Why do digitally native brands need bricks-and-mortar? johnnie-O recently opened their first bricks-and-mortar location at Trademark’s WestBend development in Fort Worth, with plans for creating additional retail footprints throughout the country.
In this two part discussion, Chris Knott, who founded luxury brand Peter Millar in 2001 and left in 2015, joins Terry Montesi to discuss how the evolution of men’s merchandising is on a similar path to how Lululemon reshaped women’s fashion trends, with johnnie-O setting the course. The two also discuss Chris’ rise in the men’s clothing industry, and what attracted him to join johnnie-O to lead their merchandising and design efforts.
Be sure to hit the subscribe button to hear Part 2 of Terry and Chris’ discussion.
Transcript
Terry Montesi: This is Terry Montesi, CEO of Trademark Property Company. Welcome to Trademark’s podcast, Leaning In, where we look at the future of retail and mixed use, and how we can lean into it while others are leaning out. This is part one of a two-part episode. Thanks for tuning in. On today’s episode, I speak with Chris Knott, chief merchandising officer for men’s retailer johnnie-O and founder of Peter Millar.
He shares his business journey and his current work with johnnie-O, his thoughts on the recent retail trends, and he also shares with us why they’re opening their first standalone store in Fort Worth at our West Bend development – and also why 2020 was their best year ever. Thank you for listening.
Chris, thanks for being with us today. If you would start off and share your role and what you’re up to at johnnie-O, and a little background on how johnnie-O got started.
Chris Knott: Oh, you got it. Thank you. My name’s Chris, I’m 55 years old. I’ve been in the men’s apparel business since I was 14; I started out in a little small specialty store, so I’m very familiar with retail. I worked there all through high school and college, I deal with retailers both big and small around the country. But I joined johnnie-O four years ago as their chief merchandising officer.
My background is that in 2001, I started a company called Peter Millar, and stayed there until 2015. Then I like to say I took three semesters off. And then John O’Donnell, who’s a good friend of mine and the founder of johnnie-O, he called and said, “hey, we’re looking for someone that has your skillset and knows how to design and merchandise, and has a lot of contact with retailers and golf courses,” and things like that. The unique thing about it was that in my time off, I was living a lot of time down at the coast of North Carolina. And I was out of that business world; getting on a plane with a coat and tie on every day and hour every week, and just started paying attention to how people were starting to dress.
I think it had a big impact on me. So, when I could go back to work after my non-compete, I wasn’t looking to get back in that world of coat and tie. And I love that. I grew up in that whole world: leather bottom shoes, everything was getting more casual.
Montesi: I used to wear some of those.
Knott: I still love that business, but I worked for Hickey Freeman for 10 years.
But anyway, it was just obvious to me what Lululemon had done in the women’s business was going to come to the men’s business, but in a different way. Men are not trying to show off their body. They’re working out all day, they don’t wear their clothes like women, but I thought, “there’s going to be a big opportunity for something that was still dressy enough to wear to work, but also casual enough to wear to the cookout, or the soccer game, or the golf course.” We don’t really brand ourselves as a golf line, but we sell to $1,200 of the best clubs – like yours at Shady Oaks – around the country.
And what we find is that’s just a great cross-pollination for branding. Somebody may not even go into a men’s store or a big specialty retail like Nordstrom, they just buy everything at their golf course. I’ve got friends like that, and this just turns them on to the brand and what we hope to do, for example in an area like Fort Worth, is be able to drive people to our store there that represents the entire brand, because we’ll have everything there for the footwear, to the printed knit stretch sport codes, to belts, to knits, to bottoms, to jeans, to everything.
And this is really our first chance of showcasing the brand like that.
Montesi: Well, that’s very exciting for our listeners, johnnie-O is opening their first brick and mortar store at our West Bend project in Fort Worth here in just the next few days. It’s pretty exciting and we’re thrilled with the association. Tell us that backstory of founding Peter Millar, and then how you sold and then took some time off – I’m interested to hear a little about that.
Knott: Yeah, it was simple. I was a rep. I was working for Burberry out in London and they had licensees; Hickey Freeman did the tailor clothing, and [can’t work out brand] did the shirts. You sold the actual scarves and everything from Burberry, but what I saw happening was that no matter how good or how hard I worked, I didn’t have any equity in it, but it was just a matter of time when someone like Burberry London said, “hey, I don’t want to deal with the mom-and-pop specialty store,” and I knew when that happened, I’d be out of a job.
