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

DSW is launching a new, smaller store.

Source: DSW

DSW is trying out a new look and store layout at a store opening this weekend in Houston, aiming to draw customers’ attention to key brands.

It will feature store-in-store for national brands such as Adidas, Brooks, Birkenstocks and Crocs, as well as Vince Camuto and Crown Vintage. It is radically different from the current DSW store layout, which features mixed shoe brands in aisles organized by style and category. Designer Brands, the parent company of DSW, calls the new concept “Warehouse Reimagined”.

At the company’s Investor Day last month, Designer Brands CEO Roger Rawlins set a goal to double sales of brands it owns while maintaining sales of national brands. “For us to achieve both of these goals, the physical experience that we create for our consumers as well as for these national brands, needs to evolve,” Rawlins said later in a Zoom interview with CNBC.

DSW is testing its new format as consumers return to in-store shopping after more than two years of pandemic shutdowns and restrictions. Total U.S. retail sales, excluding autos, rose 7.2% from a year earlier, Mastercard SpendingPulse said in a report released Thursday. E-commerce transactions fell 1.8%, while in-store sales increased 10%.

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

Much of the new layout was influenced by online shopping behavior, according to Rawlins. He said nearly 90% of DSW shoppers visit the website before going to the store.

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

Opening a new DSW pilot store in Houston, Texas this weekend. “Warehouse Reimagined” will feature in-store stores for some key brands like Hush Puppies.

Source: DSW

Deutsche Bank analyst Gabriella Carbone told CNBC via email that the new DSW store format “could have a long-term impact.” She said the real pivot, however, is for the chain to “showcase national brands more prominently with curated stores, which should help Designer Brands Inc. continue to grow its supplier relationships.”

The DSW “Warehouse Reimagined” store will have an over-the-counter format, where sizes are available for customers to grab without the help of associates. For shoppers who are not at all interested in employee assistance, self-checkout will be an option. QR codes will be integrated to allow consumers to access more information about their phones when they are in store, rather than the current brand and price displays.

While the new format is smaller — at around 15,000 square feet instead of 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 reduce fixed costs, while the new design also allows the same amount of inventory to be sold, he added.

Rawlins does not publicly disclose the financial goals of the “Warehouse Reimagined” strategy. But, to gauge its success, industry watchers like Telsey will want to know if there’s a resulting boost in sales and how sales compare to unrenovated stores, among other metrics.

Opening a new DSW pilot store in Houston, Texas this weekend. “Warehouse Reimagined” will feature in-store shopping for select key brands such as the retailer’s Crown Vintage and Mix No. 6.

Source: DSW

While in a different retail subsector, Target is calling for significant sales improvements at the hundreds of stores it has renovated since 2017. At Target Investor Day 2022 in March, the chief Operation John Mulligan said traffic gains helped drive an average of 2-4% of average sales. lift in the first year after a renovation and another 1-2% lift in the second year.

DSW will look to the pilot program for a few lessons. Rawlins said about one in five DSW stores have to renew their lease every year. Designer Brand will potentially consider rolling out what works to stores when leases expire. It has about 700 stores.

A big national brand that DSW does without? Nike. The athletic kingpin ended its wholesale partnership with the retailer this year as part of its drive to grow 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 to do that. I think that’s it [DSW is] try to do.”