The $325 million teen apparel chain is going after teen girls in a big way. This month, the 424-unit retailer shook up its image by eliminating young men’s merchandise in favor of an all-girls concept. Junior clothing and accessories formerly was 55 percent of the merchandise mix in a typical Gadzooks store, with young men’s accounting for 45 percent. Now the stores, which average about 2,500 square feet, have been redesigned and remerchandised with an expanded range of junior merchandise, including apparel, accessories, shoes, beauty and lifestyle items. Gadzooks’ target shoppers are 16- to 22-year-olds, a demographic that includes a new outreach to young career customers.
It’s a radical move to help Gadzooks become a more focused and commanding player on the lucrative and fiercely competitive junior retail scene. It also fuels expansion across the western U.S., including California and eight other western states where it currently has no stores.
According to estimates from the U.S. Census Bureau, the number of 13- to 19-year-olds is expected to jump from 32 million in 2002 to 34 million by 2010. American teens spent $172 billion in 2001, up from $100 billion in 1995, said Teenage Research Unlimited of Northbrook, Ill., noting that typical teens spend about $104 a week. Amazingly, nearly 30 percent of all U.S. retail spending is generated by teens or someone shopping for them.
More specifically, teens spent $20.9 billion on apparel last year, down from $21.6 billion in 2001, according to research firm NPD Group of Port Washington, N.Y.
Gadzooks’ decision to become a juniors-only chain evolved after a protracted period of watching its young men’s business erode and cut into earnings.
“The strategy that worked 20 years ago is a tired strategy,” conceded Jerry Szczepanski, Gadzooks’ chairman, director and chief executive, who co-founded the chain in 1983. “This was not a decision we made based on current trend,” he said, but one designed to reverse “eroding comps and earnings” and to position the chain to be a “competitive force for the next 10 years. Gadzooks will be a destination shop to equip a girl with everything she needs to complete her look from head to toe.”Though volume grew to $325.5 million in fiscal 2003, up nearly 3.7 percent, net income fell $1.3 million. For the five weeks of fiscal June ended July 5, sales fell 2.7 percent to $28.9 million from $29.7 million in fiscal June 2002. Comparable store sales decreased 1.6 percent for the June period, compared with a 1.4 percent increase for fiscal June 2002. For the first 22 weeks of fiscal 2003 total sales were off 5.6 percent to $123.6 million from $130.9 million for the comparable year-ago period. Comps have dropped 5.8 percent for the first 22 weeks of fiscal 2003, versus a 1.2 percent decline for the first 22 weeks of fiscal 2002.
Discussing the all-girl approach, Paula Masters, president and chief merchandising officer at Gadzooks, said, “Our merchandise speaks to the complexity and uniqueness of being a girl. We have expanded categories of merchandise for the lifestyle needs of a young woman, including keying in on the latest fashion trends and interpreting them in various merchandise categories, whether it’s school, club, innerwear, active, swim or career, as well as shoes and beauty.”
Despite the ambitious merchandising approach, Gadzooks realizes that the conversion to all-girls will take time to catch on with young women, and therefore is planning sales conservatively.
“We don’t expect to gain market share the first year,” said Masters. “But we certainly expect next year to be back at the same level of sales before the transition to all-girls began. It’s going to take time. We’ve got some cultivating to do to get the girls back in the stores.”
The process involves a new marketing and advertising campaign called “Girl Tools.” The tag line already is splashed across in-store collateral and signage. And a new ad campaign developed by The Richards Group here will break in back-to-school issues of Teen Vogue, Seventeen, Teen People, Lucky, ElleGirl and YM, as reported.
Each spread features a model wearing one of the latest looks, juxtaposed with an image that corresponds to the mood she’s projecting. All ads use the same headline, “As — As You Want To Be” allowing girls to fill in the blank with whatever mood they perceive. The ads also carry the “Girl Tools” tag line and include discount coupons offering nearly 50 percent off on select merchandise.Gadzooks’ new merchandise mix includes less radical fashions in favor of wearable trends in new and expanded categories. For example, the mix now includes less product under the Playboy label, and it has cut out car accessories and glow sticks.
“As soon as you go in the stores you’ll see that we’ve eliminated a lot of brands and categories that spoke to extremists. Before, we were trying to be everything to everybody. And we also had a lot of crossover with Hot Topic,” said Masters. “Now we’re going for that sweet spot of critical mass. We’re now 40 percent private label and 60 percent branded merchandise. Previously,we were only 20 percent private label. We’re building our private label so that we can get into a trend faster and to differentiate ourselves from our competitors. Overall, our price points remain about the same.”
Among the private labels are Taunt, which focuses on career, and Misdemeanor, a casual label. National brands include Hot Kiss, Dollhouse, Billabong, Hurley, Fox, Bongo and Candies.
The conversion to an all-girl concept was timed to coincide with the all-important back-to-school business, and Gadzooks stores are merchandised around several key fall trends.
“Denim is obviously very important, especially cleaner silhouettes in vintage washes,” said Masters. “Military-inspired looks are huge this fall. And we’re also focusing on rocker chic, short plaid or pleated skirts, activewear, men’s wear pinstripes — we’re merchandised for the different needs and moods in a girls’ life.”
Overall, the changes that Gadzooks has made seem to be garnering good marks.
“I’m very impressed with Gadzooks’ makeover and new all-girl approach,” said Elizabeth Pierce, a retail analyst with Los Angeles-based Sanders Morris Harris. “Gadzooks has taken the necessary steps to make sure it stands out from the competition with a well-edited, very focused and thoroughly feminine approach. They’re doing what’s necessary to drive traffic back into the stores.
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