Putting the Best Foot: Forward

In the shoe industry, one size does not fit all. That goes for footwear design, style, even price. By combining a new store-design concept with innovative technology solutions, including price optimization, assortment planning and employee training, Nine West Footwear Corp. is putting its best foot forward to remain a fresh brand among its trendy shoppers.

Nine West Footwear, New York City, is comprised of some of the fashion industry’s most recognized brands. The company, a division of Jones Apparel Group, includes Nine West retail and outlet stores, Bandolino retail stores, and Aerosoles retail stores, as well as an apparel, or ready-to-wear division that features the high-end Jones New York, Casper and Anne Klein brands. The entire Nine West conglomerate operates approximately 1,000 stores.

The division has built its strong reputation on its ability to keep merchandise—and its shopping experience—fresh for its customers. Yet, Nine West felt its footwear brands were in need of a boost.

“From a competitive standpoint, it is important for us to stay fresh in the marketplace,” said Jay Friedman, president, company-owned retail footwear and apparel, Jones Apparel Group. “We are constantly reviewing different issues of our business and one point that kept resonating was that it was time to reinvigorate our store design.”

Nine West grew tired of featuring racks of shoes “that became confusing to shop and hard to navigate,” he said. “Realizing this was not a competitive way to go, we decided it was time for a new direction in store design.”

The new design focuses on clearly displaying merchandise and delivering service that contributes to a more appealing shopping experience. Besides adding new lighting “that enables product to ‘pop,’” Friedman explained, the company made a significant investment to further enhance the layout.

“To ensure that we have great product available to our shoppers, we needed technology to manage our assortment,” he said.

The first step in upholding the new store design was to reduce the number of SKUs (stockkeeping units) displayed in each store. To better manage these assortments, the company deployed a new solution from SAP, Newton, Pa.

After the planning team creates product and unit plans on a per store basis, the plans are fed into an inventory-allocation application that sorts product based on units needed in each location.

“By giving our buyers and planners access to the solution, they can create more accurate merchandise plans by our operating regions,” he said.

Nine West planned to pilot the solution last month in its ready-to-wear division, and expected to expand the functionality to its footwear division by the first quarter of 2008.

With a strategy to manage its inventory in place, Nine West moved on to how to increase turns of its merchandise. This involved the addition of price-optimization software.

“You cannot run a business with a ‘one-size-fits-all’ strategy,” said Friedman. “One way to fulfill our goal of becoming a more competitive player in the marketplace was to pursue price optimization.”

Price optimization actually had been on Nine West’s radar for two years. Once the company began pursuing its new business transition however, Nine West increased its commitment to explore price optimization.

“We wanted a proven solution that was easy to use and could provide invaluable insight into our business,” he explained.

Based on this criteria, Redwood, Calif.-based Oracle’s Retail Price Optimization solution caught Nine West’s attention. “It was already a staple across many specialty retailers that operated in environments similar to ours,” he said.

“Besides lowering the cost to develop and maintain the infrastructure, the hosted solution enables us to ramp up and implement the solution to our planning team quicker,” he noted.

The solution, which is hosted and managed by Oracle, uses algorithms to calculate demand forecasting and price elasticity, then delivers an inventory quantity plan that aims to maximize revenues and profits.

Each Monday morning, the solution provides a report of price recommendations based on demand across store zones and operating regions across the country. These price recommendations are also broken down by color and style sold in each zone.

“Managing pricing at a zone, size and color level is a significant advantage for us,” Friedman said.

The company began using the tool in its Bandolino division in May. “This is a smaller division comprised of 50 locations,” he explained. “This helped our planners get used to the tool.”

By the end of the year, Nine West plans to roll out the solution to all of its footwear divisions. By the first quarter of 2008, all apparel divisions will be using it as well.

Overall, the company has invested more than $1 million in its merchandise-allocation and price-optimization projects, and Nine West expects a multimillion-dollar return due to an increase in margins. “We expect the price-optimization tool to enhance profitability and increase comp-store sales,” he said.

“We operate 1,000 stores across the country, as well as in Puerto Rico. Clearly, each store’s shopper has different needs and responds differently to prices,” Friedman said. “This solution allows us to manage pricing down to a local level. This is an opportunity that we never had before.”