DSW finds ‘narrower and deeper’ to be the right fit for its business

Photo: DSW
Dec 08, 2021

DSW’s strong third-quarter sales recovery was made possible by past steps to increase emphasis on its top-50 footwear brands.

“Over the last three years we have reduced the number of labels we offer and have focused on the brands we know our customers want,” Roger Rawlins, CEO of DSW’s parent, Designer Brands, said Tuesday on its quarterly call.

With the shift, DSW reduced the labels it carries by 25 percent over a three-year period. At DSW’s U.S. operations, the top-50 brands now represent 77 percent of sales, up from 65 percent in 2019.

“We believe that our strategy to go narrower and deeper with our inventory investments has been game-changing for Designer Brands,” said Mr. Rawlins.

He cited four benefits:

  1. Higher conversion: DSW is in stock with sizes more frequently, thereby improving conversion.
  2. Product access: DSW becomes more relevant to its key brands, providing opportunities for priority access to exclusive items and ensuring it is “placed at the top of the food chain when supply chain issues occur.” The company credited early, aggressive pre-orders and strengthening vendor relationships with improving Designer Brand’s retail inventories from down 19 percent at the beginning of the third quarter to flat at the close. 
  3. Uniform marketing: DSW can now “consistently tell marketing stories” about its brands with a more similar mix across its fleet.
  4. Full-price selling: With “fewer fringe items and sizes going into clearance,” full-price selling improves. Pre-pandemic, DSW had “500 plus labels and had to heavily market our portfolio of labels.”

“It’s retail 101,” Mr. Rawlins summed up. “You’re better in-stocks, drives conversion, drives more regular price selling, and that has worked and will continue to work as we move forward into 2022.”

Other off-pricers, including Shoe Carnival, Famous Footwear, Ross Stores and TJX Cos., also saw encouraging quarterly rebounds.

Ernie Herrman, TJX’s CEO, credited his company’s ability to navigate supply chain issues this holiday season in part to its extensive vendor reach. He told analysts, “Our vast vendor universe is by far the largest in off-price and, as always, allowed us to have quality branded merchandise for our shoppers.”

DISCUSSION QUESTIONS: What are the pros and cons of a “narrow and deep” vendor mix? Do off-pricers likely face more downside risks or potential benefits with a more streamlined vendor base?

Please practice The RetailWire Golden Rule when submitting your comments.
"Given the SKU intensity of the shoe business, I think it makes sense to go deep in styles and brands that are proven winners."
"Narrow and deep merchandising to the customer creates what some of us call a “claustrophobia of abundance” that at times can discourage the customer."
"As the expression goes, “If the shoe fits!” This is absolutely the right strategy for DSW."

Join the Discussion!

18 Comments on "DSW finds ‘narrower and deeper’ to be the right fit for its business"

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Ken Morris

With supply chain disruption a major issue is that narrow and deep might be deadly if you pick the wrong narrow. The key is to pick a supplier with a flexible supply chain. Near or on-shore suppliers make for happy customers. I believe off-pricers need to keep their options open as they can’t afford to be out of stock and dependent on a narrow base of suppliers.

David Naumann

A narrow and deep strategy is a smart strategy for DSW. Nothing is more disappointing than finding a shoe style that is very appealing and seeing that your size is not available. A narrower brand strategy will enable DSW to stock more depth in sizes and reduce out-of-stocks on sizes, resulting in increased sales and customer satisfaction.

Dick Seesel

A narrower vendor matrix may put the retailer at risk during a supply chain crunch — if those vendors are having issues of their own. But the upside potential is greater, because of the store’s greater leverage with its suppliers.

After retailers put their logistics problems in the past, the focus of “narrow and deep” should be all about the customer. If the shopper finds more selection among “wanted brands,” and better depth of inventory especially in a size-intensive category like shoes, it’s absolutely the right decision even for an off-pricer like DSW.

Mark Ryski

This “narrow the mix” strategy also happens to square with supply chain challenges. The fact is, DSW simply can’t source some of the brands they might otherwise due to supply-chain issues, so narrowing focus to what they can get makes sense. The shoe category was hit especially hard and DSW seems to be making the most of a challenging situation.

Gary Sankary

Given the SKU intensity of the shoe business, I think it makes sense to go deep in styles and brands that are proven winners. In-stocks in footwear are difficult, this should help. If there is a downside to this, it’s that they also have to maintain some credibly in down-market fashion. They need to have some representation of fashion, and it can be a bit risky to go too deep in inventory. But given their track record, I’m sure DSW will manage that balance well.