It was 2001. I just had a baby. I just remodeled the house. I was doing great selling clothes, but I had no stake in it. So, I started a little cashmere sweater line and we named it [unclear] after a little lawn ball that my mother gave me – the guy’s name was on there. And then we went out and sold like 4,800 cashmere sweaters in the first season, we delivered them, everybody loved them. One thing led to another, I brought in some great partners – management partners and financial partners – that really knew how to build a business. I was always more of a merchant and a salesperson than a sourcing guy. So, I knew what I could do, and I knew what I couldn’t do.
So, I got out of the way, and that was the best thing I ever did. And then from there, everybody knows the story now, it’s one of the greatest brands out there and still doing well. And then I sold out in 2012 and stayed until 2015. I was too young to stop. I just wanted to slow the speed down a little bit, and johnnie-O was great to be able to let me set up a design studio here in Raleigh. So, johnnie-O is based out of Santa Monica, California, which is really the heart and soul of the company, but everything you see in the stores or online is designed here in Raleigh, North Carolina, which is where I’ve got my little hub of people and expertise.
Montesi: Well that works perfectly because I read your brand book, and you mentioned in there a West coast attitude and East coast attitude blended. So, it’s all very authentic, because you’re in both places.
Knott: It really I, and John O’Donnell, my partner who founded johnnie-O, is one of the all world-class guys you’ll ever meet. You won’t meet anybody that doesn’t love the guy; he’s a scratch golfer, he’s cool, he’s good looking, and he lives in LA. He grew up in Winnetka, Illinois, and his dad was in the advertising business. And when they were kids, they moved out to Bel Air and lived at the Bel Air country club.
So, a kid that was probably very rooted in classic Brooks Brothers dressing ends up in Hollywood or Bel air, which is a pretty cool place if you’ve ever been, as you know. So, I think John kind of got the Southern Cal, the salt air got in his blood out there. So, he went out there to play golf at UCLA. And from there is how what seems like a very simple idea was founded, and I always tell John he’s one of the most creative idea guys I’ve ever met for things like the Tweener button.
Well, he got that little button patented where there’s a button in between the top button and the middle button where it’s just the right setting. It seems like an easy idea, but somebody had to come up with that. It’s like the swish is a great idea, or Apple’s great logo. So, John feeds us a lot of these, “hey, I’m back here looking at what’s going on,” and we’re so close to the product every day that sometimes we can’t see it, because we’re just sitting there. It’s right in front of us.
The hanging out shirts was John’s idea – “hey, a lot of my buddies are wearing their woven shirts with the shirt tail out. That’s been a huge success. The tailgates are short, short pants with polar fleece lining in them for the football game; those are more marketing and creative ideas you’d find from a tech company or something. We’ve got a good marriage, and we’ve got a great CEO – an MIT grad: wicked, great guy, smart. He’s on the West coast, but it’s not uncommon for him to call me at 7:00 AM my time. He’s just one of those guys that really bleeds. We’ve got great people.
Montesi: Well, it sounds like it’s truly in your blood, and the passion shows.
It’s interesting because over the last few years we’ve seen a number of these casual men’s lifestyle brands show up, not just Peter Millar, but Vineyard Vines, Southern Tide, Fairity, and now johnnie-O. What spawned that? What was missing? Why does that happen?
Knott: Well, what’s interesting to me – and I’m a fan of all of those brands, because what they all do, they do really well. But to me, Vineyard Vines kicked it off. They started out making Hermès-like neckties that they were selling them at all the train stations, from Connecticut to all the Wall Street guys. And then when they put that well on the shirt, the thing kind of exploded. The one reason I’m talking about them is that they opened up an entire new category to the consumer and the men’s store that hadn’t been seen since the early days of Polo.
I’m 55, but most guys I know my age or older probably grew up wearing Ralph Lauren Polo shirts. So, they bought at the best men’s store in town. Ralph went on to make plenty of money and he did a lot of great things and it still is great, but you don’t find that brand in those kinds of stores anymore.
All of these stores that we grew up with, they were all hungry for a brand that we call them an on-ramp brand. Something so that you can get somebody in the store, but yet, then I could still sell them a $2,000 suit if they need it. But these are things you wear every day, and in my past life, I saw a need before I really had any partners, or anything was that that was really all about the conversation we were having earlier about our friends and retail businesses. How do you deliver some luxury product at what I would call attainable price points?
