DSW 2014 Annual Report Download - page 7

Table of Contents
merchandise. We purchase directly from approximately 430 domestic and foreign vendors, primarily in-season footwear found in specialty and department
stores and branded make-ups (shoes made exclusively for a retailer). We also make opportunistic and close-out purchases to offer value to our customers.
Through our stores, fulfillment center and expanding drop ship network, we offer thousands of shoes for women, men and children and a complementary
assortment of handbags, hosiery, jewelry and other accessories which appeal to our brand and fashion conscious customers.
Our Relationships with Merchandise Suppliers
We purchase merchandise directly from approximately 430 domestic and foreign vendors. Our vendors include suppliers who either manufacture their own
merchandise or supply merchandise manufactured by others, or both. Most of our domestic vendors import a large portion of their merchandise from abroad.
We have quality control programs under which our buyers are involved in establishing standards for quality and fit, and our personnel examine incoming
merchandise in regards to color, material and overall quality. As our sales volumes continue to grow, we believe there will continue to be adequate sources
available to acquire a sufficient supply of quality merchandise in a timely manner and on satisfactory economic terms. During fiscal 2014, 2013 and 2012,
merchandise supplied by our top three vendors accounted for approximately 18%, 19% and 18% of our net sales, respectively.
We separate our DSW merchandise into four primary categories: women’s footwear; men’s footwear; athletic footwear; and accessories and other. While shoes
are the main focus of DSW, we also offer a complementary assortment of handbags, hosiery, jewelry and other accessories. The following table sets forth the
approximate percentage of our net sales attributable to each merchandise category for the fiscal years below:
Fiscal year
Category
2014
2013
2012
Women's footwear
61%
62%
65%
Men's footwear
18%
17%
16%
Athletic footwear
12%
12%
12%
Accessories and Other
9%
9%
7%
Our 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. Our traditional point of sale and mobile point of sale allows us to interact and transact
with customers on the selling floor. Our omni-channel capabilities (ship from store and drop ship) allow customers to order additional styles, sizes, widths and
categories that can be fulfilled from other stores, our fulfillment center or the supplier's warehouse and create immediate access to our total assortment.
Merchandise is 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 Our Customers
Through our buying organization, we are able to provide customers with high quality, in-season fashion styles at attractive prices compared to the sale prices
found at specialty retailers and department stores. We 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 shopping 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 DSW
stores and at dsw.com. DSW Rewards members earn reward certificates that offer discounts on future purchases. Reward certificates expire three months after
being issued. Members also receive promotional offers and gifts with purchase. We employ a variety of methods, including email, direct mail and social
media, to communicate exclusive offers to our rewards customers. In fiscal 2014, we also introduced a co-branded credit card that allows DSW Rewards
members to earn points for purchases made at DSW, as well as outside of DSW.
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Source: DSW Inc., 10-K, March 26, 2015 Powered by Morningstar® Document Research℠
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