Will a new name and private labels give DSW a leg up on the competition?

Discussion
Photos: DSW Inc.
Mar 20, 2019
George Anderson

Yesterday, DSW Inc. announced a three-year strategic plan that includes a name change for the company, a decision to add private label footwear to its current mix of brand name shoes and a further strengthening of its omnichannel operations.

The company will be known as Designer Brands and operate stores under three retail banners: DSW Designer Shoe Warehouse, Shoe Warehouse and The Shoe Company.

Last year’s acquisition of Camuto Group, a footwear designer and wholesaler, will provide Designer Brands with an in-company resource for developing private label shoes to provide a competitive point of difference from other shoe sellers while at the same time helping to lift profit margins.

The Wall Street Journal reports that exclusive brands generated $285 million for DSW last year. The company expects that number to climb to $725 million over the next three years with brands made by the Camuto Group.

In a presentation to investors, CEO Roger Rawlins said that changes brought about by technology, an increase in brands selling directly to consumers and consolidation within the manufacturing ranks prompted Designer Brands’ decision to focus more on its own labels while continuing to build on its omnichannel expertise.

Earlier this month, DSW announced that it was expanding a test of nail salons in its stores. In an interview with Ad Age, Mr. Rawlins said the salons help attract Millennial women to its locations, resulting in increased sales. The salons, he said, help the retailer offering “differentiated experiences” that cannot be matched by online sellers.

DSW posted a same-store sales increase of 5.4 percent in the recent quarter, but registered a loss due to acquisitions, higher marketing expenses and the company’s decision to shutter its Town Shoes business.

DISCUSSION QUESTIONS: What factors do you think have had the greatest impact on shoe retailing over the past five years? Do you think that Designer Brands, formerly DSW, is on the right track with the changes it is making?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"DSW is shaking the market a bit when it comes to shoes with their new initiatives. The proof will be in the shoes, along with investing in the DSW digital experience."
"Why wouldn’t a retailer take advantage of the leadership, differentiation, and margin opportunities presented by proprietary brands? Good for DSW."
"Quick answer, yes. DSW needs to continue to adapt, blend e-comm and store, ensure the right store experience, and stabilize leadership to continue success."

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17 Comments on "Will a new name and private labels give DSW a leg up on the competition?"


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Art Suriano
BrainTrust
I don’t see any value in changing the company name, and all the company will have, will be an unnecessary expense. Remember when Books-A-Million changed many of their store signs to BAM? So what did that do for their business? Not much. The public doesn’t get hung up on names like some retailers think they do. DSW has been around for years and has built brand awareness and name recognition. There is nothing wrong with expanding their business, but I don’t see any reason to change their name. Last year we wrote commentary about Dunkin’ losing Donuts. These ideas do not deliver what the marketers think they will, and all that happens is confusion and expense. The best example about not changing your name but keeping your business up to date with the times might be IBM. The name stood for International Business Machines and was created long before we had computers. Because of its name recognition and reputation, IBM kept their name, and it has never hurt their business. DSW needs to focus on… Read more »
Ken Morris
BrainTrust
Ken Morris
Retail industry thought leader
10 months 2 hours ago

DSW’s greatest impact over the past five years are most likely the result of its increased focus on omni-channel capabilities and most recently, the addition of its VIP loyalty program. I think the acquisition of Camuto Group was a smart move to further develop private label brands, which are usually more profitable than selling other brands.

With the demise of Payless, Designer Brands has a lot more opportunity for growth and they appear to be very focused on capturing their fair share of the market.

Neil Saunders
BrainTrust

The corporate name change is logical but is irrelevant to consumers. It will make not one jot of difference to what happens on the ground. The expansion of the private label offer is, however, more relevant. It will enhance margins and give group companies more exclusive and innovative products to sell to consumers which is important in terms of differentiation. This, combined with DSW’s moves to keep its stores relevant and give people reasons to visit, should ensure the company has a place in shoe retailing for many years to come.

Ken Lonyai
BrainTrust

The changes for DSW are all positive, logical, and forward-thinking, except for the name change. I see absolutely no benefit other than it being a little bit better name behind private brand shoes. It will likely take a couple of years (or more) for consumers to fully settle into the new name, so the damage done initially by rebranding and creating confusion will probably take a long time to recoup.

Bob Phibbs
BrainTrust

This is a brand being led, not pulled into the future. I’m not a fan of name changes but with all the initiatives they have done in the past few years, I’m sure their data says it is all positive.

Paula Rosenblum
BrainTrust

The shoe business is very cyclical and styles and categories go in and out of vogue every few years.

My first thought when I read about the re-branding was that it was a bit like shuffling the deck chairs on an ocean liner. Maybe it’s not the Titanic yet, but it’s still an odd, somewhat useless things to do.

I do think it’s a good idea not to rely on the close-outs of others, although if we look at TJX, Ross, etc., they do pretty well with that model.

Private label is always a good thing if you get the styling and quality right. But the name change? I truly don’t get it.

Paco Underhill
BrainTrust

The most impactful technology in modern retail has been supply chain management. Over-runs and over-stocks are so much better controlled. The broader outlet business has had to react. Many outlets are now directly sourced.