Rich Kizer

Narrow and deep merchandising to the customer creates what some of us call a “claustrophobia of abundance” that at times can discourage the customer. However with well -merchandised and displayed presentations, it can spell sales and positive perceptions of the store.

Liza Amlani

DSW’s narrower and deeper merchandising strategy is not only great from an assortment planning perspective but it’s smart from a sustainability perspective. Less SKUs means less markdowns and less product ending up in a landfill.

Having a narrow assortment gives you more control in building partnerships with your vendors, more control over the supply chain because you are managing less brands, and there is an opportunity to get closer the customer by giving them the brands they actually want to buy – you become a loyal destination for your market with brands you truly believe in.

Dave Wendland

As the expression goes, “If the shoe fits!” This is absolutely the right strategy for DSW.

Gone are the days of the low-performing tails in inventory. Focus is an imperative.

Liza Amlani

Focus is everything and “if the shoe fits” is exactly right on the mark. From a merchant perspective, curating the right product assortment mix is how you keep your customers and having too much of everything is never the right strategy.

Jeff Weidauer

Going “narrow and deep” is almost always the best strategy when you know your customer base and what they are looking for. Given the current supply chain challenges, it’s also great timing. This is absolutely the right move for DSW.

Raj B. Shroff

It seems like a smart move by DSW. As long as their team keeps its finger on the pulse of what customers want, it will work. Going into a DSW store (brick-and-mortar or e-commerce), you still get the sense they have a breadth of assortment so it is doubtful that a majority of customers would even notice any difference. And if they can increase conversion by having the size and style in stock, the customer leaves satisfied; that’s the goal.

Liz Crawford

A narrower mix will turn-off some shoppers, but will excite others. It seems like they are heading into niche territory – which is generally terrific if they can own the space and secure DSW brand fanatics.

Peter Charness

DSW is a big box store, and part of the attraction for a customer is breadth of choice, Breadth requires good execution to stay in-stock and this is where the balancing act comes in between over-assorting and in-stock execution. Clearly DSW needs to ensure the product’s that it chooses to carry is in-stock. The assortment planning Rubik’s Cube needs to (as always) balance choice count with the ability to maintain good stock positions, with financial and margin goals, and with a customer pleasing shopping experience. And do that on a localized basis. You know the usual 40-hour a week job for most merchants and planners!

Zel Bianco

In my experience at DSW, I was frustrated with being able to find a shoe, boot or running shoe I like, but not finding my size. Narrow and deep makes sense and as other posts have stated, some shoppers will be turned off but for others who like what they find, if DSW actually havs the most popular sizes in stock, it would certainly be the right fit.

Gene Detroyer

Why do shoppers go to off-price retailers? Their primary reason is price, not unique style or brand. Offer brands that carry value in themselves and sell them at a lower price. Most shoppers will walk away pleased with their choice and satisfied. Good decision by DSW.

Nicola Kinsella

Focusing on, and improving in stock positions for your core performers makes sense. It builds more customer trust in your inventory availability and your ability to deliver. Especially when competitors are battling supply chain issues and out of stocks. At the same time it’s important to experiment with new styles — especially as an off-price retailer. Customers get a kick out of oddball deals — and the treasure hunt and limited availability are often conversion drivers. I wonder if DSW will add new Drop Ship Vendors to their online selection so they can extended range without taking on the inventory risk?

Craig Sundstrom

Brand (or SKU) rationalization is, I believe, the name for this, and it’s hard to make a convincing argument against stocking what sells. It will be hard on fringe brands, but that’s what boutiques are for … aren’t they?

Anil Patel
Customers often find it too difficult to choose when given too many options. The overall shopping experience becomes exhausting instead of a pleasant one. They’ll most likely wind up buying nothing. A narrower and deeper assortment, on the other hand, makes it easier to shop and explore. Customers are happier with their purchases. Moreover, brands with fewer assortments are less likely to have an end-of-season sale and are more profitable. The only problem, in my opinion, with a narrower mix is that if you fail to recognize your customer’s design preferences, your whole season could be ruined. And the damages will be visible until a long period of time. Retailers considering narrower and deeper assortment strategies must know everything there is to know about their customers, stay up to date on market trends, and keep ’em customers engaged. For the off-pricers, the strategy definitely is beneficial. A smaller assortment creates a sense of scarcity. Customers are more likely to take advantage of good bargains on scarce products. And I wouldn’t be too concerned about product… Read more »
"Given the SKU intensity of the shoe business, I think it makes sense to go deep in styles and brands that are proven winners."
"Narrow and deep merchandising to the customer creates what some of us call a “claustrophobia of abundance” that at times can discourage the customer."
"As the expression goes, “If the shoe fits!” This is absolutely the right strategy for DSW."

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