Having seen success in a 10-store pilot of buy online, pickup in store (BOPIS) program in the third quarter of 2016, Michael Kors plans to roll it out across all of its 300-plus U.S. locations this quarter.
Michael Kors CEO John D. Idol told analysts on an earnings call the company had seen “solid results” from the pilot, leading to the decision to expand it chain-wide.
“We believe that further enhancing our omnichannel presence will help us to drive improved comparable sales results in the future,” Idol said.
Having succeeded in BOPIS, Michael Kors is now setting its sights on a test of same-day delivery out of a number of locations this spring.
“We want to make the determination of what does a (store) footprint allow you to do in terms of service,” Idol said. “And we think service is going to be critical component of our long-term success as a brand, and also as an omnichannel retailer. So how do we service her? Where do we provide that service? And at which speed? And we all know the people who are setting the standard in that. So we take it very seriously, and we think that the store footprints will allow us the capabilities of doing that as long as they remain profitable.”
For the quarter, Michael Kors’ ecommerce business outperformed expectations, with double-digit increases in comparable sales. The decline in store traffic was in the high single digits, Idol said, but was partially offset by an increase in conversion rates.
Like many other brick-and-mortar chains, Michael Kors is seeing more of the future in ecommerce.
“We will significantly increase our digital marketing spend to fuel our fast-growing ecommerce business globally,” Idol said. “We continue to see strong revenue growth from our initiatives in this channel as consumers shift their shopping behavior.”
Looking to the future, Idol said the company saw a “strong response” over the holidays to its new Michael Kors Access line of wearable technology, with sales exceeding our expectations for the season.
Michael Kors is also continuing its pullback from the retail and wholesale channel, Idol said. In the Americas, wholesale revenue decreased 15% as the company strategically reduces activity in department stores.
“Beginning this month, we are reducing promotional activity across the retail and wholesale channels,” Idol said. “While we believe this is the right thing to do for our brand long term, this decision is expected to negatively impact our net sales throughout fiscal 2018, albeit to a smaller degree.”