Reader ROI\n\nFind out how e-commerce is helping an old company update its image\n\nLearn which technologies this brick-and-mortar retailer is adopting to compete online\n\n\n\nYou\u2019re online looking for some new clothes for work, and you surf to the website of a famous retailer. Up pops the image of a striking young man wearing a spread-collar dress shirt in sage green\u2014one of fall\u2019s hot colors. His top button undone; he\u2019s the picture of business casual. Another image flashes at you\u2014a stack of women\u2019s shirts in apple green and hot pink. The latest from Banana Republic? Nope. You\u2019re shopping at stodgy old Brooks Brothers\u2019 online site.Yes, the company still sells those famous button-down white shirts, if that\u2019s what you want. But the venerable retailer has designed its website to attract young customers, the demographic that abandoned the company in droves for the more fashionable, casual attire of competitors. Brooks Brothers wants these customers back and once it gets them, it wants to keep them for life, like it did in the days when Wall Street bankers brought their sons to the store to be measured for their first pinstripe suits.Information technology\u2014and the Web especially\u2014plays a critical role in Brooks Brothers\u2019 strategy to rekindle that tradition and boost its flagging profits. The casual \u201990s were an up-and-down decade for Brooks Brothers as it struggled to remake its buttoned-up image and bolster profits that slumped by 38 percent from 1999 to 2000. As part of its push to improve the bottom line, the company is in the middle of a two-year plan to integrate its Web, in-store and catalog operations to provide a single view of each customer that its sales force can use to market new clothes and provide personalized services in all three sales channels. Been measured in the store for a custom-made shirt? Then order some more from your Palm Pilot while you\u2019re waiting in the airport. Want to buy your brother another tie but can\u2019t remember which one you bought him last Christmas? Brooks Brothers will look it up, no matter which channel you bought it from. The Web won\u2019t save Brooks Brothers. No amount of technology can help a retailer make money unless it sells products that people want to buy. But if the company solves that problem\u2014and it remains to be seen whether it will\u2014then the way the organization uses IT can distinguish it from, or at least allow it to keep up with, the competition. Brooks Brothers\u2019 online push is coming at a time when it has curbed plans to open new stores and abandoned an effort to spin off separate stores for women. Last fall, six executives, including those in charge of men\u2019s clothing and online and catalog sales, left in a management reorganization sparked by the company\u2019s losses. Marcia Aaron, a retail analyst with Deutsche Banc Alex Brown in San Francisco, says, "People shouldn\u2019t look at the Internet to be the main growth driver" for any retailer. But she thinks online stores are necessary for the convenience they offer customers.Online sales don\u2019t yet add much to retailers\u2019 profits. According to The NPD Group, a Port Washington, N.Y., market research company, Internet purchases accounted for less than 1 percent of total clothing sales last year. Mark Friedman, Brooks Brothers\u2019 executive vice president for e-commerce and direct mail, says his company did somewhat better than average\u2014in the low single digits as a percentage of all sales (though he wouldn\u2019t share specific numbers). Until recently, "the Internet has tended to be skewed toward male [shoppers], and we have tended historically to be a predominately male business," he says. "So our demographics have matched up well with who is shopping online." Now that investors\u2019 enthusiasm for dotcoms has waned, retailers are under less pressure to race online. Companies are advised instead to hone in on the way e-commerce complements their existing business model, says Julian Chu, director of retailing and consumer goods for the Cambridge, Mass., Internet consultancy Mainspring. Big-spending customers of brand-name catalogs and full-price stores are more likely to shop online than patrons of discount stores, says Chu. So it makes more sense for a company like Brooks Brothers, whose customers have high incomes, to get online quicker than a discounter like Marshalls, whose customer base isn\u2019t as tech-savvy.Joseph Gromek, Brooks Brothers president and CEO, says he has no desire to be an online pioneer, but he doesn\u2019t want to be a laggard, either. Chu says there\u2019s wisdom in such a moderate approach. "There\u2019s a lot of hype that click-and-mortar is the way to be, but there\u2019s not any clear understanding of what that