Putting the Best Foot: Forward
In the shoe industry, one size does not fit all. That goes for footwear design, style, even price. By combining a new store-design concept with innovative technology solutions, including price optimization, assortment planning and employee training, Nine West Footwear Corp. is putting its best foot forward to remain a fresh brand among its trendy shoppers.
Nine West Footwear, New York City, is comprised of some of the fashion industry’s most recognized brands. The company, a division of Jones Apparel Group, includes Nine West retail and outlet stores, Bandolino retail stores, and Aerosoles retail stores, as well as an apparel, or ready-to-wear division that features the high-end Jones New York, Casper and Anne Klein brands. The entire Nine West conglomerate operates approximately 1,000 stores.
The division has built its strong reputation on its ability to keep merchandise—and its shopping experience—fresh for its customers. Yet, Nine West felt its footwear brands were in need of a boost.
“From a competitive standpoint, it is important for us to stay fresh in the marketplace,” said Jay Friedman, president, company-owned retail footwear and apparel, Jones Apparel Group. “We are constantly reviewing different issues of our business and one point that kept resonating was that it was time to reinvigorate our store design.”
Nine West grew tired of featuring racks of shoes “that became confusing to shop and hard to navigate,” he said. “Realizing this was not a competitive way to go, we decided it was time for a new direction in store design.”
The new design focuses on clearly displaying merchandise and delivering service that contributes to a more appealing shopping experience. Besides adding new lighting “that enables product to ‘pop,’” Friedman explained, the company made a significant investment to further enhance the layout.
“To ensure that we have great product available to our shoppers, we needed technology to manage our assortment,” he said.
The first step in upholding the new store design was to reduce the number of SKUs (stockkeeping units) displayed in each store. To better manage these assortments, the company deployed a new solution from SAP, Newton, Pa.
After the planning team creates product and unit plans on a per store basis, the plans are fed into an inventory-allocation application that sorts product based on units needed in each location.
“By giving our buyers and planners access to the solution, they can create more accurate merchandise plans by our operating regions,” he said.
Nine West planned to pilot the solution last month in its ready-to-wear division, and expected to expand the functionality to its footwear division by the first quarter of 2008.
With a strategy to manage its inventory in place, Nine West moved on to how to increase turns of its merchandise. This involved the addition of price-optimization software.
“You cannot run a business with a ‘one-size-fits-all’ strategy,” said Friedman. “One way to fulfill our goal of becoming a more competitive player in the marketplace was to pursue price optimization.”
Price optimization actually had been on Nine West’s radar for two years. Once the company began pursuing its new business transition however, Nine West increased its commitment to explore price optimization.
“We wanted a proven solution that was easy to use and could provide invaluable insight into our business,” he explained.
Based on this criteria, Redwood, Calif.-based Oracle’s Retail Price Optimization solution caught Nine West’s attention. “It was already a staple across many specialty retailers that operated in environments similar to ours,” he said.
“Besides lowering the cost to develop and maintain the infrastructure, the hosted solution enables us to ramp up and implement the solution to our planning team quicker,” he noted.
The solution, which is hosted and managed by Oracle, uses algorithms to calculate demand forecasting and price elasticity, then delivers an inventory quantity plan that aims to maximize revenues and profits.
Each Monday morning, the solution provides a report of price recommendations based on demand across store zones and operating regions across the country. These price recommendations are also broken down by color and style sold in each zone.
“Managing pricing at a zone, size and color level is a significant advantage for us,” Friedman said.
The company began using the tool in its Bandolino division in May. “This is a smaller division comprised of 50 locations,” he explained. “This helped our planners get used to the tool.”
By the end of the year, Nine West plans to roll out the solution to all of its footwear divisions. By the first quarter of 2008, all apparel divisions will be using it as well.
Overall, the company has invested more than $1 million in its merchandise-allocation and price-optimization projects, and Nine West expects a multimillion-dollar return due to an increase in margins. “We expect the price-optimization tool to enhance profitability and increase comp-store sales,” he said.
“We operate 1,000 stores across the country, as well as in Puerto Rico. Clearly, each store’s shopper has different needs and responds differently to prices,” Friedman said. “This solution allows us to manage pricing down to a local level. This is an opportunity that we never had before.”
