Daffy’s Inc.

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Daffy’s Inc.

1 Daffy’s Way
Secaucus, New Jersey 07094
U.S.A.
(201) 902-0800
Fax: (201) 902-9016
Web site: http://www.daffys.com

Private Company
Incorporated: 1961 as Daffy Dan’s Bargaintown
Employees: 600
Sales: $114 million (1997 est.)
SICs: 5651 Family Clothing Stores

Daffy’s Inc. is a discount retailer, based in the northeastern United States, of men’s, women’s, and children’s apparel and accessories. Noted for cheap but often stylish clothing, it also was well known in the 1990s for its cheeky billboards and other outdoor print ads advising readers that they would be foolish to pay full price elsewhere.

Growing Retail Chain: 1961-94

Daffy’s had its start in 1961, when Irving Shulman opened a small off-price clothing store named Daffy Dan’s Bargaintown on a back street in Elizabeth, New Jersey. Shulman publicized his wares with zany promotional stunts that made him a local celebrity. He sold silver dollars for 88 cents, placed mannequins on the store’s roof to attract the attention of passersby (who came into the store to warn that a woman was about to jump), and parked three leased Rolls-Royce limousines outside the store to illustrate his claim of “clothing bargains for millionaires.” He also placed advertisements declaring, “99 out of 100 psychiatrists say Daffy Dan is O.K.; it’s just his prices that are crazy.”

There was, of course, method to this madness. Daffy’s was still, in 1990, paying as much as 60 percent below regular wholesale price for its merchandise by purchasing goods that manufacturers had been unable to sell to department and specialty stores. The manufacturer was happy to sell the overstock for what he could get since a new shopping season was, or soon would be, under way. Daffy’s policy was to take delivery of purchased goods immediately and stock it in its stores within days. Most of its goods were domestic, but company buyers sometimes flew to Italy, France, or Spain to purchase clothing from suppliers’ excess output. In a 1997 New York service article, Corky Pollan wrote that Daffy’s had “cornered the market [for children’s clothing] on the coveted European names that usually surface only in the kids’ boutiques dotting upper Madison Avenue.”

Neither of Shulman’s two sons was interested in the business, but his daughter Marcia worked there on Saturdays and during the summer and went on buying trips with her father. She and her husband, Vance Wilson, joined the company in 1970. By the spring of 1987 Daffy Dan’s—renamed Daffy’s that year—had grown to a chain of five stores, 450 employees, and annual revenues of $35 million. Marcia Wilson, the prospective successor to her father, was then vice-president of operations and her husband was vice-president of real estate and development.

By this time Daffy’s had gone from selling what Shulman called “shlock” to off-price but high-fashion merchandise. This was made possible because of a growing acceptance by suppliers of the role of the off-price apparel merchant, allowing such retailers access to better quality clothing. “With the department stores going in for price cutting,” Vance Wilson told a reporter in 1990, “suppliers are seeing off-price retailers in a new light, maybe even as a necessity.”

Competition from price-cutting department stores—and also from manufacturers themselves, who began opening their own outlet stores—did not seem to faze this retailer. By 1989 the number of Daffy’s outlets had grown to nine, including its first in Manhattan, at Fifth Avenue and 18th Street, which became its flagship, with 34,000 square feet of space on three levels. This section of lower Fifth Avenue had been part of the city’s main shopping district a century earlier and now was returning to vogue. The newer Daffy’s stores were given more tasteful interiors, clearly with the intention of attracting a more upscale clientele.

Daffy’s made an even bigger splash in 1990, when it opened a 15,000-square-foot store at Madison Avenue and East 44th Street, in the heart of Manhattan’s shopping district for full-price conservative men’s clothing and just across the street from Brooks Brothers’ flagship store. But Shulman told a reporter, “We are not looking to compete directly with [traditional retailers], since we are off-price merchants. We would have gone there even if they weren’t there because of the office buildings and affluent consumers right there or nearby.” Shulman conceded that Daffy’s offered “mostly self-service” rather than customer service but added,“Our goods are so cheap that a man who comes in for a white shirt will settle for a blue one.”

Women’s apparel, however, had the dominant role in Daffy’s chain of outlets; even at the Madison Avenue store, women’s accessories shared the main floor with menswear. A visit to the women’s department—one flight down by escalator—turned up racks of Oscar de la Renta cashmere dresses for $99.99. Items such as a Randy Kemper silk jacket for $119.99 and Viewpoint’s $29.99 swimsuits were further discounted by one-third at the cash register. Some goods had labels cut out at the option of the vendor. Vance Wilson said about 70 percent of the store’s sales would be in women’s apparel. By 1991 business was so good on Madison Avenue that he said the store needed more space.

Daffy’s opened a store in the heart of Philadelphia, on Chestnut Street, in 1992, and a third Manhattan outlet in the World Trade Center in 1993, shortly after taking over the lease held by bankrupt Alexander’s Inc. for $5.5 million. The following year Daffy’s launched its fourth Manhattan store in the enclosed Herald Square Mall, at Broadway and West 34th Street. This outlet was described by Pollan as “the most stroller-friendly” of the chain in Manhattan, “bright, spacious, and super-organized.”

