Reimagining Retail

WHAT COMPETITORS CAN’T carry they can’t sell. Hence, DSW’s focus on expanding its Owned Brands portfolio in 2022—in addition to reaping better margins. The stable of exclusives (including licensing deals) now includes Vince Camuto, Jessica Simpson, Hush Puppies, Keds, Topo Athletic, Reebok, Le Tigre, 360, Crown Vintage, JLO Jennifer Lopez, Lucky Brand, Kelly & Katie, and Mix No. 6. Sales of the division represented 26.5 percent of total net sales in Q3 of 2022 compared to 21.5 percent for the same period last year.

CEO Roger Rawlins described, in a recent press release, the effort as “meaningful progress” in what is a long-term strategy with the goal to double those sales by 2026. “The strategic shifts we have made in our business over the past several years are driving a sustainably higher gross margin rate than 2019 as we have a more targeted focus on customer acquisition, optimizing our assortment, and growing the brands we own and control,” he states.

Despite ongoing supply chain disruptions and economic headwinds, DSW delivered solid results the first three quarters of 2022. Highlights included comp sales up 3 percent in Q3 and 6.2 percent in Q2, net sales of Owned Brands up 40.4 percent in Q2, and Q1 overall net sales spiking 80 percent and fueled, in part, by the relaunch of the Vince Camuto brand. “While we are seeing many of the same pressures across the consumer landscape that most retailers are seeing, our flexible business model continues to support our efforts to navigate a dynamic macro environment,” Rawlins says. “We are focused on meeting our customers’ footwear needs while we balance inventory and expenses in order to continue growing market share in this volatile environment.”

Another highlight of 2022 was the launch of DSW’s Warehouse Reimagined store prototype, which debuted in May near Houston, TX. Designed to put customers, brands, and speed at the forefront, the format features an updated warehouse-inspired design to optimize capacity to bring the Owned Brands to life as well as showcase national brands with shop-in-shops. Features include product displays, head-to-toe lifestyle imagery, oversized graphics, and modular store walls to adapt to planned promotions. In addition, a dedicated kids’ section presents products at their eye level and includes interactive games and the ability for kids to size themselves and select their styles. Rounding out the design are easier-to-find selections and merchandising based on customers’ shopping habits. Warehouse Reimagined also continues to advance DSW’s philanthropic partnership with Soles4Souls, serving as a collection point for footwear donations to then be shipped to entrepreneurs in developing countries while keeping those products out of landfills.

“This new store format is an immersive experience—by the customer, for the customer—and brings to bear our proven capability to retail brands the way customers want,” Rawlins stated, adding it’s an exciting 360-degree consumer experience. “This new format also features expanded and upgraded services and order pick-up areas to make the shopping experience more convenient. Optimization of space helps us ensure our top items are always in stock, building on our hard-earned customer loyalty.”

During DSW’s Investor Day last spring, Rawlins announced the company had taken control of its destiny, having transformed into a brand builder, marrying its world-class design and sourcing capabilities to its industry-leading DTC infrastructure. “We know our customers like our best friends, and we utilize the data, feedback, and insights gleaned from our nearly 30 million loyalty members to efficiently design top-quality product suited specifically for them and engaging with them in innovative ways across any and all mediums they desire,” he says. —G.D.