DSW 2010 Annual Report Download - page 11

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breaches of fiduciary duty. The complaints seek, among other things, to enjoin the shareholder vote on the merger,
as well as monetary damages. The Retail Ventures defendants and the DSW defendants intend to defend vigorously
against these claims.
See “Risk Factors” for risk factors related to the proposed merger.
Competitive Strengths
We believe that our leading market position is driven by our competitive strengths: the breadth of our branded
product offerings, our distinctive and convenient shopping experience, the value proposition offered to customers
and our financial strength.
The Breadth of Our Product Offerings
Our goal is to excite our customers with an assortment of shoes that fulfill a broad range of style and fashion
preferences. DSW stores and dsw.com sell a large assortment of better-branded and private label merchandise. We
purchase directly from more than 450 domestic and foreign vendors, primarily in-season footwear found in
specialty and department stores and branded make-ups (shoes made exclusively for a retailer), with the assortment
at each store geared toward the particular demographics of the location. A typical DSW store carries approximately
24,000 pairs of shoes in approximately 2,000 styles compared to a significantly smaller product offering at typical
department stores. We also offer a complementary assortment of handbags, hosiery and other accessories which
appeal to our brand- and fashion-conscious customers.
Distinctive and Convenient Shopping Experience
We provide our customers with the highest level of convenience based on our belief that customers should be
empowered to control and personalize their shopping experiences. In stores, our merchandise is displayed on the
selling floor with self-service fixtures to enable customers to view and touch the merchandise. We believe this
shopping experience provides our customers with maximum convenience as they are able to browse and try on
merchandise without feeling rushed or pressured to make a purchasing decision. We also provide our customers
with a cross-channel shopping experience through dsw.com by offering additional styles and sizes. Our stores and
dsw.com are organized in a logical manner that groups together similar styles such as dress, casual, seasonal and
athletic merchandise for easy browsing.
The Value Proposition Offered to Customers
Through our buying organization, we are able to provide customers with high quality, in-season fashion styles
at prices that are competitive with the typical sale price found at specialty retailers and department stores. We
generally employ a consistent pricing strategy that provides customers with the same price on our merchandise from
the day it arrives in store until it enters our planned clearance rotation. Our pricing strategy differentiates us from our
competitors who usually price and promote merchandise at discounts available only for limited time periods. We
find that customers appreciate having the power to shop for value when it is most convenient for them, rather than
waiting for a sale event.
In order to provide additional value to our customers, we maintain a loyalty program, “DSW Rewards”, which
rewards customers for shopping, both in stores and online at dsw.com. “DSW Rewards” members earn reward
certificates that offer discounts on future purchases. Reward certificates expire six months after being issued.
Members also receive promotional offers, gifts with purchase and free shipping on purchases over a certain dollar
threshold at dsw.com. We employ a variety of methods, including email, direct mail and social media, to
communicate exclusive and public offers to our customers.
As of January 29, 2011, approximately 16 million members enrolled in “DSW Rewards” have made at least
one purchase over the course of the last two fiscal years as compared to approximately 13 million members as of
January 30, 2010. In fiscal 2010, shoppers in the loyalty program generated approximately 87% of DSW store and
dsw.com sales versus approximately 84% of DSW store and dsw.com sales in fiscal 2009.
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