DSW is shifting to the changing market. The Shottenstein family, owners of DSW and American Eagle, deserves credit for being one of the premier merchants in America. In past fifteen years they have navigated the evolving retail landscape with much skill. A good book, or better yet, a television soap opera waiting to be produced….

Brandon Rael
BrainTrust

A company name change is not a game changer in itself. In fact, it may create more confusion if anything in the short term. However, the investments that DSW has made in their merchandising strategies, their expansion into the private label categories are so much more meaningful for DSW as compared to a name change.

An expansion of the DSW private label offerings may just be the secret sauce the company needs to get things back on track. Customers really appreciate new and exclusive product offerings, along with the significant value that DSW has to offer. The combination of a fresh assortment, value pricing, exclusive private label offers, should help to keep DSW far more relevant than any name change.

Cynthia Holcomb
BrainTrust

Unlike Payless, selling private label shoes without a soul, DSW is moving into private brands with the design and sourcing team to manufacture great shoes — if they can do it. Camuto Group stumbled after the death of product visionary, Vince Camuto in 2015.

DSW will need a strong, solidly design-oriented leader who knows how to execute the fine line of commercially viable fashion shoes. A person who can also lead the execution and blending of the tribes to deliver a good to great product.

DSW is shaking the market a bit when it comes to shoes with their new initiatives. The proof will be in the shoes, along with investing in the DSW digital experience which is challenging to say the least. If a shopper has to spend an hour searching for a shoe she likes on the DSQ website, then DSW has lost her to Nordstrom, as they carry Vince Camuto shoes too. Easy to shop digitally might be a good mantra for DSW.

Dick Seesel
BrainTrust

I agree with the push toward omnichannel — with the growth of online competitors like Zappos and others, this gives DSW the advantage of physical locations complementing its website. And I also agree that private brands (or shoe brands exclusive to DSW) represent a volume opportunity as long as they don’t overshadow the company’s focus on brands.

What I don’t agree with is the rebranding into three separate concepts. The DSW brand itself has strong recognition among its consumers, so the new concepts should only be in add-on locations instead of new nameplates for existing stores. The company may see a void created by the closure of Payless — and it that’s what the new brands are meant to address, it makes more sense. But let DSW be DSW!

Jeff Sward
BrainTrust

This all sounds very smart, on all fronts. Proprietary labels make abundant sense when executed ala Costco and Trader Joe’s. Why wouldn’t a retailer take advantage of the leadership, differentiation, and margin opportunities presented by proprietary brands? Good for DSW. All smart moves in a turbulent market.

Verlin Youd
BrainTrust

Quick answer, yes. DSW needs to continue to adapt, blend e-comm and store, ensure the right store experience, and stabilize leadership to continue success. The new name and private labels will be important adaptations to position against the competition.

Georganne Bender
BrainTrust

DSW currently sells good looking, quality private label shoes in its stores, so I am confident that whatever the company does to expand these lines will be embraced by consumers.

DSW listens to its customers and has consistently added new services and programs to its stores as of late. The name change involves the corporation, not the stores. I doubt that the consumer will even notice.

Peter Charness
BrainTrust

Agree with most here … but Nail Salons? I must be missing the connection.

Rich Kizer
BrainTrust

A horse with a different name is still a horse. Retail stores at times change names, and do nothing different inside; and that just disappoints and loses customers immediately. It’s like a broken promise. I don’t believe that this will be the case with DSW. New names, new interior, better fixtures and great fashion looks at a price, will definitely please customers who visit their “new” stores. And I agree with Mr. Rawlins; the salons attracting Millennials will be referred to as a smart decision in this re-branding saga.

Craig Sundstrom
Guest

While I’m not opposed to private label, per se, when your raison d’être is designer names it seems like it can’t be allowed to become too big a part of the business. Could it, though, become bigger at the subs — “Shoe Warehouse” and “The Shoe Company” — that aren’t encumbered by the term? Perhaps … indeed one could argue it’s the biggest reason to retain separate identities.

Mike Osorio
BrainTrust
I have been a DSW customer for over 10 years and have always been impressed by their selection of excellent brands and warehouse pricing. In recent years they have invested heavily in onmichannel capabilities and customer experience. I applaud the Camuto Group acquisition and trust they have a good reason for the name change. Two points for emphasis: 1. Changing the name is unnecessary, although it looks to be a corporate name change only. So if it somehow makes them feel better, or more aligned to their company ethos and long-term strategy, then go for it. If they were going to change the store nameplates, that would be an expensive mistake. It does not appear this is the case. 2. The private label focus is brilliant, bolstered by the Camuto Group, which already supplies wholesale for many brands as well as owns several designer brands (and footwear licenses) including Max Studio, CC Corso Como, Lucky Brand and namesake Vince Camuto. So they are not diluting the power of the “designer” focus of DSW as they… Read more »
wpDiscuz
Braintrust
"DSW is shaking the market a bit when it comes to shoes with their new initiatives. The proof will be in the shoes, along with investing in the DSW digital experience."
"Why wouldn’t a retailer take advantage of the leadership, differentiation, and margin opportunities presented by proprietary brands? Good for DSW."
"Quick answer, yes. DSW needs to continue to adapt, blend e-comm and store, ensure the right store experience, and stabilize leadership to continue success."

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