really means\u2014what do you integrate, what do you not integrate and what do customers [want]. You have to tread carefully."Reinventing an Old StandbyTime was, if your office was in the executive suite, or you aspired thus, you had a few Brooks Brothers suits in your closet. The 182-year-old company set the trend in American corporate dress for much of the last century with its single-breasted wool suits, blue and white Oxford shirts and silk repp ties. But in the past decade, as the workplace has become even more casual, Brooks has struggled to keep pace with changing tastes to pump up its profits. Last year\u2019s 38 percent loss came on the heels of a 21 percent drop between 1998 and 1999. It\u2019s not that it hasn\u2019t tried to get with it. British parent Marks & Spencer brought more sportswear, leather jackets and hipper suits into Brooks\u2019 repertoire after purchasing the company for $750 million in 1988. When that didn\u2019t work, Marks & Spencer shook up Brooks\u2019 management, bringing in Gromek in 1995 from Ann Taylor, a retailer that sells casually tailored business clothing for women. The company also added men\u2019s shirts in nontraditional puce and purple. Revenues rebounded for three years before the most recent fall. Though the company and its parent have attributed the latest decline to expenses incurred from installing an enterprise resource planning system and the economic downturn in Japan, where Brooks Brothers has 70 stores, Deutsche Banc\u2019s Aaron says, "Usually when an apparel retailer doesn\u2019t do well it\u2019s because it doesn\u2019t have the right fashion." (Marks & Spencer, which has been experiencing its own financial turmoil, now reportedly wants to sell Brooks Brothers.)Yet business is booming on the Internet. Since Brooks launched its online store in time for the watershed 1998 Christmas season, it\u2019s been sewing up profits from its Web operations, according to Gromek. He wouldn\u2019t provide any numbers, but insists the online store makes money. Even established retailers haven\u2019t all found a winning online formula, according to industry analysts, while dotcoms routinely perish. What\u2019s more, says Gromek, half of Brooks\u2019 online business comes from new customers. As is generally true of online shoppers, these customers are younger than the clientele that shops from catalogs, Brooks has found. And Gromek says this younger crowd is buying the same products that older catalog customers purchase, suggesting that Brooks\u2019 clothing does have some youthful appeal. "People have an outdated and inaccurate view of the company," says Michelle Garvey, who was Brooks Brothers\u2019 CIO until September, when she accepted the CIO position at MemberWorks, a Stamford, Conn., direct-marketing company. The Web can help change that image, she says. While store windows offer passersby a lesson in new business casual looks\u2014displaying those men\u2019s colorful shirts and ties or women\u2019s bright sweaters with relaxed trousers\u2014inside, most stores evoke the staid past. On the first floor of Brooks\u2019 oldest store\u2014housed in a grand, 10-story building constructed in 1915 on New York City\u2019s Madison Avenue\u2014the beige carpets, Corinthian columns and dark wood trim look worn and tired. Piped-in jazz music doesn\u2019t succeed in setting a clubby, intimate mood. Likewise, Brooks\u2019 website isn\u2019t exactly hip and flashy. Click through to the page for men\u2019s shirts, and the first items you see are still those pale Oxford shirts. But the presentation makes it easy to find some of the trendier clothes, like men\u2019s fine-knit Italian wool sweaters or a woman\u2019s stretchy silk shirt in rich burgundy. The company has deliberately eschewed cutting-edge bells and whistles, focusing instead on making the site easy to navigate. Moving Clicks to BricksBrooks aims to use the web to strengthen its brick-and-mortar roots. Its goal is to convert online customers into walk-in shoppers and vice versa. "When we talk to retailers who work in more than one channel, they tell us [that] customers who shop with them in more than one channel spend dramatically more than those who don\u2019t," says Cathy Hotka, vice president for information technology with the National Retail Federation in Washington, D.C. That\u2019s because such customers are more familiar with the merchandise and less likely to be shopping on impulse.Anecdotal reports from Brooks\u2019 sales force suggest customers aren\u2019t looking to abandon brick-and-mortar stores. Since Brooks went online, salespeople have reported customers coming into their stores, Internet printouts in hand, to buy sale items promoted online or to return things they had purchased on the Web. Many shoppers still want to try on new clothes, feel