In an attempt to attract younger shoppers Stein Mart made some significant changes to its merchandising array which failed to connect with its core shopping base, leading to a drop in sales.
The apparel retailer began to implement younger focused assortments and promotional campaigns in the spring/summer and into the fall, but the new assortment and marketing approach “did not work,” according to interim CEO Hunt Hawkins.
“It is important that we evolve our merchandize assortments to attract a younger thinking customer,” Hawkins said on a recent earnings call with analysts. “As we began this in the spring and going into the fall however, we did it too quickly, which alienated our loyal core customers. We have to be more thoughtful in how we change our assortments in the future. We need to evaluate our marketing media mix and advertising messaging. Dropping our newspaper focus in the third quarter and replacing it with TV advertising highlighting our new categories and a much younger customer did not work.”
The new merchandising approach led to a decrease in brick-and-mortar traffic, increased markdowns and a 4% year-over-year comp store sales drop in Q3 2016.
“Our current customers have liked some of what we have done with our new modern category, but we have had mixed overall results,” Hawkins said. “We believe it is important for us to better address what our core customers are looking for, as well as appeal to a younger thinking customer in our core demographic. Combined these merchandising marketing and promotional misses impacted traffic and confused our customer. This led to our inability to clear spring merchandize on the timely and profitable basis during the quarter.”
While Stein Mart enduring a setback when it altered its merchandising approach, it is not abandoning its new strategy. Rather it is going to continue to introduce new younger-focused assortments and brands, but at a slower pace.
While comp sales decreased 4% in the quarter, overall sales decreased by just a hair, thanks to a 31% increase in e-commerce revenue. Overall the chain’s digital sales represented 2.2% of total sales in the quarter.
To hear more about how Stein Mart plans to capitalize on emerging consumer trends be sure to attend the “Deciphering 2017's Digitally Demanding Consumer” session at the NRF Big Show 2017. The presentation will feature Stein Mart’s Mark Bishop, senior director, application engineering, e-commerce.
For more information on the 2017 Big Show check out RIS News’ preview guide here.