Posted on 6/6/2019 6:45:05 PM
Leaders from DSW Designer Shoe Warehouse recently presented at CBUS Retail’s Retail Re-Thought Conference in the brand’s hometown – and Midwest retail hub – of Columbus, Ohio.
DSW President Bill Jordan spoke from the conference mainstage about the company’s transformation and how it’s finding ways to thrive by innovating and disrupting the footwear industry.
Jordan highlighted DSW’s history of innovation: From its beginnings as Shonac Corporation when it was founded as a close-out footwear retailer in 1969, to pioneering the open-sell model with the founding of DSW in 1991, to its evolution as a leading omnichannel retail brand. Of course, the retail landscape has gone through significant changes in the last decade; these changes have compelled DSW to transform again.
Jordan explained that the first force for change is the obvious fact that technology has changed the way consumers behave. The vast majority of DSW’s customers are engaging digitally at some point in their shopping journey, from browsing the app or website before visiting a brick-and-mortar location, to comparison shopping on a mobile device while browsing the aisles at their local DSW store.
Secondly, consumers increasingly prefer experiences over things. Just acquiring goods isn’t the experience today’s consumer is seeking – she or he is looking to connect in an emotional and memorable way. And finally, the digital revolution enabled brands to sell directly to the consumer through their own websites and apps, changing the game for “brands of brands” like DSW.
Jordan outlined how DSW is adapting to these forces with three key strategies: Differentiated products, differentiated experiences, and operational excellence.
Product is King
Not only has DSW rolled out kids’ footwear in all its locations (meaning parents don’t have to shop in two stores for their shoes the kids’ shoes), it’s going deep in seasonal product. Consumers are searching for a wide assortment of sandals in the spring and boots in fall – ensuring that DSW is in-stock on the hottest styles when it matters most is key. Most importantly, said Jordan, DSW is leveraging its industry-disrupting acquisition of design and sourcing organization, Camuto Group, to grow in exclusive brands.
DSW will offer an increasingly unique and differentiated product assortment (one you can only get at DSW) through the footwear experts at Camuto. Not only will consumers find amazing styles and selections they won’t find anywhere else, these Camuto-produced brands will have higher margin than the balance of DSW’s assortment.
It’s an Experience
Central to differentiated experiences is DSW’s new loyalty program, DSW VIP. It launched in 2018 with customer feedback driving the benefits and perks offered. “We gave customers what they asked for, and near the tops of that list was the ability to donate their used shoes,” explained Jordan. “In under a year, our customers donated a million pairs of shoes to our partners at Soles4Souls, and they’re changing lives because of it.”
What’s more, the company is seeing great success with its W Nail Bar concept, offering manis and pedis at two locations in Columbus, with five more locations planned to open in Virginia and Texas in 2019. Adjacent services are a way to drive traffic into the warehouse (as the company calls its stores) and create emotional loyalty with customers. It also creates repeat visits, since devoted customers often return monthly for a fresh polish.
And of course, DSW is focusing on advancing personalization, creating a closer relationship between the customer and their favorite brands. Ultimately this means a better experience for the customer. “If we understand her buying patterns,” explained Jordan, “we’ll be smarter about ensuring we have the assortment she wants in stock at her local DSW and giving her an offer or promotion that actually matters to her.”
In the end, it must all be underpinned by the basics. “None of it matters without the fundamentals of Retail 101,” said Jordan. “If the warehouse isn’t stocked and clean, and the check out lines aren’t moving fast, the people you worked hard to drive to your store won’t come back. It’s critical to nail the basics.”
“Innovation in retail is like learning how to drive for the first time,” quipped Jordan. “You might run a few red lights. The important thing is to gain skill with practice and keep challenging yourself. You grow not just for tomorrow, but for 10 years from now.”
Let’s get Phygital
SVP Customer Experience & Operations Brian Seewald, DSW CMO Amy Stevenson and VP HR Amy Jo Donohew also spoke at Retail Re-Thought on a panel about bringing the customer’s physical and digital experiences together (“phygital,” get it?). The team talked about the effects of this evolution on the way the DSW business operates.
Stevenson noted that the customer’s needs are front and center now thanks to the prevalence of data. “Marketers talked about it for years,” said Stevenson, “but now you see that customers are really in a starring role in retail.” The team discussed the way DSW uses data to drive the business, like using transactional data to drive the merchandising assortment, creating personalized offers for customers, or using the rich data from its 27 million DSW VIP loyalty members to ensure it is delivering benefits that resonate with customers.
Seewald noted the way inter-team data sharing is driving the business now. “I’m very excited that we’re getting more aggressive about using data from our digital team to inform our stores team,” said Seewald. “For example, we’re taking regional-level data on what the customer is searching for online and including that in the visual documents we share with our warehouses. That allows us to merchandise our end caps or feature areas based on the actual search data. That’s an important tool to drive sales and conversion in our warehouses.”
When asked about ah-ha moments data can surface for retailers, Stevenson explained that sometimes profound answers are hiding in plain sight. For example, when designing the benefits of the new DSW VIP program a few years ago, the marketing team asked customers a very simple question: Why don’t you buy more shoes? They assumed the answer would be financial (i.e. can’t afford it right now), but they found that consumers didn’t buy more shoes because their closets were already full. They didn’t wear these shoes anymore, but that they didn’t know what to do with them! The insight? “Customers felt guilty about throwing away their old shoes and those old shoes were barriers to buying new ones,” said Stevenson. The marketing team saw an opportunity: Give customers a solution to their old-shoe problem that made them feel good, turning guilt to glory. Partnering with Soles4Souls on a shoe donation program was the solution, and the marketing team incented customers with 50 points per donation, encouraging the purchase of a new pair.
DSW’s talent strategy has also evolved because of data, explained Donohew. Today, everyone needs to be data savvy, not just business analysts. “This is a big change from the talent that marketing departments would look for 20 years ago. And we’re getting non-traditional in the candidates we consider.” Stevenson agreed: “We’re looking for people who are curious, constant learners… those who are hungry to grow and change. That’s who keeps pace with the change.”
DSW’s organizational design also draws inspiration from the IT team’s agile development processes. “We’re building agile teams at the heart of the business, blending digital and store operations together to ensure we’re delivering a customer experience the way the customer expects it,” explained Donohew.