Catching Up with: Lee Shafkowitz, Aeros Showroom

Lee Shafkowitz opened his first showroom at the age of 29 after ten years in apparel retail and wholesale. After he sold the showroom, Shafkowitz served as Max Mara’s North American commercial director, where he opened corporate and licensed stores. He relaunched Cerruti 1881 after that, serving as its North American president. Shafkowitz is currently the owner of the Aeros Showroom in New York City. Karen Alberg Grossman caught up with Shafkowitz over lunch recently.

Karen Alberg Grossman: What’s your take on the current state of retailing?

Lee Shafkowitz: Retailers are rightfully scared: not only do some not have answers, many don’t even know the questions. Few of us were around during the last depression so we’re in uncharted waters!

What are you suggesting retailers do to stay afloat?

There are two obvious strategies that retailers need to implement going forward: either sell more product at regular price or increase their gross margins: 3x instead of 2.5, which they’re more likely to accomplish with limited distribution products.

Specialty store merchants, for the first time in decades, have the opportunity to make their store’s name all-important again, as opposed to promoting over-hyped, over-exposed, over-priced designer collections. Retailers have the opportunity to reposition, gain market share, and brand their own store. This is an era to focus on unique, value-priced product. And to drive traffic by marketing the sum of the experience they give customers.

Why is this necessary? What’s wrong with designer names?

Once the big stores go promotional as they did this past holiday, it’s hard to sell these names at regular price. In most stores these days, only 3 to 5 percent is going to the bottom line when it could be 9 to 11 percent. Retailers are losing money and factor credit lines.

Does this mean you’re not shipping certain stores?

Vendors are dealing with individual stores based on existing relationships and past history of payments. We’re not looking to take major risks but in this environment, we need to work with each other: We’re in it together and we need to find realistic alternatives to maintain business relationships through the downturn.

I think the bigger challenge now is how the specialty store owners and the European designers, who are accustomed to dictating to the stores, will work together. This is not an era that rewards arrogance; I think several of these firms will suffer as a consequence.

How did you get started in menswear?

I started as a stockboy in a Long Island men’s specialty store working my way up to buyer/manager. Eventually I transitioned to working in a showroom, and after 8 or so years, I opened my own showroom. Then I went on to lead several large Italian designer companies, Max Mara and Cerruti 1881 before getting out of the industry for several years to open other businesses. However I truly missed our business and thus came back to open my multi-brand showroom, Aeros LLC.

So this has been your main career?

Yes but I feel I am a serial entrepreneur so a main career for me is a misnomer.

You’re known to be an exceptional seller; what advice would you give to salesmen?

Kind words, thank you. The key to salesmanship is listening. Customers will always tell you what they want and/or need; typically you just have to ask questions and listen. Whenever I meet with sales associates in the stores, I always ask, ‘when is the sale over?’ The answers are quite surprising but the most common is; when the customer pays. But the right answer is that the sale is never over. It’s an ongoing experience.

Can you give an example of retailers who get it?

Yes. I love how Butch Blum features his customers and his sales associates in his advertising, how Tim Leamy of Sebastian’s Closet makes every customer feel like a rock star, and how Mitchells follows up and communicates with their clients online.

What’s your best advice to retailers these days?

It’s time to return to being a merchant. It’s all about product, product, product! Concentrate on unique items with margin potential. Focus on the product, not the label.

There’s no denying the reality of these difficult times: we’re climbing a mountain and some will fall off the cliffs. But with determination, focus and forward thinking, we can reach the summit. Those who make it will be rewarded with a breathtaking view and a bright future.

I understand you recently survived a heart attack? How has that experienced changed you?

I’ve been rewarded with that breathtaking view. I feel very fortunate every day of my life to do what I truly love.