselves feel great.

WWD: You have a value card that breaks down your mission, right?

B.M.: Yes. And the first value is: Customers are the center of our universe. Do you know your top 100 customers? We like to have everybody know the top customers, not just the executives, not just the sales associates taking care of them. Our credit manager knows if she’s talking to one of our best customers. We can talk about businesses being good or bad because of the weather or the tariffs, but it all comes back to: Are you talking to the customers? When I’m in town, I still personally spend every Saturday on the selling floor talking to customers. Everybody sells — I still sell. We want to create an environment people love to be in because we still believe the in-store experience is where we win.

WWD: Your father Jack Mitchell wrote about this in his book, “Hug Your Customers,” but how does that translate into action?

B.M.: We’re continuing to amp up the personalization of relationships in the store. VIC [very important client] trips, going to people’s homes, knowing what people like. We offer Coke and Pepsi because we have executives from both companies, and you never serve a Coke to the president of Pepsi. My dad was ahead of himself on the personalized service piece, but now you’ve got to take it to a whole other level.

WWD: You operate in a rarified space, targeting luxury customers. What impacts their purchasing?

B.M.: What makes the luxury customer stop spending is the stock market. They all have plenty of money and everyone can say rich people shop through bad times. But when they don’t feel great, they don’t spend as much.

WWD: So how do you convince them to buy if the stock market is down?

B.M.: Assortment is critical, but that’s kind of a given. If you’re selling the best brands in the world, you have beautiful merchandise. But we’re personalizing it. I always say the thing I’m most proud of is the tenure of our people. Dan [Farrington, head of menswear], has been here 37 years, Angela [Pieretti, head of women’s], for 25 years, and Jen [Farrington, Dan’s wife who runs the jewelry business], for 18 years. They know our customers, know the markets, know our sales associates.

WWD: Is that still possible as the company has grown into a national business?

B.M.: As we’ve gotten bigger, I keep saying we have to think small. Are we in touch with the top 50 clients at Marios as much as we are the top 50 clients in Greenwich or Westport? We have multigenerational relationships with these clients and sales associates who have been with us 10, 20, 50 years. You cannot create authentic relationships if you have high turnover with sales associates. We work as a team, act with integrity, mutual respect and trust.

WWD: Anything else?

B.M.: Yes. One of the keys to our successes is we give back in the communities we’re part of, and in today’s environment, that really means something to the luxury customer. I think that resonates even more after COVID with people about staying local, shopping local. And that includes offering local brands because no client in Dallas wants to hear that Greenwich is the same as Dallas. I used to be the analytical one and say, “Oh, it’s about 70 percent the same.” And I found that was a turn-off to the customer. The customers want to embrace that Dallas is different than Palo Alto, which is different than Long Island. So by maintaining local brands, people can feel like they’re shopping at the local hero.

WWD: You never really call it an acquisition when you bring another store into the Mitchells fold. And you always keep the founders involved. Why?

B.M.: Again, it goes back to what the customer wants. When we had the party at Korshak, people were so nice and welcoming, but the first thing they said is: “I’m glad Crawford’s [Brock, the former owner] still here.” They don’t know me. I could think I’m God’s gift to retail, but in their minds, I’m some schmuck from Connecticut.

WWD: When you bring another store on board, what’s the first thing you do?

B.M.: Of course, there’s a new customer that you want to try to attract in order to grow, but the easy part is making the core customer feel better and selling them more. When we bought Richards, it was all men’s and today the store is 55 percent women’s and jewelry. We have three distinct businesses: men’s, women’s, jewelry. It’s about 40-40-20 today. So when we merge with someone, it’s like, where’s the low-hanging fruit? At Marios, it was menswear — women’s was actually bigger and they had very little jewelry. At Wilkes Bashford, the women’s and jewelry were under-penetrated. Korshak is actually interesting because their business is almost identical to ours but they have twice the square footage doing less than Westport or Greenwich. So we believe it’s just selling more to existing people and attracting more new people. With as many people as there are in Dallas, it should be the number-one store.

WWD: Although you keep the local flavor, how does it benefit you to have a large chain?

B.M.: We share inventory with all nine stores. If someone wants a suit and we don’t have it in one store, we usually have it in another. That’s the value of being part of a bigger group. But customers still like the idea that they’re shopping in Stanley Korshak in Dallas, versus calling it Mitchells.

WWD: Is that why you keep the names of each store you acquire?

B.M.: Yes. [The easiest one to change] would have been Richards, but I can’t tell you how many people come in on a Saturday and say, “I’ve been shopping at Richards since 1960,” or whatever. I believe there’s a sense of pride around that, especially with wealthy people.

WWD: And you’ve said in the past that wealthy people also like shopping at multibrand stores.

B.M.: If you ask 100 luxury customers, would they rather go to one store and buy everything they want? Or do they want to go to 10 different stores? Ninety-nine out of 100 people want convenience, which I think is another one of our biggest assets. About 85 percent of the business comes from within a 10-mile radius of each store. They want convenience, but they also want selection. And that’s where technology has helped us immensely. Every one of our items has an RFID tag in it. We can see exactly where every piece of merchandise is in every store. So if I call San Francisco and I need this pair of shoes and they say they can’t find it, I can just tell them it’s in the back stock room on the third shelf.