“Hey, I love that $2,500 cashmere three corner coat, but boy, I’d really like to pay $695 for one and it looks and feels similar”. So, I was always a good listener. I talked to retailers all day long. They’re my best friends, just because that’s who I hang out with. And they would always tell me what was coming and what was doing great.
Everybody wants to sell more. So, the ability to listen and then be able to go get it executed is really what’s been my success. So, when I got here, which is a totally different lifestyle and animal – even the constructions on the cloths are looser and not as packed and dressy or shiny. I loved to dive in on this and learn how to do this part of the business; it was like a lawyer that did certain kind of law all his life now he’s doing a different kind of law. It’s still a law, but it’s a little different animal. This has been really fun for me to get a second chance at building something.
And over the last four years, the brand has exploded. Not because of me, but just because of all the pieces of the puzzle. You’ve got to have great product, but then you’ve got to have a great salesforce. You’ve got to have great management. You’ve got to have great internet. You’ve got to be able to execute.
You can’t just be in one vertical, saying, “hey, we want to be in every good men’s specialty store in the country. We don’t really sell to big department stores other than [unclear] and we call that big specialty retail, but we also sell to the right golf courses. We sell to the right resorts. We’re in the right high-end bookstores. We’re at the right MLB. If you go to Wrigley Field, we have a shop there. Being in all the right places is how you pollinate your brand throughout the country so that all the right people are seeing it no matter what their interest is.
Montesi: So you’re staying out of Macy’s and Dillard’s and those; are you in [unclear], for instance?
Knott: No, we haven’t gone there because we’re just not set up. If you look at brands in those shops first, they’re all very fine stores, and it’s just a little bit different of a brand mix, and I’m not saying what they do is not very good. When you walk in the store in Fort Worth, everybody in there is going to be speaking and breathing johnnie-O. Their DNA will be johnnie, they’ll know every answer to everything we make.
We feel like that’s important and we are a brand, not a label, and there’s a difference. There’s a lot of things in your closet. There are labels, but a brand can actually drive somebody into your mall, into your centers. A brand has hundreds of thousands of people in their database that they’ve acquired a hard sweat and working on the internet.
So, we feel like wherever we go, we’re going to lift that area. Even in a men’s store, in a town that may even have a johnnie-O store, it will make the brand awareness of our brand in that town and a lot better. And it should drive traffic to both retailors.
Montesi: I’ve often thought what Polo Ralph Lauren would be had they not gone into those more mass merchant department stores and had they been a little more selective. Might it be worth as much or more if it were more exclusive?
Knott: He’s done very well, but the landscape has changed a lot since he did that. If you look back at the date and Hudson’s and the Marshall Fields and the Foleys – there were a lot of big department stores around the country. It wasn’t just Dealer’s, Macy’s, Belk’s. I’ve got a daughter that’s 20 and my wife, and they’re not really luxury shoppers, but they like to shop, and the targets of the world had become great merchants. I go in there for ideas, just for sweatshirts and things, because they’ve got a great team of designers. They know how to source.
So, there’s just a lot of competition out there now. So, when I was listening to your podcast last week, these venues like yours, I just spent seven days, 12 hours a day, at your center there in Fort Worth. You’ve got to have a little bit of everything to get people there, and the open-air and the walk-in and the landscape – I really spent a lot of time there and noticed some of the details y’all did that I appreciate; a little succulent garden you had, and the way you’ve got it laid out there. There’s a little bit of turnover there where there is everywhere, but now with COVID gets out of here, we really will be looking for more exact centers just like that. The fact that the ceilings are tall makes the place feel bigger, and there’s a lot in the fact that the windows are tall. There’s a lot of light coming there. So y’all did a lot of things right there.
Montesi: Well, thanks. You’ve mentioned where y’all are being distributed and how you’re being careful, it’s really interesting, and the days of COVID with the headlines, all being about brick and mortar being so challenged and apparel being so challenged.
So, tell us, what’s behind the decision to go brick and mortar? One of the things that’s interesting as you read is that omni-channel and that, really for digitally native brands to really work, they have to be in brick and mortar because omni-channel stores are really where they make their money, this [inaudible].
If you could help us understand y’all’s decision to get into it and how you see that [inaudible] native guys needing brick and mortar, it would be very helpful.
