Dressed for recession

Jos. A. Bank offers suit guarantee in case of job loss

March 17, 2009|By Andrea K. Walker | Andrea K. Walker,andrea.walker@baltsun.com

The president of Jos. A. Bank clothing chain believes that there are some guys out there pining for a new suit but holding back on buying one because of the unstable economy.

So he is giving consumers a little incentive to make that purchase anyway. The men's clothing company based in Hampstead will give refunds to customers who buy a suit and then lose their jobs. And those customers will get to keep the suit.

"We sense that there is some consumer reluctance to go shopping," said Jos. A. Bank Chief Executive Officer R. Neal Black. "A lot of that has to do with uncertainty, and we are trying to take that uncertainty away."

The company is the latest to offer creative ways to draw customers who are afraid to spend on anything other than necessities as they worry about their jobs during the economic recession. The economy has slowed sales for just about every retailer.

"You have to try and encourage a 'wants'-based shopper in America and give people a reason to go out and make that purchase," said Ted Vaughan, a partner in the consumer products industry group at BDO Seidman.

Hyundai announced a program in January similar to that of Jos. A. Bank, promising it will take back cars from people who lose their jobs, suffer a physical disability or are self-employed and forced into bankruptcy. The carmaker said it will let customers return cars within a year of the purchase, and the company will cover $7,500 worth of depreciation.

Amazon entered the "used game" business this month, allowing customers to trade in used video games for store credit. And Starbucks coffee recently began selling instant coffee, which is cheaper than its freshly ground versions.

Under the Jos. A. Bank program, the suits must be purchased during the retailer's $199 sale, yesterday to April 9. Customers have to show proof that they lost their job between April 16 and July 1 to get the refund. Jos. A. Bank will pay a refund up to $199.

Vaughan said that retailers are offering different incentives as solely lowering prices becomes less effective.

Vaughan said that the Jos. A. Bank refund offer should help drive more customers into its stores

"I think the upside is you bring in people who may be holding back - those people who aren't shopping even if they haven't felt the pinch," Vaughan said.

But Jos. A. Bank will lose money when people return suits. Black said the company has estimated expected losses from the program but declined to disclose them.

"It's a calculated risk," Black said. "Certainly, we will get some refunds and we have an estimate of what that would be. We don't think it will be a detrimental effect, or we wouldn't have done it."

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