fabrics and see what colors really look like, or else they find some transactions, like returns, to be more convenient in person. According to a recent report by Forrester Research, online shopping technology like 3-D images and accurate color reproduction isn\u2019t advanced enough to simulate the experiences customers have shopping at the local mall."It\u2019s hard for any clothing site to dispel the notion that I really want to try something on," says Brad Jealous, who recently wandered into Brooks\u2019 Fifth Avenue store looking for sport shirts. Jealous, a 27-year-old law student, says he\u2019s bought "computer stuff" online, but buying clothes isn\u2019t like buying a new hard drive. When it comes to what he wears, he says he\u2019s more likely to scope out sales on the Web and go to the store to buy.To Friedman, such comments support the company\u2019s decision to integrate its Web, catalog and in-store operations to create a single view of each customer, an approach many other retailers are also taking. "We\u2019re not moving the business to be an online retailer," says Friedman. "We\u2019d like to be able to give someone a consistent experience shopping with us. We should understand customers well enough that we can drive them from one channel to another."To reach that goal, the company is cautiously deploying new technologies for use by both the customers and Brooks\u2019 sales force in in-store, online and catalog operations. Garvey says the failure of online fashion site Boo.com, which offered cutting-edge 3-D modeling software for viewing its clothes but drove customers away because the bandwidth-hogging feature made access too slow, indicates customers aren\u2019t clamoring for the latest virtual gizmos. She says Brooks Brothers has been doing a lot of soul-searching internally about whether or not to offer online shoppers a virtual dressing room in which to model how clothing would look on someone with their measurements or body type. But it will probably be a year before Brooks canvasses customers about whether they want this service.Instead, the haberdasher known best for selling conventional clothing is working on some technical basics. Brooks initially threw its website together without integrating its online order-entry system with inventory management software already in place at the company\u2019s Raritan, N.J., catalog fulfillment center. Online orders had to be entered manually into the fulfillment center\u2019s system. Not only has this practice cost Brooks time and money, it\u2019s forced the company to forgo some sales because it couldn\u2019t give online customers accurate information about product availability, says Garvey.Integrating the two systems, which is scheduled to be completed by next month, means online orders can be instantly checked against available inventory. It also means Brooks won\u2019t be caught short by surprise orders, because it will be able to maintain real-time updates to the inventory from both catalog and Web orders. Garvey says that right now, the company can\u2019t manage its inventory to accommodate the single customer who decides to order a dozen shirts at once. With an integrated inventory system, those shirts "can\u2019t be sold out from under you if a catalog customer calls looking for the same merchandise," she says.Brooks is also building a single customer database that, among other functions, will track information about individuals\u2019 purchases from each channel. Like other retailers that are delving into customer relationship management, Brooks plans to use the data to tailor e-mail promotions to each shopper. "If [they] know you have a blue houndstooth and a gray solid suit, [they] could recommend some ties," says Garvey, or suggest another suit in a different color.She admits that customers might find it creepy that Brooks is collecting data on their buying habits or storing their measurements in a database. But Garvey says the company plans to keep the information it collects private, as it has done with databases it now keeps separately about catalog shoppers and credit card customers. The organization doesn\u2019t share or sell customer data, she says. Meanwhile, the database of measurements Brooks collects for custom shirts and suits aren\u2019t linked to purchasing history, so employees don\u2019t routinely have access to personal size information.Nevertheless, the company has replaced an e-mail-based form for recording customers\u2019 measurements for custom-made shirts with a Web-enabled version that can be stored as part of a customer\u2019s profile. That way, customers can reorder shirts online. Garvey says that information can be transmitted to its suppliers\u2019 manufacturing systems without any person being able to see whose data it is.Meanwhile, like many retailers, the