Knott: I think it’s important to understand that we are a wholesale company that got into the online business because we had to, when the world started going online and it’s turned out obviously to be the right move. You’ll meet these people that are mostly labels say, “I’m not going to do online”. It doesn’t mean that they don’t want to, they just don’t know how to, and they don’t have the money to do it. Our whole business right now still, if you combined our wholesale channels, they’re still our biggest part of our business.
Now, obviously the online business has grown like crazy with everybody at home. We had the best year we’ve ever had, because the ball bounced in our direction. We haven’t been chasing the market, but the market came to us and we just had to be one of the lucky ones.
It could have easily gone the other way, and we all know fine businesses that are suffering because the market went away from them. What happened with us and what made us pull the trigger on this deal was when our buddies reached out to us and asked us about doing a store.
First of all, we knew we were talking to the right guys, because we’re not retailers. So, in the way that we’re setting this thing up, we’re sharing in the expense to get the store built out. We’re going to share the expense and supply and inventory, and we really want them as retailers to go do what they do best and be retailers. And that’s going to be the success and it’s already happening. They know how to hire the people. They just know how to do that. That’s what they do, all the blocking and tackling every day. We’re going to probably see if there’s other opportunities in Texas with these guys to go replicate what we did, because we just went through the dress rehearsal – and it went great by the way.
So that’s really what pushed us to get into it. Now that we’ve done it, and we’ve got it all designed and it’s executed, we’ve got a great partner here in North Carolina that built everything that we installed. We had a great local contractor. Now we can replicate that. So, I’m sending this out to my friends in South Florida and my friends in California, my friends in Chicago that are retailers just saying, “hey, look what we just did”.
Montesi: Like our friends in Memphis.
Knott: I was just on the phone with Paul Cowers right before this. We had picked out a little eight-foot space before he saw our store. Now they’re saying, “hey, we want to design this in a different space, and then I’m hoping it’s bigger than eight feet when it comes back”.
But when I’m getting at is that this project forced us to go do something we’ve been needing to do, but we’ve waiting for the right opportunity to come along. And this is the right opportunity.
Montesi: That’s exciting. So, you mentioned best year ever. One of my questions was going to be, has the pandemic affected your business? But I’d say that help us learn why this was the best year ever? What can our audience learn?
Knott: Well, it was interesting. We were at a board meeting in LA in February and things were going well, and everybody’s sitting around talking about the upcoming election and this and that. And somehow another story came up. I said, “look, in 2009 in my past life, we came out of that better”.
And they said, “explain”. Well, one thing you start tightening your belt. Do you need it? All these extra offices and things like that? Because now with technology, a sales manager can work out of his house with what we’re doing right now with Zoom, but technology allowed that. And so, what happened with us was: one, the whole market has been trending towards this kind of casual, soft, comfy look, I’m not saying all athletic, there’s plenty of that out there, but I’m just saying, what do you put on in the morning when you go to work? I’m in an office building here, and down the hall I’ve got seven bond traders that all used to work in New York five years ago. Well, they’re coming to work wearing five pockets and cool tennis shoes and a zip neck like you, and I’ve got on and a backpack and they go out and they get in the Range Rovers and BMWs to get home.
So, I’m just saying that’s the reality of it. We cut out a lot of overhead just by trimming the fat a little bit. COVID probably forced some things that were probably coming down the road, it just made it happen faster. And then we tightened our belt. We started looking at what programs are working, how fast are we turning something? Just because we love it, we sell a lot of it. How fast are we selling it? It just got us a chance to refocus. And with Dave Gotto, our CEO and Katie Benjamin, who’s our COO – two of the smartest people I’ve ever been around.
We have an 11 o’clock meeting every day where our management team connects. So, we’re probably more connected now than we were before COVID, because we were having them once a week before, and sometimes as much as it’s a bit of a pain to do it, it is a good thing. Because you’re connected; you’re looking at each other, everybody, and Dave keeps a list and we check it off and everything stays on point.
Montesi: Interesting. So, did you just say you have a female CEO?
Knott: We got a male CEO and a female COO.
Montesi: At a men’s wear company. I like that.
Knott: It is interesting. A Stanford grad – these folks are very smart people that understand finance and business and the way business really works. So that lets me sleep well at night. A lot of times in our business, just a bunch of guys that like clothes sit around and they can fall short, if they’re not careful.
Montesi: For somebody who’s been really focused on merchandise and merchandising your career, how much of the challenges of these failing or failed legacy apparel brands –many for women, but some for men – how much of their challenges do you track towards poor merchandising and poor commitment to merchandise and maybe investing elsewhere? Help us understand what you’ve learned about that in your observations.
