DSW supplies a shoe that fits
DSW integrates merchandise planning with other systems for the perfect fit
Fashion is moving faster these days. With SAS® Size Profiling and Pack Optimization, shoe retailer DSW keeps ahead of the style curve with a solution that easily integrates into its buying and allocation systems. SAS’ analytical power recommends customized (by location) size packs and unit replenishment orders that sell through with fewer markdowns while also reducing stock-outs.
DSW Inc. is a leading branded footwear and accessories retailer that offers a wide selection of brand names and designer dress, casual and athletic footwear and accessories for women, men and kids. DSW operates more than 377 stores in 42 states, the District of Columbia and Puerto Rico as well as more than 345 leased departments for other retailers in the US under the Affiliated Business Group. DSW also operates e-commerce and mobile sites.
Shoe merchandising is evolving as: customers expect to find what they want when they want it; fashion cycles are accelerating; and acquiring stock from overseas suppliers creates more challenges. Shoes are also not like clothing – they come in more sizes and fit tends to be quite individual. "With clothing, if a store doesn’t have your size you might buy a size up or a size down, but that doesn’t happen with shoes," says Linda Canada, Vice President, Planning & Allocation.
One of DSW’s challenges was to customize pack sizes so the right shoes, in the right sizes, could be found in each store and replenished at just the right time in the right amounts. Historically, shoes are shipped in standard 12-packs. It doesn’t matter if a store needs to replenish just the size 7s and 8s, they’ll get a pack that includes sizes 6 and 9. Customizing packs was very labor intensive. In addition, store design limits the amount of extra merchandise that can be delivered. "Our product is in hard boxes, you can’t really stuff more under a table and our back rooms are fairly small," Canada explains. "There’s only a certain amount of product that will fit in our stores so having the right mix is critical. Too little on the floor – it looks like we’re going out of business and too much doesn’t fit in the stores." In addition, DSW needed a solution that could integrate with its supply chain systems.
This is where having SAS . . . makes a big difference. We can develop accurate size curves.
Customizing with SAS
Before using SAS, individual store managers often knew what sizes would sell out quickly and which would land on the clearance rack. At most, they could ask for extra packs of a certain style or size in an ad hoc manner. There was no optimized, sustainable or automated system in place.
With SAS, DSW can work with all its data to provide a more customized approach to stocking stores and filling pack sizes. "Other solutions tended to throw out a lot of data," says Mike Ezell, Allocation Manager. "This is where having SAS with the imputation logics makes a big difference. We can develop accurate size curves." It is now possible to develop a "size by store" model and optimize our inventory through a combination of packs and size unit replenishment. Not only has SAS recommendations validated the individual requests of store managers, but found other stores with size profiles that don’t fit the "norm."
Pack recommendations are more automated because SAS recommends the optimal pack mix by store. This has reduced the amount of inventory that needs to be discounted at the end of a season and avoid the loss of sales from stock-outs.
DSW is particularly happy with how SAS helps the company work with seasonal items. As the shelf life of a sandal is much shorter than a dress shoe, SAS allows DSW to work forward sales into its calculations for stocking specific stores. "It was a big win for us to build forward sales into the inventory plan," says Canada. The efforts have been so successful that the company has convinced buyers to reduce the amount of inventory they buy. In the past, buyers didn’t want to be caught without enough of a hot seasonal style. Now they are ordering fewer packs, but gaining confidence that they’ll have the right shoes on hand. "We’ve helped them understand they can buy less, achieve the same sales and make more money," says Phil Brown, Sr. Director, Allocation & Replenishment.
Vendors have also been very receptive to DSW’s requests, despite the need to pack shoes in different configurations. "They see the benefit," says Ezell because, "They don’t want to see their product marked down." Helping encourage cooperation, size and pack optimization are built into the entire supply chain at DSW so the company can alert vendors well in advance to the need for different pack sizes.
DSW needed an automated way to send the right shoes, in the right sizes, to its 377 stores.
Orders and allocations are optimized to store specific size curves resulting in fewer stock-outs and markdowns.