Footwear Insight

26 • Footwear Insight ~ July/August 2018 footwearinsight.com DSW's Play for Kids By Bob McGee R etailer DSW is intent on retaining and growing its business with women, whether they are buying for themselves or their little ones at home. In time for the upcoming Back-to-School season, the Columbus, OH, company will have completed a multi-year initiative to develop and install DSW Kids assortments in all 517 of its warehouse locations, giving it the ability to market the specialized departments nationally. "DSW remains significantly underpenetrated in kids and these give us confidence and optimism for this category's long-term prospects," DSW CEO Roger Rawlins told analysts earlier this year. According to public filings, DSW's Accessories/Other segment, which includes kids' shoes, has held steady at nine percent of the retailer's annual revenues for several years. That percentage represented nearly $252 million in sales in FY17, although it's unspecified how much of that total was for kids' offerings alone. "There is share to be taken with Stride Rite's exit (from children's footwear retail)," says Matt Powell, senior industry advisor for The NPD Group. "A void has been created and DSW can take some of that. There is an opportunity for them to leverage that visit by mom, who is probably coming in multiple times to shop for women's footwear, and sell her some cute kids' shoes at the same time. I think they're smart to get after this." Thus far, DSW has been mum about how much floor space will be dedicated to the kids' departments, which were scheduled to be installed in 203 stores by June 30, but Rawlins has said the retailer intends to do so "while preserving the balance of our existing offering." Of course, the retailer has to be mindful that the kids' shoe business, unlike women's, is fit-sensitive, lower- margin and requires a higher number of SKUs to service the smaller feet. Steve Marotta, an analyst for C.L. King, says there has been talk that DSW's play for additional kids' business could increase the retailer's comparable store sales by one-to-two percent. "Their (DSW's) studies show that they have mom captive as a customer until she gives birth before they lose her as customer for as many as 14 years before gaining her back," adds Marotta. "The real kicker here is keeping her as a customer while she is having children." DSW, which did not return Footwear Insight's calls for comment on their kids' strategy, has not publicly discussed the range or brands that will be carried in these new sections. But some believe athletic will be a significant percentage of the mix. "The most important thing to me [about this kids' strategy]," says Susquehanna analyst Sam Poser, "is how are they going to make kids feel comfortable in the DSW Warehouse environment. But I think they're going to sell some shoes. It's probably a better place for mom to come in and buy the shoes for the child and tote them home rather than bringing the child with her." There should be more clarity about DSW's kids' strategy and its customers initial reaction to it later this year, particularly after the Back-to-School and Holiday seasons. O The Retailer Is Focusing in on a Growth Opportunity. DSW expects to have its new DSW Kids assort- ments installed in all 517 of its warehouse locations by the Back-to-School period. RETAIL STRATEGY

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