WWD: How important is technology to the business?

B.M.: We believe in data. We want to be merchants, but we want to be grounded in fact. But on the other side of data, we’re using technology to stay personal. I really credit my brother Russell. When everyone was chasing the internet and spending millions and millions of dollars, we did it in a more measured way. We built our technology platform to stay connected to our customer and attract first-time customers, not to become the biggest e-commerce player. So today, our business is about 7 percent e-com, but the most powerful piece of our technology platform is what we call “Reserve in Store.” If a client in Seattle is ready to shop, she can go online and pick from all nine stores. She can send it to her sales associate [who will make recommendations].  If you look at what people reserve and buy, it’s around 12 percent and it’s mostly regular price, which is even better.

WWD: Do you have outside investors?

B.M.: We are completely self-funded. We have no outside debt. And the reason we can do that is because we’re very disciplined on certain things like full-price sell-throughs: we have the highest in the industry. We’re selling about 70 percent of all merchandise at regular price. That comes from being very deliberate. Yes, we need stuff that’s going to excite people, but it’s also got to sell. That’s where great merchants can make a difference. They know they’ve got to get the sell-throughs. We’re always competing with the bigger players, but we only lose if we don’t have a brand. Or we‘re not on sale. We never want to lose a customer, but someone who only wants to buy at 60, 70 or, 80 percent off, when I’m losing money, I’m willing to lose that customer.

WWD: How do you handle markdowns?

B.M.: They’re obviously a part of the business. We’re trying to minimize them by pushing the full-price sell-through. We can’t have a large percentage of the merchandise being marked down, or it doesn’t work for us. We learned a long time ago that the best things sell at lower discounts. If your dress sold 80 percent, that last 20 percent is going to sell too. And it can sell at 20 or 30 percent off, not 50 to 70 percent. I’m always happy for a good customer to get some things on sale, but for clients who only want to shop at the bargain discounts, that’s not a customer worth chasing.

WWD: Are exclusives important to you?

B.M.: I love to have things that other people don’t have, but we have a lot of the big brands because that’s what the customer is voting for. Why would I not carry a couple of big brands because they’re at a department store down the street? Take Fidelity: we started with them many years ago and it was something most people didn’t know and it became a great brand. Or Pescarolo, which is owned by the Kiton family that no one had heard of. Now it’s a multimillion-dollar pant brand for us. But that doesn’t mean I can’t have Kiton, or Cucinelli. With globalization, the product is everywhere. So this idea of exclusivity in an intellectual world makes great sense but I don’t think it’s practical for most things.

WWD: How do you decide what brands to add to your assortment?

B.M.: We really try not to add any brands that will cannibalize an existing brand that we’re doing very well with. We win by being loyal and bigger and stronger with our vendors and not diluting them with new people unless there’s a real reason. It allows us to be more important with those vendors, which builds authentic relationships and allows them to help us to drive the sell-through to a level that increases profitability. It’s all tied together.

WWD: Your value list also talks about always striving for excellence.

B.M.: Yes. That one came from my dad. He used to ask Russell and I, early on, what’s next, what’s the goal? And we always said we want to continue to raise the bar every single year. I’d rather have an $800,000 seller who’s growing at a rapid rate than a $3 million or $4 million seller who’s just plateaued for five years in a row and doesn’t strive to do better. One of the most important things about excellence for me is listening, learning and growing. A lot of times people ask why we’re part of an international retail group. Why are we part of the Forum Group? Because we listen and learn what to do and what not to do. Even if someone’s smaller than us, I always look at them and say, what’s the one thing I can take from them that they’re doing better than us?

WWD: Who do you admire in the retail business?

B.M.: The one that just blows my mind is Amazon. Every time you step back and think about what they do and how it gets there the next day. They’re dealing with a million employees in the retail division and how many times do you really get disappointed with them? Very little, right? Retail is detail — that’s another thing I say all the time. Especially with the luxury customer, if you’re going to do something, you better deliver on it. They’re high-end people who are used to getting their way. So don’t disappoint them. If you can’t do it, say no or I need a little more time — just stay in contact. It’s totally unrelated, but Costco is a company I want to learn more from. I’m just in the infancy of talking to some of the [Costco] executives in Seattle. But if there’s a store that’s in our industry that I still look up to, to aspire to be, it’s Bergdorf Goodman. People can say whatever they want about what’s going on [with the merger of Saks Fifth Avenue and Neiman Marcus Group, which includes Bergdorf’s], but they still have the best assortment and they’re in the best position in New York City. You have to look up to them and tip your hat to what they’ve created. I try to learn from everyone — my wife gets mad at me — because whether it’s a restaurant or a hotel, I’m constantly thinking how are these people making money? What’s the value proposition?

WWD: Have you seen that change over the years?

B.M.: In Connecticut 20 years ago, if I went into a very expensive restaurant, I knew 80 percent of the clients. Today, there’s a younger generation of people who are much more willing to spend $250 a head on dinner or $2,000 or $3,000 on a suit. So I think there’s something to learn about what these restaurants are doing to create buzz, and how we can harness that to drive them into our stores.

