Making young Montrealers look good
The Batchouns built StyleXchange by selling clothes to cash-flushed youngsters

Apparel is one of the few segments of the Quebec's $70 billion retail market that performed poorly last year. One big exception was StyleXchange, a three-store chain headed by twenty-somethings George and Mark Batchoun.

While clothing sales slipped 0.3 per cent during 2002, StyleXchange, which sells trendy jeans, tops and shoes to young Montrealers, registered its best year ever. The chain is on track for a 30 per cent sales increase, which would bring revenues to about $7 million.

The products StyleXchange carries don't come cheap. A pair of hot selling Fornarina Jeans retails for between $250 and $300, and a shoelace, which a salesclerk swears is a really a pair of underwear, comes in at $20. But ask the Batchouns where youngsters get that kind of money and neither bats an eyelash.

"Are you kidding? Today's kids have loads of bucks," said Mark Batchoun, 24. "Most have part-time jobs. They live at home, and spend every cent they have on two things: clothes and going out. Looking good is very important to them"

The brothers have built their business around getting their hands on much of that available cash. And by the looks of it they are doing a pretty good job.

The three StyleXchange stores, which target kids between 16 and 25, are located in areas which draw high proportions of upper middle income consumers: on Blvd. St-Jean in Dollard des Ormeaux, at Marché Centrale and downtown in Cours Mont Royal. But many customers such as Amanda Mancini, 18, a student at Dawson College, travel long distances to browse brands as Diesel, Gas, Fidel and a host of others.

"Their clothes are always in style and they have a very good selection," said Mancini, a St-Leonard native, who works part-time in another retail chain to drum up extra cash for shopping. "Their sales staff is also very friendly and perky."

According to George Batchoun, comments like Mancini's are no accident.

"Our selection is the key to our success. We're in the fashion industry, and if we don't buy right, we have to sell the clothes at the end of the season for huge discounts," Batchoun said. "And a lot of the time clients come a long way to see us. We are a destination store."

George and Mark Batchoun are 24 and 22 respectively, which they say is a big advantage in choosing the right clothes for their market.

"We were at a DKNY a couple of years ago and we ran the head buyer for one of the major chains and he looked like he was 60 years old," Mark Batchoun said. "I am sure he knew his stuff, but it must be hard for him to relate to what young people are thinking."

"If we want to know what young people want we just ask out friends," Batchoun said. "But we can also trust our instincts, because we're young too."

Although StyleXchange stores target 16 to 25 year olds, they draw from a much wider base. Everyone wants to be between 16 and 25. These kids' younger brothers and sisters look up to them and watch what they wear, as do those between 25 and 40, who are trying to prolong their youth.

The brother's spend a lot of money on advertising and promotion. That includes supporting close to 100 fashion shows at high schools and CEGEPs during the last few years. Another move that paid off was a sponsorship deal with Star Académie.

The show's unexpected success gave the store strong inroads with francophone customers, and the brothers want to sign on for another season - if they can afford it. "The show want more money this year," Batchoun said. "We'll have to see."

During a recent visit to the Cours Mont Royal store almost all of the two dozen clients were young women. But the Batchouns say that sales are roughly split between the sexes.

"There are more women in the afternoon. Men come in at nights and on weekends," George Batchoun said. "And they don't hang around trying on lots of clothes like girls do. They come in, pick out a couple of things, pay and leave."

Earlier this year the brothers invested several hundred thousand-dollars in a new fashion magazine called Strut. The magazine, to be published quarterly, features ads from many StyleXchange suppliers and targets readers who are also likely to frequent the chain.

"We're now in two of the toughest businesses around, clothing and magazines, Mark Batchoun said. "Imagine that."

According to one industry expert, stores like StyleXchange that offer a unique selling proposition, have a leg up on the competition.

"(Apparel retail) is a highly fragmented market. There are a lot of players, including Le Château, Simons and Les Ailes de la Mode," said Denise Chicoyne, an analyst with Nesbitt Burns. "The successful one are not (those) who target everyone, but those who specialize."

For the future, the brothers plan to concentrate on building the customer base for both Strut magazine and at the three stores. They have no immediate expansion plans, but a Toronto store is a possibility down the line.

"We get customers from Ontario all the time. They tell us "why don't set up in Toronto?"" Mark Batchoun said. "We don't have anything like that over here."

 

 

Sidebar: Getting ahead

o Mark and George Batchoun operate three StyleXchange apparel stores. These average 8,000 square feet in space and are close to neighborhoods with high proportions of upper-middle income families.
o StyleXchange focuses on selling high-end branded jeans, tops and shoes to young Montrealers between the ages of 16 and 25. These live mostly at home, pay little or no rent and tend to have large disposable.
o The Batchouns, both in their early 20s, credit their success in part to their youth, which makes it easier for them to identify and profit from fashion trends that appeal to their friends and contemporaries.
o Earlier this year the brothers launched a fashion magazine called Strut, which targets the same market as StyleXchange stores. The brothers were able to sell close to 60 pages of advertising in the first issue, much of it to store suppliers, which generates substantial cross promotion.

 

Peter@peterdiekmeyer.com

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