DSW takes a step in sharing economy
Shoe chain is experimenting with new services, hoping to bring customers to stores
The discount shoe purveyor DSW says it wants to give its customers what they want, which is how the chain has arrived at this: Shoe rentals.
The retailer announced last week that it is considering adding a rental service, as well as shoe repair and storage facilities, to some of its 511 shoe-and-accessories stores. The experiments are part of a broader effort by DSW, which stands for Designer Shoe Warehouse, to get more customers into its stores.
“Today’s customer craves more than just a transaction, they want an experience,” said Michele Love, the company’s chief operating office, in a statement.
Retailers around the country are racing to add services that might keep customers coming back to their physical locations, where people are more likely to make impulse purchases — and spend more — than online. Nordstrom this week opened its first merchandise-free store, staffed with stylists, tailors, manicurists and bartenders. Apple, meanwhile, is outfitting its stores with outdoor plazas and indoor boardrooms in hopes that shoppers will linger.
At DSW, executives say the idea is to create a one-stop shop where customers can buy everyday footwear, stash items that are out of season and, yes, rent shoes.
“This is something we’ve had a lot of customers ask us for, particularly with special-occasion shoes,” said Christina Cheng, a spokesperson for DSW. “When it comes to prom or a wedding or a special event, people are usually looking for a very specific shoe in a particular colour, that matches a particular dress, that they probably won’t ever wear it again.”
But, Cheng added, shoe rental — which the company will begin testing in coming months — also raises a number of logistical questions: How will stores know which styles and sizes to keep on hand? How will they clean them between uses? And how do you determine the cost-per-wear of a bedazzled stiletto?
Industry experts also raised concerns about the program. Sure, it may be commonplace to rent shoes at the bowling alley or skating rink, but are people willing to wear someone else’s open-toed high heels to a wedding? Some are unconvinced.
“It’s good to think outside the shoe box, but this is taking the shared economy to a new extreme,” said Milton Pedraza, chief executive of the Luxury Institute, a New Yorkbased retail consultancy. “Shoes are such a personal item — you’ve got to worry about fit, style, so many things — that I don’t think it’s necessarily something people want to share with strangers.”
And, he added, what happens if a suede shoe gets caught in the rain? Or a glittered heel pops off into a ditch?
“I don’t see shoe sharing is going to be either in high demand or highly profitable,” Pedraza said.
There are, however, a number of other apparel and accessories rental models that have worked: Rent the Runway has created a $100-million business offering dresses, gowns and jewelry for short-term wear. Bag, Borrow and Steal has found similar success — and millions in venture capital funding — by renting out designer handbags. Other startups allow you to rent watches, earrings, necklaces, even custom wigs.
The larger challenge for DSW, analysts said, is getting customers to buy and returns items at its stores. Online shopping has become a particular problem for shoe retailers, which often struggle with high return rates. It’s become commonplace, analysts said, for some people to order eight pairs of shoes in different styles and sizes, and keep just one. Fulfilling those large orders, then processing returns and covering shipping costs can add up to an expensive problem.
“Getting traffic to their stores is really the most critical component,” said Steven Marotta, a footwear analyst for CL King & Associates. “And having a very large footprint around the country, which DSW does, has been a real advantage.”
The more reasons a customer has to walk into a DSW store, the more likely they’ll walk out with a pair of new shoes. And that, executives said, is ultimately why they’re experimenting with shoe rental, repairs and storage.
DSW is also looking for new ways to turn its existing stores into miniwarehouses. It is often cheaper and easier, Cheng said, to ship a shoe from a nearby store than from the company’s fulfilment centre in Columbus, Ohio. The company is also reconfiguring its shops to add taller, deeper shelves that can store up to 30 per cent more inventory, and it recently merged computer systems so online orders, store purchases and inventory catalogues are in one place.
“Today’s retailer needs to be able to do it all,” Marotta said. “Ship to store, ship from store, ship store to store. Anybody who can’t offer that is at a disadvantage.”