Rue 21 2011 Annual Report Download - page 13

multiple unit and outfit purchases. Our merchants are dedicated to consistently delivering high quality fashion
assortments at every day great value.
Sourcing
We do not own or operate any manufacturing facilities. We purchase all of our merchandise from a network of
domestic based importers and domestic 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.
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 requirements,
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
conventional advertising, but instead employ a viral approach to marketing that is designed to capture the interest of
our customers and drive them into our stores. For example, product knowledge, trend statements and fashion blogs
are posted daily through Facebook, Twitter and YouTube. Our rue21.com website reinforces our brand image and
allows us to reach our customers in a fun and interactive environment. Website promotions and contests are an
added incentive to motivate teens to share their voice. In addition, email campaigning is used to send “e-blasts” and
coupons. The “e-blasts” highlight key trends, new products and promotional events to drive our customer back to
our stores.
In addition to using our website and social networking to promote our brand image, we employ a community-
based marketing approach to building brand awareness and customer loyalty. We often initiate marketing efforts in
concert with the local shopping center management in advance of opening our stores. At a store level, we reinforce
our brands through in-store signage, events, and product labeling, and by hiring diverse, energetic and enthusiastic
individuals who exemplify our brand. Our coupon programs encourage repeat business from our customers. We
have built an extensive coupon program which is strategically planned during select times of the year to maximize
sales, traffic and customer loyalty.
Distribution
We distribute all of our merchandise from our recently expanded 378,000 square foot distribution and office
facility located in Weirton, West Virginia. Substantially all merchandise arrives at our distribution facility
pre-ticketed by our vendors, which allows for a quick turn around time and reduced internal labor. In general, the
merchandise is received, sorted and packed in to shipments for each store based on a predetermined allocation plan.
The distribution facility then uses an automated sorting system for separating shipments by store. Merchandise is
shipped to our stores daily via a third-party delivery service to ensure a steady flow of new products to our stores.
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