Pair who peddle safari jackets gird for sales jungle. Banana Republic, rich from offbeat garb, faces competitive pressure
Patricia and Mel Ziegler call themselves ``clothing archaeologists.'' To find just the right cotton shirt, they dig through military surplus stockpiles in Spain. To find the right jewelry, they hire a tribe in Kenya to make their traditional crafts exclusively for them. To find the right hat, they persuade a near-bankrupt hat factory in the midlands of England to begin making hats of 50 years ago, hats that her majesty's soldiers used to sport when traveling the world.
In the nine years since the Zieglers started the Banana Republic stores, these clothing archaeologists have unearthed something else: money, lots of money, coming out of the pockets of an increasingly affluent baby-boom generation.
It is precisely that group - young, urban professionals, with the money and interest to travel - that was most shaken by the stock market plunge Oct. 19. Now the Zieglers will have to call on their own ingenuity - and the American consumer's dogged determination to spend through thick and thin - to pull them through an uncertain Christmas.
Mr. and Mrs. Ziegler have turned adversity into profit before. When they were first opening their stores, they trotted the globe, hunting for durable, comfortable clothes. In Spain, they came upon a cache of old Spanish paratrooper shirts that were used in the Francisco Franco era.
They bought them from a middleman in Madrid, by the pound. ``We thought we were really clever,'' recalls Mel. When the shirts arrived in San Francisco a couple of weeks later, ``we took them off the boat, and we opened the container, and the container was weighted down with airplane parts. I'm not sure what we paid for those first shirts.'' Moreover, the merchandise they did receive appeared to be useless: The sleeves were an inch or two short.
``We decided since the sleeves were short, it wasn't proper for people to wear long-sleeve shirts anyway.''
Patricia, as ``minister of fashion'' of the Banana Republic, dictated that sleeves on safari shirts should be rolled up. And Mel, a former reporter with the San Francisco Chronicle, ``wrote some apocryphal copy for the catalog explaining the reason for the short sleeves, and that,'' he says, ``was Franco's maniacal persecution of long-armed Spaniards. They sold out almost immediately.''
The two of them have been ringing up the profits ever since.
In fact, the Banana Republic has become something of a legend in retailing. The average store sells about $600 per square foot, roughly triple what a department store sells, says Edward Weller, an analyst at Montgomery Securities in San Francisco. In 1983, the store was bought by The Gap, and Banana Republics, financed by their big parent, began popping up all over the country. (``We married the bank,'' Mr. Ziegler says.)
There will be 90 stores by the end of this year. In the last three years, Mr. Weller estimates, ``Banana'' has gone from $5 million in sales and less than $1 million in pretax profit to an estimated $180 million in sales and $25 million profit.
At first, retailers wondered whether Banana Republic was the Hoola-Hoop of clothing. A first-time shopper may be agog at the rhino head (plaster, not real) mounted on the wall, or the jeep parked in the corner, or the wild-boar grunts and bird screeches coming out of the stereo speakers. But presumably, one can sell only so many safari hats.
It is a dilemma captured by Helen and John Centa, an elderly couple from Hayden Lake, Idaho. Last week they stood gazing in the window of a Banana Republic in downtown Washington; they didn't go in. Why not? they were asked.
John: ``We just don't happen to be interested in what they have to offer at the moment.
Helen: ``We've already been to Africa on safari.''
But Banana Republic turned out not to be a passing fad. The stores were helped by demographics - the '60s generation expressing its individualism in offbeat clothes - and fortuitous timing. Movies like ``Crocodile Dundee'' and ``Out of Africa'' created a demand for Banana Republic's wares.
Now that trend has played itself out. ``There was concern that when that look faded, they would fade, too,'' says Margaret Gillian, an analyst at First Boston. ``But they haven't. I think they can sell anything their hearts desire in those stores.''
Which is what they are trying to do. Banana Republic, Ziegler says, is becoming ``a full-service resource for the traveler.''
The chain has already put travel bookstores in many of the shops. It also operates a ``climate desk,'' a toll-free number (800-325-7270) with two researchers who answer questions about the weather and political climate of any spot in the world. It will soon be coming out with a magazine called Trips, on, well, trips. Eventually, Ziegler says, Banana Republic will arrange trips for travelers as well.
Essentially, Banana Republic is shaving off some of its ultra-exotic edges. In the new catalog, the word ``safari'' is absent in its old logo, ``Travel and Safari Clothing Company.'' In this spirit, the stores will be replacing their grunts-and-screeches tape with one that has travel noises on it: things like trains pulling into the station, or boats on the water.
Most analysts think the stores can make the transition smoothly. Indeed, the Zieglers appear to have a deft touch. Patricia is an artist, even doing a stint as a courtroom artist when she covered the Patty Hearst trial for the Chronicle. She designs the clothes and the stores, and she illustrates the catalogs. Combined with Mel's tongue-in-cheek writing, the pair has won an embarrassing number of awards.
There is, of course, a ``but'' to all this; actually, there are two hitches to their success.
First, after the first year or two, sales that any given store generates tend to level off.
``It's hard to convince people to wait in those lines on a Saturday to buy another cotton shirt,'' Weller of Montgomery Securities observes.
To ease up on the crowds, another Banana Republic will open nearby, and that tends to cannibalize the first store's sales.
The other challenge facing them is competition.
``Right here in San Francisco, the local Macy's has several departments in both the men's and ladies' areas that have palm trees in them,'' says Weller. Not only do they sell safari-type jackets and heavy dense cottons like Banana Republic's, but their clothing is far more colorful and less expensive.
Macy's and a host of other department stores are setting up specialty shops that ``seem to be skimming an awful lot of the high-volume, moderate-price point cream right out of the Banana Republic strategy,'' Weller says.
``Everybody has copied us, and it's disheartening to see that happen,'' Ziegler says. ``The difference between us and them is, they can't go to work until we finish.''