DSW Seeing Success from Combined Store and Ecommerce Operations

DSW, omnichannel, omnichannel fulfillment, omnichannel focus, omnichannel retail, omnichannel operations, ship from store, buy online pick up in store, in-store pickup, endless aisle, SKU, SKUs, ecommerce, retail ecommerce, ShoephoriaA year into a reorganization that merged its .com and store operations under a unified team, specialty shoe company DSW is expanding its omnichannel capabilities and looking to build on its 2014 results, when omnichannel sales brought in $100 million, double the figure from 2013.

“If you assume an average store is doing $5 million per year, that’s like opening 20 stores at once,” said Roger Rawlins, executive vice president and Chief Innovation Officer for DSW. The latter is a newly created position in which Rawlins leads an integrated, cross-disciplinary omnichannel team.

Later this year, DSW will add buy online pickup in store, and is piloting endless aisle at a number of locations, on top of its chain-wide ship-from-store program. The company uses a home-built algorithm to determine the most efficient and effective fulfillment path for each order. This expands product choices from 2,500 SKUs within a local store to more than 15,000 throughout the DSW network.

The endless aisle test, now live in 10 DSW stores, includes digital displays that provide extended colors, sizes, product reviews and related styles via touchscreens, and an associate-facing mobile app. This lets associates provide customers a wider range of product choices, access to saved wish lists and reward certificates, and the ability to complete their transaction from anywhere in the store, including combining in-store and ship-to-home purchases.

The company has also recently upgraded the DSW.com platform, adding features and functionality that improves search results for online shoppers. “Customers shopping for products online will now find a dramatic improvement in search results,” Michael MacDonald, DSW’s president and CEO told analysts in a recent call. “This is particularly important as we expand the breadth of SKUs and increase the number of drop ship vendors on DSW.com.”

MacDonald said the upgrade also improves DSW’s site visibility for product-related queries conducted on search engines. “This is particularly important as we expand the breadth of SKUs and increase the number of drop ship vendors on DSW.com,” he said.

For the first quarter ended May 2, DSW reported revenue growth of 9.4% to $655.5 million. Net income increased 22.6% to $47.4 million, while earnings per share increased 26.2% to 53 cents per diluted share.

DSW started its ecommerce operations in 2007 as a completely separate entity. Then in 2009, Rawlins said, the company began focusing more on getting store buy-in on ecommerce returns, because of the huge potential for spillover sales from its multichannel customers.

“It may seem comical now but it was a pretty big deal six years ago, and it really impacted sales,” he said. “It was those types of organizational challenges we had to figure out and overcome. We had to figure out how to compensate the store management team so at the end of the day, regardless of whether they were fulfilling an online order or selling in store, we’d find ways to recognize and reward the associate for servicing our customer.”

In 2011, DSW launched Shoephoria, a stock finder system which fulfills store-based demand through the ecommerce site, when customers can’t find what they’re looking for at the physical location.

Rawlins said as part of the reorganization, DSW created the innovation team in February, with director-level representation across marketing, merchandising, operations, IT, supply chain, project management, change management, HR and finance. Each leader oversees a range of duties in their functional area to support both store and .com business. The team is also driving strategy and initiatives aimed at creating a seamless DSW customer experience across channels.

Based on this work and its overall omnichannel initiatives, DSW received the Best Omnichannel Experience Award at eBay Enterprise’s annual Imagine Commerce Conference, held last month in Las Vegas. The award recognizes retailers and brands who deliver exceptional omnichannel customer experience through innovation, creativity and growth.

“In the old world, we had one general manager of merchandising for stores and another for .com, led by two different people,” he said. “They were making decisions that weren’t aligned with what DSW the brand cared about. It was more specific to the channel around product, price points, markdowns and the timing of each. Those separate decisions created lots of noise and challenges for consumers. Now it’s one team, making one decision, informing the other channel when they’re taking an action, making sure it’s right for the customer and for DSW.”

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