Key to being an effective leader is knowing what you don't know. Trouble is, you often need somebody else to point this out, which involves opening oneself up to criticism.
Nevertheless, Michael Cohen, founder of Hawthorne, CA-based Michael Stars, last year hired a business consultant to lay it on the line.
The consultant's conclusion? Cohen and the rest of the company were drowning in inefficiencies because there was almost no middle management.
All for a good reason, however: Michael Stars, which has been in business since 1986, has grown by 70 percent over the past two years. "That's too much," says Cohen, a native of South Africa. "We weren't set up to grow healthily."
Denim fuels rapid growth The growth has been fueled by the denim trend, as the company's fashion tees pair easily with premium jeans. The wide assortment of colors, upwards of 25 per season, assures that shoppers invariably buy more than one at a time. Michael Stars also has expanded into new categories, adding a cashmere collection last year and dresses this year. For fall 2008, the company will roll out a complete sweater collection in a variety of fabrications.
"The warehouse was bursting at the seams; we couldn't find things," laughs Cohen. Under the consultant's guidance, the company added two more warehouses, invested heavily in technology, and increased the staff substantially. "We've added so many people in the last year it's scary to me," says Cohen. "I don't know who some of them are."
But the result has been reasonably smooth sailing, and the company is now poised for new ventures. The company currently boasts a retail fleet of five stores, counting a new Las Vegas store that opened last month. In summer 2008 it will open two more: one in the Los Angeles suburb of Glendale, and another in Corte Madera, just over the Golden Gate Bridge in Marin County.
Michael Stars plans to then continue adding retail stores at the rate of three to four per year throughout California, Nevada and Arizona. "We'd love to be on the East Coast and in the Midwest," says COO Michael Rosen, "but for now we're just picking locations in close proximity to our headquarters."
How it all started Michael Stars began when Cohen put the work of a contemporary artist on tshirts and gave them to his friends. Soon Cohen changed to garment-dyed tees, eventually expanding to the 200 styles offered today. "By sheer luck we were unequivocally the first people to make fashion t-shirts for women. We are a slight phenomenon, in that it's not usual that a t-shirt company would become a big fish in a tiny pond."
In 1988 Michael Stars devised the innovative sizing strategy that would become its signature: One Size Fits Most. It has remained the company's metier ever since.
The company covers sizes 0-12 in most every style; less so for sizes 12 and up. But each product is only offered in one size, and is meant to cover only a certain range of the size spectrum. Retailers love the concept, says Cohen, as it makes managing inventory a cinch. As for consumers who discover that the style they want doesn't come in their size, Cohen says pragmatically: "You really can't please all of the people all of the time."
Other apparel companies frequently note the ingenious strategy. "The compliment that I get most from my peers is about how clever we were to do one size," says Cohen. "I say'thank you' politely, but that's the one thing that's easiest to copy. If it's so clever, why don't [they] do it? And I don't know why they don't do it."
The new loose-fitting dress collection comes in two sizes. "We have 100 percent more sizes but only added one more size," laughs Cohen.
Manufacturing stateside, looking for new markets globally
The heart of the Michael Stars line retails for $28-$58. "We don't like to be cheap," explains Cohen, "but we like being one of the lowest-priced items in the better stores." The company does its best to control distribution to 70 percent specialty stores and 30 percent majors such as Nordstrom, a longstanding account. With the exception of the new cashmere collection, which is made in China, the line is made entirely in the United States through a subcontractor in Pennsylvania.
"I don't know if the consumer cares that we're made domestically," says Rosen, "but I think she does. The point that I would make is that since we are made in the U.S., we want to drive that point home. And we like the fact that we employ a lot of people to make our product here in the U.S."
And though manufacturing domestically is a company imperative, Michael Stars is considering going international -- in sales, that is. The company sees great potential in Europe and Asia, and is beginning to investigate international distribution. It has also hired a director of licensing with plans to unveil three licensed categories by 2009.
Retail stores, licensing, international distribution -- they're all the hallmarks of a company that is transitioning to a fullfledged lifestyle brand. Quite a journey for a company that began with tees.
"You can only go to the trough so many times with printed t-shirts," says Cohen. "No matter how nice they are, nobody wants to own 30 of them."