Kicking Up the Design
Nine West Footwear, a division of Jones Apparel Group, built its reputation on delivering the hottest trends to its shoppers. That’s why it is no surprise the company is rolling out a fresh, new store design to flash its wares.
“We had two goals: We wanted a cleaner look and we needed to give our shoppers an easier way to shop when in our stores,” said Jay Friedman, president, company-owned retail footwear and apparel, Jones Apparel Group.
All members of the company’s senior management team worked together to ensure that the organization’s brand experience is embodied within the new store design. The first task was to limit the amount of product featured on the showroom floor. Next, the chain added functional elements that would create a modern, clean ambience.
This included using sharp black and white fixtures, as well as mirrors, on low-level shelves and couches. The team also opted for enhanced store lighting to make the product pop.
“This new look is resonating with our shopper and we feel it is a significant transition from our traditional look,” he said.
The new design is currently being rolled out and the entire enterprise will feature the cleaner look by the end of the year, according to Friedman.
Going Above and Beyond
Price and assortment may attract the shopper, but it is the in-store experience that solidifies the customer relationship. That is why Nine West began making a significant investment in its guest-services training program.
“We call our customers our guests, so we are committed to developing a training program that can teach our associates to be brand ambassadors and provide an impressive store-level experience,” he said.
The program goes beyond how to use the point of sale and the proper way to greet and treat a customer. Nine West’s program also focuses on making each visit a unique buying experience.
The company currently relies on a combination of workbooks and DVDs. However, an analytics tool gives associates the most valuable tool—the ability to assess shoppers’ needs.
“Fashion changes all the time—sometimes daily. Communicating these trends can be difficult,” Friedman said. “We use DVDs to relay ideas on what is happening in the industry, and educate our ambassadors on how to impart their knowledge to the shopper.”
Part of this training includes upselling strategies. “Our courses teach ambassadors how to assess shopper needs and to present ideas that complement their choices,” he said.
For example, if a shopper chooses a pair of black patent-leather ballet flats, associates will instantly bring two other pairs of shoes in a similar style or different color. They will also bring a handbag or belt to complement the shoe.
“The program was created to ensure that associates don’t overwhelm the shopper, but instead provide the level of service they expect,” he said.
Friedman emphasized that the only way to ensure that the training program works is to continually monitor employee progress.
“Training is a dynamic process. It is imperative to stay on top of their education,” he said. “That is why we use the right combination of tools and monitoring to ensure that our associates implement what they learn.”
Winn-Dixie team honored for turnaround
JACKSONVILLE, Fla. The team that lead Winn-Dixie Stores’ successful turnaround initiative is being honored by the Turnaround Management Association for the best ‘Mega Company Turnaround’ for 2007. Comprised of financial experts from The Blackstone Group, Skadden, Arps, Slate, Meagher & Flom and Smith Hulsey & Busey, the team helped Winn-Dixie regain the market share and profits it started to lose in the mid 1990s and early 2000s to competitors Publix and Wal-Mart.
Winn-Dixie filed for Chapter 11 bankruptcy in early 2005 after reporting year-to-date losses of $552.8 million or $3.93 per share of common stock and a decline of 4.9% in identical-store sales in its second fiscal quarter over the same period in 2004.
Despite the difficulty of achieving a succesful turnaround, Winn-Dixie began its reorganization effort, while still continuing to operate its core business and preserving jobs. According to the Turnaround Management Association, it created new common stock for five classes of unsecured creditors, with recoveries ranging from about 96% to 53%. The company emerged from bankruptcy on Nov. 21, 2006.
For its fiscal year ended June 27, Winn-Dixie reported adjusted EBITDA of $85.9 million compared to a loss of $27.8 million last year and an identical-store sales increase of 1.6%
Sears ends deal with maternity retailer
PHILADELPHIA Sears and Mothers Work, the world’s leading maternity apparel retailer, will not be renewing their agreement, Mothers Work announced today. Under their current agreement, Mothers Works operates the maternity apparel department in 502 Sears stores through the sale of its Two Hearts Maternity branded merchandise.
Mothers Work said it expects its partnership with Sears to end on June 20, 2008, when it current deal with the company is expected to expire.
Rebecca Matthias, president and ceo of Mothers Work, noted, “While we are disappointed about the end of our relationship with Sears, we feel the decision not to proceed with a renewal is in the best interest of our stockholders since we were unable to reach terms on a renewal which would be favorable for Mothers Work and our stockholders. “