company\u2019s website already provides customers with commonplace personalization tools. Register with Brooks, and, along with customized promotions, you\u2019ll get services such as the capability to review past purchases or save what\u2019s in your shopping bag if you aren\u2019t yet ready to buy. Of course, if you\u2019ve also shopped at a Brooks store, none of that data is captured in the system. Garvey says that next spring, Brooks will test out new point-of-sale systems that will do more than ring up purchases and adjust the store\u2019s inventory as the current cash registers do. The new machines would collect information about customers\u2019 buying history and e-mail addresses and let salespeople review that information, as well as give them access to the corporate intranet. With intranet access at the register, salespeople wouldn\u2019t have to retreat to a back room to order an out-of-stock item for a customer.Most apparel retailers are also eyeing in-store Web applications like making computers available to customers who want to look up merchandise. Only two Brooks Brothers stores, in Manhattan and Seattle, have put Web browsers on the sales floor for customer use. And in theory, the stores could use the Web to display items they don\u2019t stock. But, Friedman notes, it\u2019s still easier for the salesperson to pick up the phone and find needed items at another Brooks Brothers store. Meanwhile, when she was the CIO, Garvey wasn\u2019t planning to make in-store Web access widely available to customers until the chain upgrades its internal network infrastructure. It would frustrate customers if access times were slow, she says.Getting the Word OutFor brooks\u2019 online strategy to succeed, however, it needs to do more than put the right technologies in place at the right time. The company has yet to explain its e-commerce strategy to the commission-based sales force in its stores (the salespeople will be asked to collect e-mail addresses from customers and point them to online services). "We\u2019d be much further along in the e-commerce business if we had buy-in from the retail channel," says Friedman. He says that when he came on board in March, salespeople "had no understanding of what we were doing." Now, the company is beginning to inform its staff about its plans during regular training programs. But, Friedman says, employees, who work on commission, must be convinced that "it\u2019s not just taking money out of their pockets" if customers buy something online. He concedes he hasn\u2019t yet figured out how to demonstrate concretely that a strong e-commerce presence is good for the overall brand. Dennis Ephlin, director of strategic services with SeraNova, an Edison, N.J., consultancy, says many companies are changing how they compensate employees to encourage them to embrace e-commerce. Some companies, he says, are rewarding in-store salespeople for helping customers buy from the Web. Others, meanwhile, are paying employees based partly on how their stores score on customer satisfaction surveys or other metrics, like corporate profitability.Gromek won\u2019t discuss what, if any, changes Brooks Brothers has made in how it compensates its staff, except to say that the company doesn\u2019t intend its staff be penalized for aspects of the business it can\u2019t control. "We try to use our stores as marketing vehicles and our sales force as ambassadors," he says, emphasizing top-notch service as the No. 1 priority of the company.Brooks has also been struggling to get its e-commerce message to customers. A woman from suburban Philadelphia examining cotton T-shirts on a sale table in the Fifth Avenue store during the summer says she hadn\u2019t heard about the site, even though she occasionally shops online. She\u2019d buy from Brooks on the Web, she says, if she didn\u2019t feel like driving an hour to the nearest store. Yet it\u2019s only in the last four or five months that the company has put its URL on its store windows and shopping bags. "You could have walked into our store, and if you didn\u2019t know there was a brooks brothers.com you wouldn\u2019t have found out," says Friedman. The company has also signed up to be a featured vendor on Yahoo, and it joined Fashionmall.com, a site for brand-name clothing retailers. Still, says Steven Love, a vice president in the Chicago-based retail and consumer products consulting group Cap, Gemini, Ernst & Young: "If I wasn\u2019t in retail consulting, I wouldn\u2019t know about it.""The problem is somebody has to think of Brooks Brothers to find it on the Internet," concludes Aaron. "The bigger issue is telling its story in a broader marketplace. It will probably have to work harder to tell that story through other traditional marketing, like catalogs, print and outdoor advertising."