A Plus-Sized Turnaround
With the plus-size fashion retailer on the brink of a second bankruptcy in three years, James Rhee became CEO. In a keynote interview at Privcap Game Change: Consumer & Retail, he explained the wildly successful growth strategy.
Without any experience running a retail chain, or as a chief executive officer, James Rhee decided to gamble.
“We bet the farm on just loyalty,” says the executive chairman and CEO of Ashley Stewart, and founder and president of FirePine Group, which was founded in 2009 to invest in special situations requiring structured capital and operational catalysts, with a focus on the branded retail-consumer product industry. He explained that he saw the potential in a business that was a rare boutique-style store for plus-size women with locations in urban neighborhoods.
“We personalize the brand” Rhee says. “We have people talk to the brand in the store as a person; so our store managers are called Ms. Ashley in a lot of our communities. Every customer on social, it was like she’s talking to Ashley Stewart.”
In the beginning, the company would respond to every social media post personally, but Rhee says it’s get-ting harder now because of the brand’s popularity. “The strategic goal from week one was—we were going to be this woman’s best friend…No matter what that takes, that’s the strategy.”
Rhee says he rewrote the business plan, and that nearly the entire staff was “changed out.” The company completed a change-of-control transaction in June 2016, without using “a dollar of debt.” Rhee says he used operational leverage instead. “The trick is to buy extremely cheap, in distress, and then you have to grow.”
When asked how the new business plan allowed for the company to keep its loyal customer base while also attracting new business, Rhee told the story of a compliment he received in a Boston Globe piece about Ashley Stewart.
“One of the major bloggers in plus-size says that ‘James, inside he’s a plus-sized African-American woman.’ To me, that was about as high a compliment as I could get. That means I understood the customer and I was being a fiduciary for the customer.”
Forty percent of Ashley Stewart’s online business now is from white customers, which Rhee says is “up from zero.” He credits this expansion to not focusing on race or size, but on “buying affordable, nice fashion that’s on-trend for women.”
Social media has also been a huge driver in the growth of the business, using things like contests to attend brand-sponsored concerts and more traditional “word of mouth.”
“It’s really focusing on a customer base and letting them advocate for you,” says Rhee. “What we are trying to run is truly what I call a ‘social commerce strategy.'”
With the plus-size fashion retailer on the brink of a second bankruptcy in three years, James Rhee became CEO. He explains the wildly successful growth strategy.