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Growth for Canadian fashion retailer DynamiteMonday, September 29, 2014 > 12:00:42
Andrew Lutfy likes to drive fast.
How fast? The CEO of Groupe Dynamite, the Montreal-based fashion chain, has been speeding forward building a retail empire since he started working in the stock room of his father-in-law’s Place Versailles store in 1982.
The company, with 317 Dynamite and Garage stores and 6,000 employees worldwide, is in full expansion mode in the midst of the Canadian retail doldrums. It has even made a successful push into the U.S., where so many Canadians have failed, with 41 stores and six more signed just last week, Lutfy said.
“It’s the pillar of our growth,’’ he said of the U.S. expansion. “We are saturated in Canada.”
Now, the objective is to have 500 stores in the U.S. within the next five to seven years, said company president Anna Martini.
It seems there is no stopping Lutfy.
“The race car is only in second gear,” he says, laughing at being asked about his driving habits and allowing that he has been driving fast since he was 10 years old.
Dynamite is celebrating its 30th anniversary this year with a sophisticated and visually arresting “reboot” campaign in stores and on social media.
Garage, with younger, more casual fashions, will be 40 next year.
“We’re investing in ourselves,’’ said Lufty, asked what the company was doing right.
Dynamite has invested $20 million in its headquarters, $40 million in operations and has hired a Zara alumnus as director of design for the Dynamite label.
“We’re thinking out of the box. We’re anticipating the storms,” Lutfy said.
Inside of the box would be staying the course, looking for incremental growth of 10 or 15 per cent annually.
“If I’m feeling comfortable, that’s not a good thing. I know to be successful you’ve got to be uncomfortable – you’ve got to take risk, take chance, innovate.”
In 2007, he recalled, Dynamite invested $25 million in opening 10 stores within 18 months in the U.S.
“That was extremely uncomfortable and, furthermore, unprecedented that a Canadian retailer had succeeded in the U.S.”
Lufty had anticipated the foreign influx of retailers to Canada.
“We knew that Canada was going to be a global marketplace. “We’re going to have to be offensive, we’re going to have to get our heads kicked, we’re going to have to eat some humble pie. “We did get our heads kicked in – 2008 (with the recession) didn’t help. We lost a s---load of money.” But they learned from the experience, he said, improving every year and attracting global talent. The past three or four years have been profitable in the U.S., he said.
Later in the interview, he adds: “Despite my desire to make myself uncomfortable, I like to make myself very comfortable financially. We are fiscally conservative.” Lutfy’s optimism appears not to be the required retail optimism. While the privately owned company releases few figures, Martini said annual revenue is in the $500-million range. Retail analysts are impressed. Why they’re doing so well is essentially great leadership, and it’s been consistent,’’ said John Torella, senior partner with J.C. Williams Group in Toronto. “They have a lot of the fundamentals of success in place, including a very well-defined customer segment.” They define the customer not through traditional demographics, Torella said, but through a lifestyle and fashion attitude point of view. “They just do well, and in many cases, exceed expectations.”
The company understands how hypercompetitive the U.S. market is. “If you don’t have a unique brand, if you don’t have a defined point of view, if you’re not special, then you’re a commodity and you’re interchangeable.” Indeed, as far back as five years ago, the chain had invented two muses or targets for its customers: Rachel, “forever 27” in 2009 (although she seems to be 28 now) for Dynamite, and little sister Alexia, 16, for Garage. “Rachel and Alexia are fables,’’ Lutfy said, that he cherishes and protects fiercely. “Anything that attaches itself to the brand – design, photo shoots, communication with the customers – it must be aligned. We have a very strong sense of self.’’
The old model of a customer walking into a store, confronted by “thousands of units” and a salesperson who offers to help is very “primitive,’’ according to Lutfy. “The burden is on you to go through the clothes. “We’re going to curate a collection or a grouping that is tailored to you.”’ Dynamite does it through the virtual world – social media, the website, or in store – “whatever makes you happy.”
But it takes technology. The company has invested more than $40 million in ERP, or Enterprise Resource Planning, basically the operations software of the chain. “Technology is a huge and crazy journey,’’ Lutfy said. “We basically blew up all of merchandising, warehousing, planning, allocation, design. We blew up all our systems and rebuilt them from scratch.” The four-year project went live in early summer. “It allows us to do everything the world is talking about – managing global inventory, brilliant logistics, incredible customer management relationship (CRM) – marketing stuff. “This is knowing everything about you as a customer, and being able to market to you in a very individual way.”
A third tactic is a plan to halve the usual 41-week calendar from development to store racks, crucial perhaps, in this age of instant information via the internet. And the product has not been left out of the equation. Fernanda Blasco, who was head of design at Massimo Duti, a division of Zara, arrived on his doorstep, Lutfy said, and he was “ecstatic.’’ “It’s giving Rachel a more urban and global personality. It’s putting her on the world stage, as opposed to the Canadian stage,’’ Lutfy said.
And a huge push on social media is on. The Dynamite Instagram account (Dynamite Style) has 51,000 followers, not bad for a Canadian brand, with a well-photographed mix of model and product shots. “It’s vital. At the end of the day, it’s really the future,’’ Lutfy said of the social media presence. “The fact that we have stores, a brick and mortar presence, and can combine it with a virtual presence, is very powerful.’’ Lutfy, in a black turtleneck, casual trousers, and runners, posed for photos and gave a video interview in the soaring atrium of the recently redesigned headquarters in industrial Town of Mount Royal. The atrium is reminiscent of the HQ of another Montreal success story, Aldo. As the interview ended, Lutfy left to take care of his real estate investments. “I have to go make some money,” he said, sprinting off.