Roger Rawlins, CEO of off-price shoe retailer DSW Inc., still remembers the time when he was in the seventh grade being the 12th man on the school’s 12-person basketball team, and how a pair of Converse leather sneakers changed how he felt about himself.
“I remember the first day when I strapped those on, I felt invincible,” Rawlins said on a conference call Tuesday, when DSW reported a surprise 0.6% Q2 comparable sales increase, its first rise in six quarters. “I remember how the right pair of shoes can let a kid from the middle of Ohio feel like an NBA All-Star. Those shoes certainly inspired me to express myself.”
And Rawlins wants to recreate that kind of same “emotional connection” with its customers, in his opinion a must-have to be “one of the few (retail) survivors” at a time when many apparel and shoe retailers are hurting from changing consumer spending priorities and where online retailers led by Amazon are increasingly stealing share.
US shoe industry sales dropped 1% to $65 billion in the 12 months ended February, hurt by declines at physical locations, according to market research firm NPD Group. Declines in categories such as shoes, where consumers use to build their wardrobe, indicates a decline in fashion as a priority, NPD has said.
DSW, for its part, saw comparable sales decline last year for the first time in at least five years. Sales per square foot had been dropping for years. (See complete data for DSW in eMarketer's Retail & Ecommerce database.)
“In an environment where we spend on healthcare, technology and durable goods, that has squeezed discretionary spending,” Rawlins said on the call. “Customers are more product and experience focused. Operators who compete solely on price and transaction and offer no differentiated experience or customer connection have lost relevancy and competitive appeal as we’ve already seen across multiple retail segments—in office supplies, electronics and sporting goods.”
To set itself apart, DSW is revamping its reward program, which has 25 million members and represents about 90% of its namesake chain’s sales. In addition to allowing its loyalty members to earn rewards faster, Rawlins said the new updated plan will also offer services like shoe repair. DSW is also testing a new layout at a store in its home market in Columbus, Ohio to feature more products—50,000 units versus 30,000 previously—to give consumers “an immediate access” despite a “vast assortment” it already added online, he said. The new format has driven traffic and converted more visits to purchases, Rawlins said.
DSW also is co-developing a proprietary software tool that not only would free up more time for store employees to engage with customers but also provide them with data such as a customer’s past purchase history, wish list and personalized offers so they can better interact with shoppers.
Online, where sales rose 27% in Q2, the company has redesigned its DSW.com site. Echoing many other brick-and-mortar retailers, Rawlins also touted DSW’s 500-plus physical stores—within 20 miles of 70% of its target population—as a competitive advantage that allows it to offer such services as allowing shoppers to pick up online orders or return them in stores. DSW last year also bought online off-price shoe and accessories retailer Ebuys, which operates ShoeMetro and ApparelSave ecommerce platforms, to help it expand in online marketplaces.