2011 June 9

The Retailer Files, Vol. 13: Katy and Matthew Culmo, By George

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By George boutique By George boutique
Photos courtesy By George
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(NEW YORK) By George--the shopping mecca for southern belles without a (serious) budget--has been leaving its competitors in the dust for over 30 years. Not a surprise, coming from a multi-million dollar boutique offering racks of Dries Van Noten, Alexander Wang, and Balenciaga instead of your run-of-the-mill daisy dukes or department store knockoffs. Despite their success, Katy and Matthew Culmo--the husband-wife duo behind the iconic storefront--have their reservations about retail. The Daily sits down with the Texas twosome to find out why. MARIA DENARDO 

Katy, we heard you followed a boy to Texas. What’s the story?
Katy: I did that often. I grew up in Tennessee and left after high school. I followed one to Dallas, and then another boy to Austin. The boys always ended up where they started; I kept going forward. Austin was super hippie and super groovy—it’s nothing now compared to what it was. I wasn’t going to go backwards to Tennessee, which is a beautiful state. I was young and stupid and made my way wherever I was. I was pretty darn boy crazy.

Did you always want to be in retail?
Katy: I was always in administrative jobs, and I was great at office work. When I broke up with the boy in Austin, I was out exploring the campus and the surrounding area, and there was this little store in a high-rise dorm called By George. The owner, George Humphrey, was very intent on getting to know me. We dated for nine months, but I never worked for him. I would go to market, though. After we broke up, he called me one day and told me he was selling the store and wanted me to buy it. I told him he was insane. ‘I’m 26. I make $800 a month!’ I said. This was 1979. He kept pursing it, and promised to co-sign a loan for me at the bank. It was my opportunity to have my own business. I didn’t know anything about it, and I liked fashion at the time, I guess, so I bought it.

When did you and Matthew meet?
Katy: Matthew says ’86 or ’87. I’m ten years older. I had several boyfriends, of course, in the middle of all that. It was the eighties!
Matthew: I was living in London, and one of my best friends was hanging out with Katy...
Katy: A groovy older lady who was the owner of By George!
Matthew: ...And when I moved back, he introduced us, and we moved in together a couple months later. We’ve been together ever since.

How did you learn to run a store?
We learned quickly.
Katy: It took us about 20 years to get there, I think.

What would it be like for a 26-year-old to buy a store these days?
Matthew: They can buy mine!
Katy: This is not very sexy, but if I had to do it all over again, knowing what I know, I wouldn’t have an inventory-based business. I’d run a business where you make the money, and you put it in your bank account. With a store, you constantly reinvest in your inventory. We’re fortunate that we’ve been lucky, but it’s a business. It's not just shopping!
Matthew: We’ve had several people approach us to buy our store, and after 32 years, we entertain it. When we meet with them, they don’t understand what’s involved in owning and running a store. Today, the retail climate is completely different. You could open a store two blocks from here, but between me and eight other stores, you wouldn’t be able to get product from the line you want. The distribution is so tight. Unless you’re doing a private label, I don’t know how you would open in the market right now.
Katy: When I bought By George, it was hard work, but it wasn’t confusing. Coterie was at The Plaza on two floors. Now, there’s the Javits Center. There's just so much stuff. I don’t know if I could do it all over these days, or figure out my identity, with all the choices.

Is there anything you miss from your earlier retail days?
Katy: Control. It was easier to keep your vision, and it wasn’t so competitive. With all the markets, vendors, and deliveries, you’re constantly chasing your ass with your paperwork and your business. Matthew and I still run it like a mom and pop store set in 1984.
Matthew: We talk about control, but we control everything. It’s hard for us to give up control, especially when it comes to buying.
Katy: We complain, but I’m not letting anyone else buy for us!

What designers have you become friends with over the years?
Katy: Christina Kim at Dosa, Gary Graham. I carry French Connection because I’ve carried it since we opened. I saw them some place, called them up, and they sent me a box of merchandise to pick from. There’s just something so right about it. I have a really long relationship with them, and you know, they have some cute stuff in the middle of it. It’s not my money maker, but it’s something I hold onto.
Matthew: We’re not driven by the social aspect of this business. I talk to Alber [Elbaz] in the show room, but we don’t have to see designers to be validated by what we do. We buy what we love and what would be great for our customers.

Who is your customer?
Matthew: In the flagship store, our customer is older now, between late 30s to 60s, because those are the women who are actually spending money. At the other location, it runs the gamut from young to old, and it’s more tourist-driven.
Katy: I’ve definitely given up our market share on the younger shoppers. I can’t compete with Zara, Free People, H&M, or J.Crew. They duplicate what’s going on in fashion right now for a cheap price, and that’s what younger women are doing right now—at least in Austin, Texas.