WWD: How can you incorporate that into your business?

B.M.: The question is, are you creating an environment in your stores that is extra special? The other day, a guy, one of the most important attorneys in the world, was here shopping. He doesn’t even live here anymore. He lives in the city but he came for his big shop. We have a new Neapolitan pizza place around the corner. The sales associate said [the customer] loved the chicken parmesan grinder so when he was done shopping, we handed him a grinder. Everyone talks about all the fancy stuff, but are you doing something that really resonates with that person? Those little things are creating an environment that will make people say, “Wow, this place is really different.” Some people really don’t like to be here with a lot of people. Are you opening the store for them late? Are you allowing them to shop on Sunday when there’s no one around? We’re trying to encourage more of that.

WWD: How does that tie into your VIC program?

B.M.: It’s a huge part of our business, particularly in women’s, where we’re taking people to Milan, to Paris. The sales are incredible — kind of mind-blowing. But what comes out of it is Angela Peretti being with six women’s clients from Seattle, San Francisco, Connecticut — and all of a sudden they’re all text buddies. That’s building the authentic relationships to the next level. Not only do they spend in the short term, their long-term spending goes up because they feel that much more connected to us. Our vision is to be the best specialty stores on the planet. We want to strive to do better, keep trying to improve, and never be complacent.

WWD: What about other events outside of VICs?

B.M.: Having an event with 15 or 20 people sometimes produces better business results than 100 people. Probably the best example is when Kiton flies over a Michelin star chef to someone’s home in Greenwich, and we entertain just 20 clients. And even though there’s no selling on that night, people come to the trunk show the next few days — every one of them. Then, there’s a great new brand in women’s called TWP — it’s the fastest growing brand I’ve ever seen out of the gate. We had an event in the store and it wasn’t anything fancy, it was the designer talking about her vision. It was modeling a few clothes, and people just shopped.

WWD: E-commerce isn’t a big part of your business, but how do you use it to your advantage?

B.M.: We now have dedicated digital stylists, people who are trying to build relationships like we’re building in the store. It’s been successful, and we’re going to continue to invest there. The continued challenge with the e-com business is that the return rate is still huge — 35 to 40 percent. If you think about it using a positive lens, how much do people bring in the dressing room that they buy? But it’s still much harder to actually build loyalty. Most people who are big internet shoppers look at everything, so you’re competing against the world. Our strategy continues to be to try to make it as highly personalized as we can. One of the biggest outgrowths of COVID has been that the luxury customer doesn’t live in one place as much as they used to. Even people who are still working full time are finding ways to spend six months in Florida, three months in Greenwich and three months in Aspen. The most important part of our e-com platform is it’s the door to our stores today.

WWD: Do you see a difference in loyalty between men and women?

B.M.: The differences between men and women are generally not as different as people think. We have shown that with the right sales associate, women can be just as loyal as men, where we can capture about 80 percent of their purchases. The biggest difference in women’s is if someone has a propensity to buy some of the major brands that we don’t have, be it in Hermès, Dior, Chanel, it’s very hard for us to capture that market share.

WWD: Would you ever open a restaurant in one of your stores?

B.M.: We’re producing anywhere from $2,000 to $4,000 a square foot. Most department stores are around $500 a foot. If I had a lot of extra square footage, I think having a great restaurateur who could drive traffic into the store is something we would strongly consider. For us, it’s much more about whether we can own the husband’s purchases or the wife’s or partner’s. That’s another one of our big missions. When people talk about top customers, for us, it’s top households.

WWD: You’ve spent a significant amount renovating your stores. How do you justify the expense?

B.M.: Over the last 15 years, we’ve recognized that we have to have world class-looking stores. If there’s one place the monobrands can outdo us, it’s spending on interiors. But literally every person who comes into [the new Wilkes store in] Palo Alto, says, “Wow.” The store is incredible. So as much as we don’t love doing it, every eight to 10 years, we have to keep changing the stores. It’s also super important to the brands that they look great in our stores. They aren’t going to distribute to people who aren’t going to enhance their brand. I probably spend half of my time just staying connected to the most important brands. I want to understand what’s important to them, and try to have them visit here as much as we can, so they can experience what we’re doing.

WWD: Can we expect any other acquisitions from you in the future?

B.M.: Right now, our plate is full. We’ve never done two big projects in one year: Palo Alto and Korshak. That’s the biggest capital expenditure we’ve ever had in a year. We’re always open, but for the next year or two, we’re going to try to digest and not get ahead of ourselves. Especially with these semi-uncertain times, I think it’s the wrong time to be overly aggressive.

WWD: You’ve mentioned that you’d like to expand to Florida someday.

B.M.: Eventually we will, it just has to be the right time and the right place. I still worry about the seasonality. I know everybody says not to worry about it, but it’s not in our DNA to have a small store and all of a sudden in May, June, July, August, September, October, you get an empty store. There’s a reason both Saks and Neiman Marcus went out of business in Palm Beach. But we’ll see.