Knott: Well, I think it’s like any vertical you’re in. If you go back and look, Woolworths aren’t in business anymore, or Sear’s as a business.
There’s a lot of brands out there that to me have got to do some changing. You can’t wait till the last minute to change, and the bigger the ship, the harder it is to maneuver. So, some of these businesses – we have a term –they got snuck up on. Next thing you know, they didn’t know what hit them, which is their own fault.
Blockbuster – you can go down the list of brands that you had never thought in a million years would have been out of business. So, you’ve got to be paying attention – for me as what I do and what I think lets me sleep at night, is that it’s nothing for me to walk into a surf shop or an Old Navy or a Superdry store in New York.
I’m looking at everything and I’m trying to figure out “here’s what the market is saying. And from that, how do I bring it to the guy that I’m chasing, the customer I’m chasing?” I never even looked at a hoodie until I came here. Now I play golf in hoodies. It’s cool, you see Justin Thomas or this guy or that guy doing it. It’s really interesting. But if your mindset is not on that, you don’t look at that. If you’re not driving a truck, you’re not really paying attention to the other trucks. So, to me, that’s what I’ve had to do, and I’m kind of a sponge on that.
And with an iPhone, I’m taking pictures all the time of everything that I think is unusual. I’ve got 40,000 pictures that on my computer, I put them all in files and I keep them organized because when I get ready to do a line, I start sitting down and going through my archives of stuff I’ve been watching my whole life, and I start finding little details that helps me make it applicable to what’s going on today.
Montesi: We’re in the retail business, on the landlord side as well as office and multifamily now. But as we say in the retail business, you have to evolve or die. So, it sounds like you agree with that.
Knott: I look at it even in architecture now. You go to a coastal community now and you look at what the 40-year-old kids are building.
It didn’t look like their parent’s house. They want it to look more like that cool hotel they stayed in. So you’ve got to be paying attention to all that, or you wake up and you’ll just be dead in the water. And I tell my customers, “hey, you need to be looking at this line over here. They’re really good at this – all-running tennis shoes or something like Fiori”. I’m not going to go try to make that shoe. I’m just saying that’s the category you need to be in because those other leather bottom, tassel, loafers you got with those cap toes ain’t selling.
So, you better figure out the answer – I can’t sell shoes. You can’t sell what you’ve got.
Montesi: The other thing I heard from you that is very aligned with us – I open all our pitches with the fact that what makes us different is we’re learners, not knowers. A lot of landlords are knowers, and I’m guessing a lot of legacy apparel brands were run by knowers and not learners.
I don’t think age has anything to do with willingness or ability to adapt or to learn, and it sounds like you and I are aligned on those things.
Knott: Just watching what other people do is free, and I’ve never been involved with the social media part of any brand I’ve helped, because I’ve always been a product and salesperson, but the importance of that is incredible. We all know.
I always tell everybody to watch this Netflix special Social Dilemma and just watch how true that is. A joke, but my daughter and my wife have a little jewelry business and they got 5,000 followers. Every time they post something on there, they sell everything they got.
Now they didn’t spend a nickel on an ad. They don’t really have any packaging. They just have Instagram; they have the right people following it. So that is a powerful thing. And if you don’t believe in that and think it is today’s times, you’re already out of business because it’s not going away.
Montesi: Interesting. So, Chris, tell us what you’re doing at johnnie-O relative to positioning your product.
Knott: When I got there, we were less expensive. Our woven shirts were $98. At one time the knit shirts were $69 and that was all great if you’re selling to a certain kind of store and all these stores bought it because it was on the tail of what’s the hot logo? Vineyard Vines has started all that. And this was a West coast tool, but sooner or later, what happens in life is a guy that’s buying products says, “hey, I started comparing it to everything else in my closet”. So now, we got $148 woven shirts, and we sell to the same stores and we sell to some of the topper and they love it.
Some guys want me to be more expensive. I say no, expensive doesn’t always mean better. We didn’t want to walk away from our core customer that got us to where we were four years ago, but we knew we had to elevate and still keep the DNA. I think everybody would agree that we’ve done that.
So, you could shut your eyes and buy anything on of johnnie-O and you would be as happy with what you bought as anything in your closet. And that just comes down to being in the right factories, the right yarns. I always say if you’re going to bake a cake, if you don’t start out with great ingredients, it, ain’t no way that that’s going to turn out right.