Footwear Insight

footwearinsight.com 3EPTEMBER/CTOBER ^ &OOTWEAR )NSIGHT s FAMILYRETAIL Stepping Up Major Shoe Chains See Similar Growth Opportunities. By Bob McGee S hoe Carnival, DSW and Caleres- owned Famous Footwear see their respective growth oppor- tunities in a similar fashion. As FY17 moved into its second half, senior management at each banner outlined comparable strategies. These initiatives largely focus on the same issues—better uti- lization of data mining; more catering to best customers who typically drop more dough when shopping their stores or online; more spending on and leveraging of technology; more adoption of specific strategies that will ultimately result in improved efficiency and profitability for fledgling ecommerce businesses; and cutting unprofitable brick- and-mortar locations as necessary. Here's a closer look at each chain's objectives. DSW: The 510-door chain is making addi- tional technology investments and promising to provide more customer services and experiences to its 25 million frequent buyers. The first phase of a new customer loyalty program will roll out in Spring 2018 with a number of new services and quicker ways for members to earn rewards. Management hasn't provided specifics on a new store design phase in, but confirmed the look will allow for "more compelling product stories and create room new ways to serve previ- ously unmet customer needs. The prototype is expected to put 40 percent more styles and sizes on the warehouse floor with a greater emphasis on kids and athletic in the assortments. On the technology front, DSW is co-developing proprietary software to enable "full visibility" chain-wide, allowing custom- ers to see online what they have purchased, where they have bought it and their personal wish lists. Already, 50 to 60 percent of digital demand is being fulfilled by stores, partially through "Buy Online, Pick Up In Store." Shoe Carnival: The 418-door retailer, which shuttered 20 stores in the Houston market due to Hurricane Harvey, is vowing to close 30 to 35 doors for good if it's unable to improve their respective four-wall perfor- mance to a minimum contribution level. Rent reductions and re-locations are two ways underperforming locations could go forward, but at least 16 to 18 underperforming stores will close in the second half of FY17. Meanwhile, earlier this year, the chain hired an unspecified strategic partner to assist with data mining its Shoe Perks file to gain a better understanding of its most loyal cus- tomers. Once the project is completed, senior management says the retailer will be better able to service its best customers and create "a seamless, memorable experience" for all customers regardless of shopping channel. Famous Footwear: Bolstered by 20 percent sales growth in lifestyle athletic and more focus on retaining its "share of wallet" with its targeted high-value customers, the retailer realized its best start to the Back-to-School season since 2013. "We wanted to make them (high-value customers) a bigger part of our busi- ness," Rick Ausick, president of Famous, told analysts last month. Last month, the retailer had approximately 1 million names in its database. The total is said to be growing daily. Diane Sullivan, CEO, president and Chairman of Caleres, says the company's communication and marketing efforts aimed at its best customers has given Famous a better understanding of brand and product assortments these people want to see from the retailer and insight about which of its stores they regularly shop in. "We're going to get smarter and smarter about how we can actually offer specific and tailored messages" to different segments within our customer base," Sullivan added. For sure, the retailer is already keen on how to improve gross margin with its online cus- tomers—encourage them to pick up their order in a brick-and-mortar location, result- ing in an average $6 boost to a shoe's average unit retail (AUR). A May decision to conduct a media test that targeted prospective customers paid dividends across the U.S. at B-T-S, senior management confirmed to analysts recently. Still, after B-T-S, Famous intends to leverage its expenses by closing approximately 50 stores. Overall, the chain's fiscal year will include 70 store exits and 40 openings as part of its normal lease renewal process. Famous operates approximately two percent of its doors, 38 or 39, in the Houston market. O One of DSW's focuses will be on tech investments in the year ahead. Shoe Carnival will close underperforming locations in the coming months. Famous Footwear had a strong Back-to-School season.

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