Tux dealer tailored for growth

LOVELAND — Even after 30 years in the formal-wear industry, Mark Burke can find new ways to dress up his company.

In 1996, for instance, Burke aligned his business — Mr. Neat’s Formal Wear — with a group of 11 other independent formal wear stores as a means to improve purchasing power.

The resulting organization, called Tuxedo America, grew to represent more than 400 stores of which Burke owns 20.

But increasing competition from national chains, such as Men’s Wearhouse and The May Co., have put Burke and his colleagues on the offensive once again.

Tuxedo America recently joined CCA Global Partners, the same retail cooperative that turned its flooring stores — Carpet One, Flooring America and Floor America — into a $6 billion enterprise. CCA Global also manages Mortgage One and Lighting One.

Under terms of the partnership, CCA Global will coordinate front-office business — i.e., buying of merchandise, human resources and advertising — for the Tuxedo America affiliates.

“What they (CCA Global) are good at is managing cooperatives to be strong and to give entrepreneurs a foothold to compete with ?big-box’ companies,” Burke said.

Based on CCA Global’s track record, the impact of the new alliance could be immense.

The cooperative system was hatched in 1985 by partners Howard Brodsky and Alan Greenberg, who were in the carpet business together in Manchester, N.H.

Sensing a threat from large carpeting chains, Brodsky and Greenberg formed the Carpet One cooperative with other independent operators.

The alliance, which eventually took the name CCA Global Partners, allowed the independents to compete on price with chain stores and helped to make business operations more efficient.

Now CCA Global, with the combined sales of all its independent affiliates, is the No. 3 home-improvement retailer in the United States, behind only Home Depot and Lowe’s.

As an example of CCA Global’s advertising punch, the cooperative recently launched a $12 million marketing campaign for its Carpet One division.

Burke said the alliance between Tuxedo America and CCA Global was not intended last year when a group of Tuxedo America owners met with Brodsky.

They were seeking advice about how to fend off the deeper-pocketed chains.

“Brodsky has the philosophy that an entrepreneur can always beat a big-box company if you level the playing field,” Burke said.

“When he was telling us all about what CCA Global did, we said, ?We don’t need to reinvent the wheel. Will you manage Tuxedo America Group?’ “

After seven months of negotiations, the two sides signed a contract this spring.

“CCA will help coordinate our buying,” Burke said. “But we’re not just looking at the best price. We’d like to develop unique, exclusive products.”

With CCA’s clout, the Tuxedo America owners gained an audience earlier this month with manufacturers in New York.

“All of the manufacturers are pretty excited about working with us,” Burke said. “We’ll be coming up with new designs, new fabrications and possibly also new brand names.”

Market opportunities

The tuxedo side of the formalwear business is a $1.6 billion market in the United States. The bridal side is “more like $10 billion or $12 billion,” Burke said.

A prominent goal for the Tuxedo America owners is to ride the relationship with CCA Global into the bridal market.

“With the strength and buying power of CCA, we can go right into ? buying dresses. Also, they can prototype stores on a turnkey basis if you want. We may be using all of this knowledge to develop a bridal chain ? but one that’s run by local ownership.”

The first priority is expanding in the tuxedo arena.

Tuxedo America’s goal is to expand its present roll call of about 400 stores to at least 1,000, a process that includes signing on more independent stores as members. The 12 founding members now operate in 11 states. One tenet of the CCA-Tuxedo America contract is that members will not compete in another member’s territory, and Tuxedo America will not accept new members located in another member’s projected territory.

For his part, Burke thinks there’s room in Colorado for up to four more Mr. Neat’s stores over the next five years, at which time he’ll look out-of-state.

“Then we’ll look at possible expansion to Utah in the Salt Lake City area,” he said.

The immediate benefit of the CCA-Tuxedo America partnership will be on the balance sheet.

“The key to the whole cooperative is the opportunity that this should drop more money to the bottom line, which we can use for future expansion,” he said. “If we are able to buy product for less, if we’re able to get all of the expenses reduced, it should give us more capital for additional growth.”

In addition to managing purchasing, CCA’s corporate structure includes a centralized, Internet-based training system for employees. The CCA Web site provides an evaluation system that allows store owners to measure the performance of workers.

The alliance also means large-group benefits packages for Tuxedo America employees. With CCA’s backing, the member stores will share bank-card fees and cut deals on cellular phone contracts and bulk office supplies.

Eventually, Tuxedo America membership — which includes an assortment of store names such as Al’s in Texas, Mr. Formal in the Pacific Northwest and Mr. Tux in the Boston area — will adopt a shared identity for marketing purposes.

“Gradually, we will go from Mr. Neat’s Formal Wear and a part of Tuxedo America Group to whatever umbrella name we come up with for the whole cooperative,” Burke said. “That will take several years.

“What we don’t want is for the consumer to think we’ve changed from the local service that made us strong before.”

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