DSW Steps Up Expansion

NEW YORK CITY-Footwear retailer DSW Inc. plans to open 30 new stores per year during the next several years, said EVP and COO Peter Horvath during a presentation at Thomas Weisel Partners Consumer Conference.

Columbus, OH-based DSW, which had its IPO in June, currently has 188 stores in 32 states and will end the year with 199. The footwear retailer, which carries branded shoes in a self-serve environment, recently implemented a statistical methodology to choose its store locations, Horvath said. “We’ve learned that a location might look good to a real estate broker or other retailers, but it might not be the right location for DSW,” he noted.

The retailer shies away from being in the same shopping center with a bookstore, movie theater or furniture store. “They steal customers from us,” Horvath explained, adding that DSW’s target customer–women age 25 to 35 years old–prefer to shop alone and spend 40 minutes to 90 minutes doing the “one-shoe walk” and trying on as many shoes as they want. The retailer prefers co-tenancy with fashion retailers like Old Navy and likes lifestyle centers, Horvath said.

Future stores will range from 15,000 sf to 30,000 sf. “We’ve found that we do a 15,000-sf store and have the same assortment as a 30,000-sf store,” Horvath said, adding that the retailer strives to achieve sales of $300 per sf.

DSW considers department stores as its main competitors, according to president and chief merchandizing office Deborah L. Ferree. Similar todepartment stores, DSW offers brands such as Nine West, Candies and Tommy Hilfiger. “We offer an everyday low value and we don’t play the high-low game like department stores,” she noted, adding that customers help themselves to as many styles as they want.

Roughly 70% of DSW’s customers are women, Ferree noted, explaining that the retailer expects upside growth from its “young attitude” and “contemporary” customers: 30-year-old women who are fashionconscious. Additionally, DSW hopes to see growth in its accessories business, which accounts for 6% of the retailer’s business, according to Ferree. “We see upside opportunities in handbags and we expect to triple the business in the next 24 months,” she said. “We areunder-penetrated in this category.”

Moreover, DSW retailer is focusing on offering fashion footwear for its men’s section and increasing the number of brands it carries. The retailer recently announced that it had signed an agreement with Nike to carry the designer’s “sport culture” products, which compare to the Puma and Diesel brands, Ferree noted. Currently, DSW is testing Nike products in 30 stores and expects to expand into more stores next Spring.