Rue 21 2010 Annual Report Download - page 14

We believe that we have an opportunity to increase sales in our accessories and intimate apparel categories.
Our product mix may change based on the growth rate of each product category, although an increase in net sales in
one of our product categories may not necessarily decrease net sales in our other product categories. Our diversified
product assortment allows us to benefit from increased sales in all categories.
Merchandising and Sourcing
Our flexible, fast fashion model allows us to quickly identify and respond to trends and bring the newest, tested
concepts and styles to our stores. We strive to offer a compelling product selection for our customers by regularly
editing our merchandise assortment to reflect key fashion trends and by shipping daily deliveries of new
merchandise to our stores.
Merchandising
We maintain a separate merchandising team for each of the three principal categories of our business — girls
apparel, girls accessories and guys apparel and accessories. Our merchandise directors, with the support of our
product development and visual teams, coordinate color and trends across the product categories to ensure brand
consistency. We utilize fashion and color services, trade shows, vendors, retail shopping and social networking to
identify the merchandise that meets the demands of our customers. Our merchandising team schedules weekly trend
meetings to review the information gathered and determine the trends to incorporate into our product offerings. We
order our product assortments after careful review and consideration of the volumes required by each of our stores.
We frequently test our new products in a limited number of our stores before broadly distributing to the rest of our
stores.
Sourcing
We do not own or operate any manufacturing facilities. We purchase all of our merchandise from a network of
third-party vendors. We believe our lack of dependence on any one vendor enhances our flexibility and minimizes
product risk. In addition, we believe our long-term relationships with many of our vendors enable us to benefit from
quick deliveries as well as very competitive pricing.
Although all of our vendors are based in the United States, the majority source our products from overseas. Our
vendors are responsible for importing products. We do not directly import any of our merchandise. A small portion
of our merchandise is manufactured domestically. This maximizes our speed to market on key fashion items.
Our vendors are required to sign our vendor agreement that incorporates a comprehensive vendor compliance
manual, which is updated regularly. The vendor compliance manual details our packing, shipping and production
requirements, as well as our legal requirements, professional and ethical standards and payment terms. We typically
transact business on an order-by-order basis. Each purchase order also incorporates and references the require-
ments, standards and terms described in the preceding sentence. The purchase orders, vendor agreement and vendor
compliance manual all are designed to ensure that our vendors operate in compliance with all applicable rules and
regulations, including labor, customs and consumer protection laws. We do not control or audit the vendors that
produce the merchandise we sell. We do reserve the right to conduct random testing of products and use a third party
resource to conduct such random testing on designated categories of items to further address our concern for
customer safety.
Our national freight consolidator ships to our distribution facility in Weirton, West Virginia from both the west
coast and east coast.
Marketing and Advertising
We believe that girls and guys rely heavily on the opinions of their peers, often expressed through social media,
websites and blogs, to determine whether a retailer is relevant to them. As a result, we do not depend on
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