In 1991, Emfield and Margolis took concrete steps to give their fantasy legs -- and, of course, pants. They approached Dalla Gasperina to be their partner and design guru and obtained a commitment from a Hong Kong factory for financial and manufacturing support. The three partners and the factory pooled just under $2 million for start-up capital. They were clear on what they would produce: Tommy liked silk. Tommy liked comfortable shorts and print shirts. But Tommy also liked tailored pants. And he liked his clothes to be durable because they were exposed to the elements of the islands. What came into focus was a line of elegant tropical clothing for men aged 35 to 65 with discriminating tastes, bearing the brand name Tommy Bahama.
For three guys who isolated the DNA of an excellent brand in short order, the company they founded was a mess right from the start. One of the most obvious problems was that the three founders put themselves on a pay scale that was lavish by the standards of fledgling companies. "We were all coming out of six-figure-salary jobs," Margolis offers by way of explanation.
There were other structural problems. One of the earliest decisions they made was that Tommy would not carry the company on his own. The partners invested their capital to launch not one but three apparel lines in three segments of the market that, Margolis says, they felt were opportune at the time. The two other labels: Gear for Urban Training, a teen-skateboarder line, and Linguini & Bob, for the lady-killer "Vinnie Barbarino group," Margolis says. They premiered the trio of brands in the spring of 1993 and breezily assumed they'd turn a profit in a year.
From the start, distribution plans for all three brands faltered. For Gear and Linguini & Bob the problem was simple. Viewpoint had agreed to sell both brands through Merry-Go-Round Enterprises Inc., a midsize retail chain based in Maryland that operated stores called Merry-Go-Round and Chess King. The chain leased a lot of mall real estate, but it was entering a period of decline that would end in bankruptcy.
Tommy Bahama's initial distribution strategy was also flawed. The company had intended to sell Tommy Bahama to large department stores -- perhaps an unrealistic plan, given that big retailers have never treated young companies warmly. In the early 1990s it was even harder for a boutique brand like Tommy Bahama to get any attention. At the time, department stores were centralizing purchasing, reducing their number of buyers, and requiring wholesalers to travel to their offices for sales calls, rather than sending store representatives to wholesalers' showrooms to be pitched. The message those changes made was unmistakable to small fry like Viewpoint. "If it wasn't red-white-and-blue Hilfiger, Polo, or Nautica, they didn't want it," Emfield recalls.
SITTING PRETTY: "Tommy has a strong personality, and we cater to him," says Bob Emfield.
In desperation, Emfield began showing Tommy Bahama apparel to the owners of specialty stores. A smattering of those businesses were intrigued. One of the first chains to pick up the brand was Gary's Island, a small chain on the West Coast and Hawaii. Encouraged, Viewpoint began marketing Tommy Bahama to small shops that sold men's clothing, with Margolis, Emfield and two of their younger relatives (who already worked for Viewpoint) traversing the country to visit specialty stores. The shift in strategy was expensive -- at least, in the short term. The company had to spend more to get relatively small orders. And once Viewpoint got a store's business, it had to worry about getting paid. "We were fearful that the specialty stores wouldn't pay their bills or that they wouldn't have the credit to buy enough to make a big business," Margolis recalls. As it turned out, their fears were rational. "Even now, I'm not going to tell you that the credit community is going to aggressively allow a small store to build a business with me quickly," Margolis says. "But as things unfold, our clients' credit lines have grown."
And in the long term, the high cost of selling to specialty stores has been offset by the benefits to the brand. As Koehn says, "A brand is not only about what you buy but from whom you buy it." If a clerk at your favorite men's shop tells you about a great pair of silk pants, it's more meaningful than a similar tip from an anonymous department-store employee, since you trust someone you know not to steer you wrong. Then it's up to the pants to fit well. If they do, suddenly Tommy Bahama means something to you. "As that trust grows," Koehn adds, "a company can introduce a range of new products more easily and cheaply." That's the power of the brand.
By the fall of 1994, Tommy had the trust of a core constituency of specialty retailers and their customers, which is another way of saying that the company truly had a brand, albeit an embryonic one. But one thing stood in Viewpoint's way as it sought to unleash the power of its brand: the company's bank balance. The partners had burned through their original $2 million. To continue, they'd have to risk more money. After some deliberation, the three men came up with a strategy. First they decided to drop the Gear and Linguini & Bob lines. Then they agreed to reduce their salaries and invest more of their savings to keep Tommy Bahama alive. Finally, they decided to launch a new private-label division -- an odd choice for a company that was building a brand. "We did it to pay the light bill and the phone bill," says Dalla Gasperina. Margolis goes even further. He calls the decision "the one key thing that happened in our history."
The private-label work wasn't glamorous -- manufacturing plain cotton twill khakis for one 400-store chain, for example. But private labeling allowed Viewpoint to say yes to business that Tommy would have turned down -- that is, it helped them take their embryonic brand and nurture it without skimping on quality or taking orders from down-market retailers. That is the process of building brand integrity. Once a company has created a relationship with customers -- a brand -- it can either build on that relationship or trade on it for a quick buck. "What happens to most people at that point is that they take every order they can get," Margolis says. "They do things inconsistent with the brand."
