Children's apparel retailers. market share shift

GW Retail /Merchandising /Trends / Operations / December

2014

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Children’s Apparel RetailersMarket Share Shift.

What’s the impact on brick and mortar retailers? Zulily, now a public company, can they handle the growth and show a solid profit?Nordstrom’s Hautelook and Nordstrom’s Rack Online. First brick and mortar with full-line flash sales sites. Amazon’s Myhabit, growing fast.Gymboree improves for Q3. Can they come out of a long, bad performance?Children’s Place solid bottom line, but small comp on the top line.Gap Kids, “ho-hum”.Old Navy, “rock-on”.Carters, keep moving solidly forward.Department stores.Recap.Questions / Discussion.

Nordstrom’s First Brick and Mortar Retailer with Flash Sites. Hautelook and Nordstrom Rack

First come / first serve model. Event driven. Official start and ending times. Highly recognizable brands. Wide assortments. Home, accessories, shoes, jewelry.

Apparel for children, women and men. Most items returnable. Mail it back or return it to a

Nordstrom Rack store. Opportunity: Speed up delivery. Both Norstrom Rack and Hautelook offer similar products and

events. Both sites have very strong children’s apparel presence.


2014

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GW Retail /Merchandising /Trends / Operatins / Feb 2014

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Zulily: Here’s the Deal: Product focus: Children and women’s apparel. Strategic model:

First come, first serve, flash site for boutique designer brands product offered at discounted prices.

New offers everyday. Over 15,000 brands offered to date. Very large and fast growing active customer file. Over a million

new active customer added every quarter this year. Spend per customer is also growing.

Dozens of “big data projects” are going on every day to keep active customers connected to their offers.

Looking for more operating efficiency to support growth. Adding new fulfillment centers and additional distribution points.

Inventory is owned after the customer has placed an order. This model keeps cost down and efficiency up.

Zulily is spending significant capital supporting continue aggressive growth.

Zulily: Customer Perspective:

What’s working: Thousands of designer

goods. Great prices. Big

discounts. New offers daily. They're focused on what I

want. Customer info is used to help customers to the next sales.

Many more choices. Broader assortments.

What’s not working: Slow delivery of orders. Two

to three weeks vs Amazon’s two to three days.

Most product not returnable. “You buy it / you keep it”, is not competitive with sites like Myhabit and Nordstroms Hautelook. Sizing is different by brand, so its hard to know what will fit.

Many brands are unfamiliar boutique brands vs their competitions national brands. Better balance is needed.


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2014

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Myhabit is a flash sales site. It’s event driven, with start and ending times. Thousands of brands offered. Wide assort of children’s, women and men’s apparel.

National brands and designer fashion focused. Fast delivery and products are returnable. Amazon like customer profiling. Very good

customer history tracking. Free shipping.

Amazon’s Myhabit.com:


2014

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Gymboree improves in Q3: Comps for Gymboree brand

“flattish”. Big improvement over previous quarters.

Crazy8 still tracking with down comps. That should not be the case considering the newness of the brand.

Janie and Jack, “up mid single digits”. The positive trend for this brand continues. Fashion driven.

Online sales just okay. Management calls e-commerce business “mature”. I disagree.

Franchise businesses, international stores and play & music, continue to have solid traction.

Some major issues to solve: Expense still too high. Management has a $20m expense

reduction initiative, But we have not detailed how it will be accomplished.

Crazy8 is still floundering. No clear product point of view.

Gymboree stores appear to have too many mark downs, too many collections. Inventories look out of balance.

Merchandising to older children sizes, but the brands fashion appears very young. Misplaced effort?

Missing the omni-channel trends. Gymboree is not competitive with digital trends for this customer.

Marketing is lacking creativity. Most marketing efforts are mark down driven.


2014

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The Children’s Place: Operational controls

appear to be in place. SG&A expense decline. Exceeding last years

net income, in spite of soft comp sales.

My worry list: All sales are mark down

driven, not fashion newness driven.

No top line growth. Store visits reveal weakness

in store standards. Over crowded merchandising and weak presentations. This was not always the case.

No omni-channel efforts noted. Digital competence is a major opportunity. Will not be able to compete with online brands.

Carters Marches on: Solid performance all year. Improvements with Osh Kosh. Great online sales growth. All segments (wholesale, retail, international,

online) have sales growth. Retail is now equal to wholesale volume. Store

count keeps growing. Sales model is not mall traffic dependent.


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2014

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Gap Kids / Old Navy Kids

Gap Kids: Store visits reveal no

newness. Fashion is mostly adult

looks in children’s sizes. More “fun looks” are needed. Ticket price is high.

Quality is solid. High level of digital

competence.

Old Navy Kids: Driving sales with special

buys, special events. Great weekend deals that

draw traffic to stores. Large social media

following. High level of digital

competence.


2014

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Department Stores and Big Box.Department stores are not giving up children’s apparel

market share easily: Most of the dept stores are competitive on fashion,

special events and brand choices. As a group, they seem to understand the importance

omni-channel and social media even better than specialty retailers.


2014

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Recap:

Flash sales site are taking market share. Fast. Mall based retailers have a big up hill battle for

top and bottom line growth. Customer profiles, their product interest and

social media are a key part of growing and keeping sales.

National brands and fashion leadership are as important as ever.

Tech and marketing talent is key. Companies need a “C” level person with these

skills at the decision making level. Cutting expenses is important to do , but you

must grow market share from several channels. This will be the only way to keep your retail customer.


2014

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Children’s Apparel RetailersMarket Share Shift.

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