FINANCE

Destination XL Q2 loss widens; plans 40 new DXL stores

BY Dan Berthiaume

Canton, Mass. – Charges related to the decision by Destination XL Group Inc. to exit the Sears Canada Direct business resulted in the retailer’s net loss growing to $4 million in the second quarter of fiscal 2014, from $1.6 million a year earlier.

Total sales fared better, driven by increased traffic and higher conversion rates, increasing 6% to $103.7 million, compared with $98 million in the second quarter of fiscal 2013.Same-store sales rose 7%.

For the full fiscal year, the retailer anticipates opening 40 additional 5,000-sq.-ft. to 6,000-sq.-ft. DXL stores in select smaller markets and in markets where geographical considerations warrant an additional presence, for a total of 270-300 new DXL stores. Destination XL will also close approximately 40 Casual Male XL and Rochester Clothing stores. The company also expects a continuing net loss, total sales of $413 million to $418 million, and growth in same-store sales.

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MARKETING/SOCIAL MEDIA

Gap returning to television with ‘Dress Normal’ campaign

BY Dan Berthiaume

New York — Gap is returning to television. The brand debuted four commercials that will air on TV, in cinema, in stores and online. Created by Academy Award-nominated director David Fincher, the films were created with Wieden+Kennedy New York as part of Gap’s new marketing campaign, Dress Normal. The TV campaign launches in the United States and United Kingdom in the week of Sept. 1.

"We want these films to get people talking,” said Seth Farbman, Gap global chief marketing officer. “Each one features a confident woman at the center and tells a story of how liberating it is when you are being your most authentic self. We believe everyone who watches them will identify with one or more of the characters."

According to Gap, the Dress Normal boldly instructs individuals to shape their own authentic, personal style – and intentionally challenges every one of us to dress for ourselves.

"We were inspired by the bold and honest spirit of the millennial generation; their authenticity is what makes them stand apart in today’s complex world," said Stephen Sunnucks, Gap global president. "Gap has always stood for individuality and being your most authentic self. By challenging the idea of what it means to dress normal, we hope to inspire confidence in everyone’s own personal style."

In addition to television, the campaign spans print, outdoor, mobile, direct, social, in store and digital. Gap has also enhanced its online Styld.by platform with amplified digital and video content and a range of creative influencers, including popular bloggers, style experts, musicians, photographers, filmmakers and artists to curate the best fall looks and illustrate their own version of Dress Normal.

In mid-September, the brand will launch an experiential element to the campaign – the Dress Normal Project – which brings to life what it means to dress normal through the lens of consumers across North America.

All four commercials can be downloaded here, or watched and shared on YouTube.

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News

GMA report finds CPG companies need to unlock digital opportunities

BY CSA STAFF

Consumer packaged goods companies need to plan for a “1-5-10” market in the United States during the next five years, in which digital’s current 1% penetration will likely expand to 5% and could accelerate to as much as 10% in short order, according to a new report, The Digital Future: A Game Plan for Consumer Packaged Goods, prepared for the Grocery Manufacturers Association by The Boston Consulting Group, Google and IRI.

The report highlights how CPG companies can best position themselves for growth and unlock digital and e-commerce opportunities.

Digital penetration of 5% represents nearly one-half of total CPG growth during the next five years, meaning that companies without an effective digital capability risk stagnation, loss of share and even shrinking sales. Early movers, on the other hand, have the opportunity to establish leading positions that will be difficult for others to infiltrate. Digital penetration rates will vary in different locations and categories. Some categories could see digital penetration of 30% or more by 2018.

“Like most other industries, the CPG industry is experiencing the signs of digital disruption,” said Elise Fennig, VP industry affairs at GMA. “That’s why it was vitally important for GMA to examine how CPG companies can holistically adapt their digital and e-commerce agendas to plan for the future effectively. We intend for the work completed by the BCG, IRI and Google team to be a go-to resource for GMA members — regardless of where they fall on the digital maturity continuum today.”

“The CPG industry is fast approaching a tipping point, driven by a confluence of trends,” said Patrick Hadlock, a partner at The Boston Consulting Group and a co-author of the report. “Consumers are embracing technologies, devices and services that make everyday tasks such as shopping, cooking and even commuting quicker, easier, more fun and more efficient. This is fragmenting the purchasing pathway as consumers regularly switch back and forth between digital and physical channels, and they interact digitally both in and outside of stores.”

The Digital Future shows that the impact of digital is felt most acutely at the early stages of the purchasing pathway. Almost 40% of offline shoppers and more than 30% of online shoppers reported that technology's impact is greatest during the discovery phase. More than a quarter of both offline and online shoppers said that its biggest impact is in the search phase. In addition, almost a quarter of in-store shoppers reported online activity as one of the three most influential factors on their purchasing pathway.

Digital channels currently have the greatest influence on purchases of home care and general food products but are likely to expand in importance during the next five years as the market moves to a 1-5-10 world.

Traditional retailers face a massive wave of new competitors and competitive models. Large technology companies with deep pockets are building disruptive digital grocery businesses to serve this category and support broader strategic goals. Start-ups are using value-added services to take share and build defensible niche positions, often by combining new product offerings with digital channels.

CPG manufacturers will need to participate in multiple retail models; the winning models have yet to be established, and it is likely that numerous models will prevail.

“The cost of inaction for incumbent manufacturers is ceding control of their brands, share position and margins in the fast-growing digital channel,” said Jamil Satchu, a partner at IRI Global Analytics and Consulting and a co-author of the report. “Companies that do not play in the digital game are likely looking at flat or shrinking sales. Brand equity is at risk as the purchasing pathway shifts online and consumers more often search for and discover brands digitally. But the experience of other sectors demonstrates that early movers often establish tough-to-trump positions and advantages.”

The report argues that while many companies have established a digital presence — a website, some digital advertising a presence in social media — most have yet to fully integrate digital into their operating model, build a big-data analytical capability, pursue a multichannel (or omnichannel) strategy or tailor their product offerings to the digital or e-commerce marketplace.

All companies can make a series of low-risk, 'no regret' moves that will better prepare them for a 1-5-10 world. These steps include developing an integrated strategy for how far the company needs to go and how to get there, shifting investments to establish a digital brand presence, building the necessary capabilities and organization for a fast-moving digital world and shaping the evolution to digital with channel partners. Manufacturers also need to recast their existing capabilities, including product placement, marketing content development and supply chain management, for the digital world.

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