Do you clash on buying strategies?
Matthew: From time to time—only when it comes to shoes.
Katy: We clash in a very typical male-female way. Matthew will always buy the hottie shoe with platforms. I’ll buy flats and shoes you’ll actually wear. He’ll try to buy a relatively slutty dress, but I write the orders. He likes luxury, and I like practical—but I make the money. We have a running competition.
Matthew: It all makes money.

Would you recommend going into business with your spouse?
Katy: No!
Matthew: It’s hard. You’re together 24/7.
Katy: It works for us, though.

Do you do anything special for the VIP clients?
We ship merch to people all over the country. We have a customer and her husband who are going to Rome in a week, so we sent them a bunch of things. We’ll go out tomorrow morning and pick up the rest. We do alterations, handwritten thank you notes, a By Geoge credit card. It runs the gamut.

What celebrities have shopped at the store?
Matthew: Sandy Bullock is a good customer. Patti Griffin, Drew Barrymore, Kate Winslet, Scarlett Johansson, Brooklyn Decker….If you come to Austin, you come to the store.

Has the economy impacted you?
Katy: 2008 sucked. In a way, it was the best thing that happened, because it made us hunker down and reassess. We worked harder, smarter, and leaner. 2010 was one of the best years we had, and 2011 is kicking it.
Matthew: We didn’t lay off a single person. People left to have a baby or get a graduate degree. We didn’t cut their insurance. We gave out more responsibility and paid our existing staff more.

What was the biggest change you implemented in 2008?
Katy: We started paying attention to what other people were doing like having their own credit cards or hosting events. In the past, the bulk of our career had been on the University of Texas campus so we were never a trunk show store. We definitely started entertaining more. We wanted our customers to have the same perks as the customers in bigger stores.

Where do you like to wine and dine designers?
Katy: Austin funky!
Matthew: We take them to drinks at this private, hip hotel called Hotel Saint Cecilia. For dinner, we take them to everywhere from Perla’s to Justine’s.

What do you do with merch that doesn’t sell?
Katy: It sits on the sales rack until it sells.
Matthew: If it doesn’t sell in the store, we take it to Le Garage Sale, a huge warehouse sale between the surrounding stores. It’s in the performing arts center, and the public pays a small fee, like $10, to get in. We always sell it there. It’s like a flea market.

What new designers are you excited about?
Katy: We’ve been carrying Maria Cornejo for the past year. She’s a genius.
Matthew: The same dress looks great on a 20-year-old to a 70-year-old. We go to dinner with her, and we love her.
Katy: Sophie Theallet will be new for Fall. We just met her, and she’s really grounded.

What are designers missing out on that customers are asking for?
Katy: Dresses with sleeves. Girl by Band of Outsiders has a really great cropped cardi that’s funky and super cute—it’ll go with every dress.

How important is social media to By George?
Matthew: It’s a direction we’re focusing on, especially to bring in the younger customer...
Katy: It doesn’t matter how cool your blog is or what you say on Twitter, if you don’t have a really nice, helpful sales staff, you have nothing.

What do you do when a woman really wants to buy something that doesn’t fit?
Matthew: We try to see if we can get it tailored or…
Katy: Spanx! I had a customer who was post-pregnancy, and she tried on a top that was hideous on her—made her look like ten tons of fun. I told her, ‘Don’t buy that. It’s not good on you. Don’t do it.’ It made her mad that I said that, and she bought it. She still shops here-- it’s a joke now. She knows it was bad. Now, wants me to look at everything.

What's trending in your store?
I don't trend.
Matthew: She means, 'What's selling?'
Katy: Oh! Well, when people come in to look-y Lou, they love our bohemian jewelry.

Any hot items right now?
The Givenchy Pandora bags--they're the right amount of luxury and the right amount of hippie.

What do you think the future looks like for smaller, multi-brand boutiques?
Slowly, we're being eeked out a bit. Our orders are getting smaller, and I'm not sure designers see small boutiques as money makers like they once did. I don't have a lot of brands that aren't also doing big department store collaborations.
Matthew: It's tough when we carry a designer who also has a line at Target for much less. If it's $20 at Target, and $2,000 at our store, guess where they're going to go? For us, we keep our heads down, find interesting product, and look for new ways to present it.

What's next for By George?
Business is good. I'm greatful for our staff. Thirty-two years is a long time to do anything.
Matthew: It's time to look for an exit strategy...
Katy: Or give away some of the control. 

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