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Dillard Outlines Lingerie Strategy in Tough Market

William T. Dillard 3rd implored innerwear executives last week to stay the course with three fundamentals to survive a troubled economy: "product,...

William T. Dillard 3rd implored innerwear executives last week to stay the course with three fundamentals to survive a troubled economy: “product, presentation and people.”

Dillard, vice president and general merchandise manager of cosmetics, accessories and intimate apparel at Dillard’s Inc., said during a period of soft consumer spending retailers and vendors need to be “innovative more than ever before.

“Consumers are older, but want to look and feel younger, more complex, and diversity is increasing with minorities making up 33 percent of the nation,” Dillard told about 100 executives Wednesday at the Union League Club in Manhattan. “You’ve got to get inside [consumers’] heads and understand what motivates them. The world is getting smaller, but also getting more complex. But in the midst of rapid change, some things don’t change — the market, people, product, presentation and price. But price is not the model a department store should emphasize. The retail is in the detail.”

His presentation, “Dillard’s and the Changing Retail Landscape,” was sponsored by the Intimate Apparel Council, a division of the American Apparel & Footwear Association.

Referring to what he described as a case study in consumer buying patterns of intimate apparel, Dillard said, “less than 40 percent of consumers are influenced by price. It’s all about the product.”

“Customers value their time, and two-thirds are motivated by exciting product and great service; price is really off the consumer’s radar,” said Dillard, noting that the store’s intimate apparel business increased 22.3 percent in the last three years because of “fresh product and enthusiastic sales service.” He added that the intimates category at Dillard’s, mainly comprising bras, has grown 30 percent in the last five years. Sales of bras priced more than $30 jumped from 30 to 57 percent.

Dillard, 37, joined the family-owned retail chain in 1993 in the Phoenix regional division and later moved to Hong Kong to source private brand merchandise. His retail experience includes selling, buying, area sales management, product development and merchandising.

Dillard’s investors, led by Barington Capital Group LP and Clinton Group Inc., have pressured the retailer to improve shareholder value. Last month, Dillard’s reached an agreement with the activist shareholder groups on new members of its board, avoiding a proxy battle.

The company also has said it is committed to closing underperforming stores and rationalizing real estate in an effort to cut costs.

Regarding the chain’s intimates’ business, Dillard said the store implemented a new strategy: upgrading product offering, reducing assortments from 180 to 103 styles and simplifying innerwear departments with an “intimate environment” of customized fixtures and furnishings, wider aisles and larger dressing rooms in 45 doors, and photos of Dillard’s 45 certified professional bra fitters displayed within departments.

“We see ourselves as curators of a museum,” he said. “[The customer] comes to us for an edited assortment and trendy merchandise. It starts with breaking down the business by classification and without duplication. We were able to add more fashion with less clutter. Our large-size business [full-figure and full-busted bras] is about 50 percent of our [total intimates] business.”

He noted that the shopping experience in the intimates department is enhanced by color-coded information tags that identify specific product that coordinates with fixtures.

“Shoppers can spend less time trying to find something and more time shopping,” he said.

Dillard would not disclose the names or styles of top-selling “million-dollar bras,” but said, “In 2002, seven bras generated over $1 million in sales annually. Today, 21 bras each produce $1 million or more in sales annually. Of these 21 bras, two produce over $2 million, one over $3 million and one over $4 million annually.”

He predicted that a new bra by Spanx called Bra-llelujah will become a $5 million item at Dillard’s.

Addressing personalized service, Dillard said the company is diligent about the expertise of its bra-fit specialists.

“Some people just slap on a tape measure to try and think they’re certified fitters,” he said. “Ours is a rigorous program that takes six months with written tests….We do blitzes with a new store with five fitters. They do a lot of event planning, $15,000 to $20,000 events. We’re really investing in this program and seeing results.”

As part of a retail analysis, Dillard singled out Oklahoma City as a key example of how fashion and upscale brands have bolstered business.

“In 2007, the population of Oklahoma City was about 1.3 million with [median] household income of $43,000,” he said. “From 2002 to 2007, intimate apparel business grew from $5 million to $6.1 million, about a 22 percent increase. Foundations [bras, shapers, corsetry] grew from $2.2 million to $3.1 million. Better bras grew from $1.3 million to $1.9 million. Sleepwear remained flat,” although he noted Natori sleepwear has been “good.”

Best-selling foundation, daywear and sleepwear brands include Wacoal, Princesse Tam Tam, Le Mystère, Fantasie, Spanx, Chantelle, Eileen West, Hanro, Hanky Panky, OnGossamer, Natori, Elle Macpherson Intimates, Jasmine and Ginger, along with private label Cabernet.

“I think there’s lots of legs left here,” Dillard said. “We’re just scratching the surface.”