DSW fills big footprint for well-heeled city shoppers: more NYC stores likely for off-price retailer

DSN Retailing Today, Nov 8, 2004 by Emily Scardino

NEW YORK -- Manhattan shoe fiends no longer have to scuff their favorite heels on the subway to Queens or Brooklyn, they now have two new 30,000-squarefoot DSW stores right in their hometown. With more than 40,000 pairs per store, virtually any footwear fetish can be easily satisfied at this chain, formerly known as Discount Shoe Warehouse or DSW Shoe Warehouse.

The assortment includes women's and men's dress, casual and athletic shoes, not to mention a broad array of accessories, including handbags, belts, ponchos and fur scarves. Aside from its extensive selection, restocked daily, the key to consumers' hearts is that this off-price retailer carries merchandise at up to 50% less than its competitors--often even more on the discount racks in the back.

DSW's assortment always features a steady flow of designer names alongside national brands, including New Balance, Reebok and Kenneth Cole. However, the Manhattan stores feature an especially broad array of designer fashion merchandise from Christian Lacroix, Versace, Marc Jacobs, Prada and Miu Miu, among others.

"Manhattan is the fashion capital of America, and we felt the time was right to bring our value-priced designer merchandise to this city," said John C. Rossler, president and ceo of Retail Ventures, DSW's parent company, who was on hand at the Oct. 24 grand opening of the Union Square location. "We have probably been ready to launch a flagship store for the past two years, but we wanted to wait until we located just the right real estate."

Aside from the Union Square flagship, near NYU's main campus, the other unit is in Battery Park City, in the financial district. Already, DSW's black-and-white striped shopping bags are a common sight. Rossler also pointed out that these are likely not the last new stores in the city, since the brand appears to be a perfect fit for the market. / Aside from prices and labels, the one-stop selection is unparalleled in Manhattan, massive even when compared with department store shoe departments.

While DSW, founded in 1991, is not a new retailer, its unique position in the marketplace has encouraged the more than 165-unit chain to ramp up its expansion pace. It opened "25 to 30 new stores during the past two to three years, and will continue opening stores at this rate for the next few years," noted Rossler, and is now the largest, and fastest-growing division of Retail Ventures, based in Columbus, Ohio. Rossler anticipates that DSW will eventually become a chain of approximately 500 stores across the country.

Retail Ventures, formerly Value City Department Stores, has two other subsidiaries: Value City Department Stores, with more than 100 units located in the central United States and off-pricer Filene's Basement, with about 22 stores across the country. The Shottenstein family has a controlling interest of approximately two-thirds of the company through the Shottenstein Stores investment firm. Last year, the organization brought in approximately $2.59 billion in total sales. Retail Ventures acquired Shonac Corp., DSW's parent company, in 1998.

The new retail complex in the Union Square location also houses a new Filene's Basement--the largest in the city--that takes up three floors in the same building, a 90,000-square-foot space that is massive in an urban setting. This off-price retailer's assortment mirrors DSW's only with the emphasis on apparel and home. While apparel still brings in the majority of sales for Retail Ventures, footwear is catching up quickly. Rossler noted that another Filene's Basement nearby, near a Bed Bath & Beyond and an Old Navy, will remain open despite its proximity.

Based on results, Retail Ventures is confident that its off-price model fits today's consumer. "Shoppers are more highly educated than ever and clearly aware of a good bargain, and that has helped up tremendously," added Rossler.

Aside from discounted designer merchandise, DSW also provides another hard-to-match shopping incentive, a generous consumer loyalty program called "Reward Your Style." Linked into a centralized database, each time customers shop and show their membership card, their purchases are tallied up. When the amount banked on the card reaches $250, the customer receives a $25 gift certificates.

Aside from the two new Manhattan locations, DSW is also opening up shop in Fredericksburg, Va., and Miami in the next few months. To enter the market with a bang, DSW donated $500,000 to a local charity, the New York Restoration Project, founded by actress and singer Bette Midler in 1995. Midler herself showed up to accept the check, which she noted was the most generous her charity had ever received. Later, Midler was spotted carrying around a pair of polka-dotted Nicole Miller spike-heeled booties that fit her youthful sense of style.

DSW already operates locations coast-to-coast, with stores in locales including San Francisco's own Union Square, so its marketing campaign includes national television advertising. The company's evp and cmo, Charles W. Rath, was involved with Wendy's during the years its campaign featured founder Dave Thomas. DSW's playful ads currently target women's most primal instincts, equating shopping to hunting and gathering sustenance for winter, featuring a young shopper loaded down with more boxes than she can carry.