DSW tests layout to spotlight brands like Adidas, Crocs, Birkenstock

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DSW debuts a new smaller store.

Source: DSW

DSW is trying out a new store look and layout at a location opening this weekend in Houston, in an attempt to focus customers’ attention on key brands.

It will feature shops-in-shops for national brands like Adidas, Brooks, Birkenstocks and Crocs, as well as Vince Camuto and Crown Vintage. Designer Brands, DSW’s parent company, calls the concept “Warehouse Reimagined.”

At the company’s investor day last month, Designer Brands CEO Roger Rawlins laid out a goal of doubling the sales of the brands it owns while maintaining sales of national brands. “In order for us to accomplish both of those goals, the physical experience we create for our consumer as well as for those national brands, it has to evolve” Rawlins said later in a Zoom interview with CNBC.

DSW is testing out its new format as consumers move back toward shopping in stores after two-plus years of pandemic lockdowns and restrictions. Total US retail sales, excluding autos, grew 7.2% from the prior year, Mastercard SpendingPulse said in a report issued Thursday . E-commerce transactions dropped 1.8%, while in-store sales increased 10%.

“They have to create excitement, and a ‘wow’, to get people off the couch and into the store, that requires more creativity” Dana Telsey, CEO of consumer products consultancy Telsey Advisory Group, told CNBC in a phone interview.

Much of the new layout has been informed by online shopping behavior, according to Rawlins. He said nearly 90% of DSW shoppers visit the website before heading to the store.

“These national brands are so relevant to the consumer, they search their name before they search DSW,” he said.

DSW new pilot store opening in Houston, TX this weekend. “Warehouse Reimagined” will feature shop-in-shops for some key brands like Hush Puppies.

Source: DSW

Deutsche Bank analyst Gabriella Carbone told CNBC over email that the new DSW store format “could be impactful over the long-term.” She said the real linchpin, though, is for the chain to “showcase national brands in a more prominent way with curated shop-in-shops, which should help Designer Brands Inc. continue to build its vendor relationships.”

The DSW “Warehouse Reimagined” store will have an open-sell format, where sizes are available for customers to grab themselves without help from associates. For shoppers that aren’t interested in help from employees at all, self-checkout will be an option . QR codes will be integrated to allow consumers to access more information on their phones while in-store, rather than just the current brand and price displays.

While the new format is smaller – at around 15,000 square feet rather than the typical 25,000 square feet – Rawlins said he’s committed to offering consumers the same level of inventory, striving to remain in-stock for all sizes. The smaller square footage helps to lower fixed costs, while the new design also allows for selling the same amount of inventory, he added.

Rawlins isn’t publicly disclosing financial goals for the “Warehouse Reimagined” strategy. But, to gauge its success, industry observers like Telsey will want to know whether there is any resulting sales lift, and how sales compare to the non-remodeled stores, among other metrics.

DSW new pilot store opening in Houston, TX this weekend. “Warehouse Reimagined” will feature shop-in-shops for some key brands like the retailer’s own Crown Vintage and Mix No. 6.

Source: DSW

While in a different subsector of retail, Target calls out material sales improvements in the hundreds of stores it’s remodeled since 2017. At Target’s 2022 investor day in March, Chief operating officer John Mulligan said traffic gains help drive an average two to four percent average sales lift in the first year following a remodel and another one to two percent lift in the second year.

DSW will be looking to the pilot program for some lessons. Rawlins said roughly one in five DSW stores come up for lease renewal each year. Designer Brand will potentially look at deploying what’s working to stores as leases expire. It has about 700 stores.

One major national brand DSW is going without? Nike. The athletic kingpin ended its wholesale partnership with the retailer this year as part of its to increase its own direct-to-consumer business.

“Losing Nike is a big deal,” Telsey said. “It’s a challenge to replace Nike, you have to be able to reinvent yourself in order to do that. I think that’s what [DSW is] trying to do.”


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