Howard Schacter, Steve & Barry’s

True story. I”m walking to work recently when a guy stops me. “Nice basketball shoes,” he says. “What are they?” “Starburys,” I reply. “Where’d you get ’em?” “Steve & Barry’s.” “How much?” “$14.98.” “HOW MUCH?” “$14.98.” “Where’d you get ’em?” “Steve & Barry’s.”

The next week, I see the same guy wearing the same shoes. “Nice basketball shoes. What are they?” I ask him. “Starburys.” “Where’d you get ’em?” “Steve & Barry’s.” “How much?” “$14.98.” “How’d you hear about ’em?” I ask. “A guy I know,” he replies. “He’s an expert on basketball shoes.”

Word travels fast, even without a huge marketing budget. That’s especially true when an NBA star endorses and wears $15 basketball shoes. But that’s also what happens when you are a retailer with such absurdly low prices that even Wal-Mart starts to look pricey. Steve & Barry’s University Sportswear was founded in 1985 by co-CEOs Steve Shore and Barry Prevor as a place where college students could afford to shop, with nothing higher than $7.98. That’s shirts, sweats, sweaters, jackets, everything.

How the Port Washington, N.Y.-based operation keeps prices low isn’t a secret. They negotiate great deals with mall landlords and source products directly from overseas. This strategy has served the company well. It has more than 200 stores in 33 states, now adding an average of five per month. In November and December, S&B’s plans to open about 90 new locations. And with celebrity-backed brands like Starbury and Venus Williams’ EleVen, they’re continuing to shake up the retail industry.

That latest twist came after S&B’s hired Howard Schacter as chief partnership officer in 2005. Schacter had previously worked at MKGT Partners, New York, which provided marketing services for such clients as Coca-Cola, CBS and Tommy Hilfiger. His contacts as a principal there and from his prior job as svp-corporate communications at Clear
Channel Entertainment, New York, were extensive. Among them was Jordan Bazant, a founder and principal at The Agency Sports Management &
Marketing, New York, who represented New York Knicks point guard Stephon Marbury. Marbury’s basketball shoe deal with And 1 had expired, so Schacter told Shore and Prevor that he wanted to approach Bazant with a unique proposal: Marbury could design a signature line of “Starbury” shoes priced at $14.98 but equal in quality to shoes 10 times that amount, as well as a sports apparel line where no item would be priced higher than $19.98.

But there was another angle to the pitch. While an NBA star might command a $10 million endorsement deal over a five-year period, Schacter suggested that Marbury’s pay would be based mainly on royalties. “They were looking for a quality partnership and we were looking to expand our brand, and it all came together,” said the 42-year-old Schacter.

Marbury liked the high-quality, low price-point promise, which, as he later said, meant “we can help teach kids to be responsible, earn their own money and buy these shoes without asking their parents for money.” When the collection was unveiled in August
2006, Marbury committed his time and energy by handing out Starburys to high school athletes at basketball camps, on playground courts and in barber shops. He wore on-court the exact same shoes that consumers get off the shelves. He even defended them against NBA star LeBron James, who has a $90 million deal with Nike. When James rejected the idea of backing a low-priced shoe, telling Newsday, “Me being with Nike, we hold our standards high,” Marbury replied, “I’d rather own than be owned.”

Steve & Barry’s doesn’t share financial figures. But after the Starbury launch, S&B president Andy Todd said, “We sold out what we thought was a couple of months of shoes in three days.” In November, Marbury himself offered, “I sold 3 million pairs of sneakers already.”