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DSW will add buy online, pick up in store capabilities

May 28, 2015 03:25 PM
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With online and mobile traffic growing, footwear retail chain DSW Inc. plans to introduce programs that more effectively tie together its stores and the web.

Executives with DSW, No. 133 in the Internet Retailer 2015 Top 500 Guide, told analysts on the retailer’s Q1 2015 earnings call that online and mobile traffic grew 7% year over year in the first quarter. To take advantage of that trend, the retailer plans to expand its e-commerce offerings so customers can access more products wherever they choose.

As part of that plan, the retailer is testing what it calls an “endless aisle” mobile technology in 10 of its stores, which will allow store employees on mobile devices to get information on extended colors and sizes, access customers’ saved wish lists and reward certificates, and complete a transaction anywhere in the store. Later this year, DSW also plans to let consumers buy online and pick up in store as well as buy online, and ship to store for the first time ever, though executives did not specify the difference between the two programs.

“Our focus this year is to expand the customers' access to our full assortment,” CEO Michael MacDonald told analysts on the call, according to a transcript from Seeking Alpha. “A customer typically finds 2,500 choices in a single store out of the more than 15,000 choices that we carry across DSW.”

“A significant portion of our growth has been driven by the omnichannel experience we created, connecting our store and dot-com business so they can act as one to meet our customer’s expectations,” Roger Rawlins, chief innovation officer for DSW, told Internet Retailer via email earlier this month.

In addition to improved options for shoppers wishing to pick up their online purchases in stores, DSW improved its website search functionality.

“Convenience has and will always be an important aspect of our brand proposition and providing a customer options in how they engage and ultimately purchase product from our brand is critical to our continued success,” Rawlins said.

“This upgrade provides us with features and functionality that will be the basis for future digital demand growth,” MacDonald added. “This is particularly important as we expand the breadth of SKUs and increase the number of drop-ship vendors on DSW.com.”

Analysts seemed impressed with what MacDonald and his team had to say.

“In our view, Q1 is the second consecutive quarter in which DSW is showing solid consistency of execution, a trend we expect will continue throughout the year as it continues to benefit from 1) improved fashion trends, 2) an upgraded women's buying team, and 3) increasing mix of opportunistic buys,” wrote Camilo Lyon with Canaccord Genuity. “These factors when combined with assortment planning initiatives (benefits could start to manifest as early as 2015) and enhanced omnichannel capabilities (e.g. endless aisle capabilities, ship from store) should lead to incremental traffic, more full-price selling, and lower markdowns.”

For the three months ending May 2, DSW, which does not break out online sales, reports:

  • Net sales of $655.5 million, up 9.5% from $598.9 million during the same period last year.
  • A comparable-store sales gain of 5.1%, as opposed to a 3.7% loss during the same period last year.
  • Net income of $47.4 million, up 22.8% from $38.6 million during the same period last year.
 

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