DSW promotes thrill of the hunt

DSN Retailing Today, May 23, 2005 by Emily Scardino

When it comes to breadth of selection and rock-bottom prices, category killer DSW Shoe Warehouse is hard to match.

DSW is in a quiet period currently as it prepares for its upcoming IPO. However, the company made a lot of noise recently with its dramatic expansion into Manhattan last October, one of the few retailers bringing big-box retail into the Big Apple. Judging by the long lines at the registers six months later, the company has secured a toehold with some of the world's most finicky footwear consumers, thanks to an assortment and merchandising techniques designed to produce a high-volume, profitable business. Featuring name-brand products at sometimes 80% off department store prices in a well-organized, self-service environment is keeping DSW a step ahead of the competition.

The company's strong financials speak for themselves in terms of DSW's consumer impact. Sales rose a very healthy 22.8% in 2004 to $791.3 million. Only in business since 1991, the retailer has been taking its store base national, with an astonishing 30,000-square-foot format dedicated to one of the broadest assortments of off-price footwear with up to 40,000 pairs per store. The company also re tails accessories, including handbags, hosiery and headwear, as well as gift items such as candles, stationery and HBC--but the core of the assortment is men's and women's shoes. Seven stores now offer children's footwear as well, in addition to a stand-alone DSW Kids Only store in Schaumburg, Ill.

Since the first DSW Shoe Warehouse opened in Dublin, Ohio, the chain has grown to 179 stores across the United States. It is the jewel in the retail portfolio of parent company Retail Ventures, which also operates approximately 115 Value City Department Stores and 26 Filene's Basement stores. According to the company, DSW has the potential to expand to approximately 500 stores across America at a rate of 25 to 30 stores per year.

DSW caters to the many shoe shoppers who enjoy the process--a characteristic portrayed in the company's national television advertising. The witty "Thrill of the Hunt" campaign features women emerging from "hibernation" and stocking up for the season, tying into some imagined primal need.

For a big-box there is nevertheless a high level of service. There are numerous associates on the floor to help consumers find a pair of shoes, though their primary job is keeping the vast array of shoes neat and easy to shop.

Though weekly new merchandise flows provide shopping incentive, another reason DSW has a lock on consumer is its "Reward Your Style" program. Every time a shopper spends $250 she receives a $25 gift certificate.

The assortment is not only diverse in terms of selection and brand, but in price as well. Whether a customer is looking for a quick deal on a $15 pair of Candle's sandals or wants to splurge on some pricey Miu Miu pumps, her needs are quickly met. A designer section features brands such as Gucci, Christian Lacroix and Prada. While still typically between $100 to $200 in price, they are still hundreds of dollars below original retail.

While shoes are a need-based category, they are also impulse driven for the fashion-conscious female consumer. Still, she is shopping for value in today's market and wants the department store brands she favors at a good price. DSW is banking on the hunch that those floral mules that seemed outrageous at $180 are a perfect fit at $75.

DSW SHOE WAREHOUSE

2004 SALES*: $791.3 million

NUMBER OF STORES: 179

Source: Company reports * For fiscal year ended Jan. 29, 2005