New York shopping columnists were finding much to admire in Daffy’s selection and prices during the middle to late 1990s. Lynn Yaeger spotted a navy blue wool Yves St. Laurent dress at the Fifth Avenue store for $69.99 and a silver-and-white-striped Cynthia Rowley T-shirt dress (with a “teensy hole” near the shoulder) for only $24.99. Besides “impossibly chic clothing for your youngest dependents” in the infant and toddler departments, Pollan found well-stocked girls’ and boys’ departments, with most articles no more than $30. Dany Levy discovered a nice selection of lingerie, sports bras, leggings, and various Lycra-enhanced gear.

“In-Your-Face” Advertising: 1991-96

By 1995 Daffy’s was attracting attention not so much for its price-friendly merchandise but for the “in-your-face” advertising campaigns disseminated by De Vito/Verdi (originally Follis DeVito Verdi), the irreverent agency that won the retailer’s account in 1991. Daffy’s had abandoned price-promotional advertising, even during the key Thanksgiving season, because although it resulted in a flurry of sales at some particular time, it did not lead to consistently strong sales every day of the week. Moreover, price-only promotions held down a retailer’s profit margin and could cheapen its image. According to Ellis Verdi, his agency “worked to help the retailer build top-of-mind awareness to the point where their business thrived on no advertised discount or sale—only an increasing perception that this is a great place to shop every day.”

Verdi went on to add that in taking “the inherently loud word ‘Sale’ out of the communication, it must be replaced with something just as attention-getting and even more memorable.... Our kind of advertising effectively tells people that they are out of their mind to shop elsewhere.” Accordingly, Daffy’s sunk money into outdoor billboards and posters putting down the full-price competition. One of these showed identical shirts side by side, but one, with a $20 price tag, was captioned “Shirt,” while the other, with a $68 tag, was captioned “Bull-shirt.” The copy for another read, “The suggested retail price of this shirt is $125.” The arms of the depicted shirt formed an obscene gesture, while the next line of copy read, “We have a suggestion for whoever suggested it.” An all-print ad read, “We believe people should be price conscious. They should remain conscious after they see the price.”

Daffy’s was reluctant to buy expensive television time, especially since its urban locations meant that it could reach a large number of people through outdoor advertising. A back-of-the-bus ad read, “Hey you, in the taxi. Nice shirt. You could have gotten it for less at Daffy’s. But you’re used to being taken for a ride.” Another outdoor ad began, “When a clothing store has a sale on selected merchandise, why is it always merchandise you never select?” Daffy’s billboards in front of many of New York City’s most expensive stores during the Christmas season warned pedestrians to “watch your wallet in this neighborhood”—or to shop at Daffy’s. Back-of-the-bus ads in Philadelphia proved so effective that Daffy’s dropped its television spots in this market.

Company Perspectives:

As other retailers seek ways to connect with their audience, Daffy’s is recognized for its smart, highly creative and often head turning messages designed to keep it top-of-mind among consumers. Through advertising, both print and broadcast, window displays, in-store merchandising and special events, Daffy’s appeals not only to the cost conscious consumer’s sense of style and value but their sense of humor.

The copy for one of De Vito/Verdi’s earliest ads for Daffy’s read, “If you’re paying over $100 for a dress shirt, may we suggest a jacket to go with it?” To the left of the copy was a photo of a straightjacket. Citing the ad for “indifference and contempt toward people with psychiatric symptoms,” the Alliance for the Mentally III of New York State, joined by the Friends and Advocates of the Mentally III, petitioned New York City’s Commission on Human Rights to treat it as a bias case. The commission referred the complaint to the American Association of Advertising Agencies, which concluded that De Vito/Verdi did not “knowingly” offend anyone and that words like “crazy” and “nuts” are stigmatizing but so prevalent in advertising that they would be difficult to remove.

Daffy’s in 1996-97

By the fall of 1996 Daffy’s had closed its store in the World Trade Center but had opened one on elegant East 57th Street. It was maintaining corporate headquarters in two buildings totaling 102,000 square feet in Secaucus, New Jersey, when, in 1996, the company purchased a 215,000-square-foot warehouse on 20 acres off the New Jersey Turnpike in neighboring North Bergen for about $9 million. It spent $6 million more on refurbishing the 42-year-old facility, which had been empty for nearly a decade, and before the end of 1997 reopened it as corporate headquarters, distribution center, and retail store. Daffy’s had 12 other stores at the time: the four in Manhattan and the one in Philadelphia; New Jersey outlets in East Hanover, Elizabeth, Paramus, Secaucus, and Wayne; a store in Manhasset, Long Island; and one in Potomac Mills Mall, Virginia. Wilson said the company planned to double the size of the chain during the next five years.