November 24, 2008

Executive Comments From Macy's, Urban Outfitters

Karen M. Hoguet, Macy's, on Internet Sales: "The truth is the dot-com business continues to grow faster than the comp store sales and do well. We are also moving towards more of a multi-channel strategy. Remember, when you buy on the Internet you can return to our stores. That negative gets deducted from store sales, not from the Internet sales. Hence it's getting very murky between the two definitions. Also we currently are testing, in Florida, the ability of being in the store and having the sales associate say, 'We don't have that in stock, let me go get it for you on macys.com', which so far seems to be working very well. We are encouraged by not only what dot-com can do on its own, but more importantly how it is being integrated into the marketing and merchandising for the stores as well.

Urban Outfitters achieves record sales and profit --- and runs opposite of vendor-suggested multichannel best practices by increasing direct sales by 41% on a circulation decrease of 9%.
  • From Glen T. Senk, about circulation decreases: "We have not finalized the circulation plans for next year. However, the brands have done a spectacular job marketing the websites and there's a paradigm shift and this is a major shift in the way people are buying particularly for Urban Outfitters and Anthropologie where we have a very developed brick and mortar business. The customer shops between the catalog, brick and mortar and the web absolutely seamlessly. In fact, we've had a lot of internal discussion about combining our direct sales and our retail comp sales going forward. We're thinking now about starting to report two ways because really the two businesses have become interchangeable. If you look at the third quarter for example, our comp increase would have gone up by a whole four points as a company. Instead of being 10 comp we would have been 14 comp and of course the biggest increase would be at Free People where if you combine the direct business and the comp base we actually would have been 28 comp. We're able to do this because of the way we're marketing the website and we have a myriad of initiatives. All of the brands have new sites; we launched the new web platform about a year and a half ago. The blog activity is tremendous. The viral marketing is tremendous. The penetration of direct-to-consumer business in total is up roughly 150 basis points and we don't know how high that is but we believe it can be significantly higher and we're more profitable in our direct-to-consumer business than we are in our brick and mortar business."
  • And this from Mr. Senk, about the percentage of the total business coming from the direct channel: "We're going to let the customer decide. We wouldn't be surprised if it ended up long term in the 20% to 30% range in terms of total penetration. It's so exciting to be part of this and when you look at the changes, the speed with which things are happening is exponential. The speed of information, the functionality on websites, people's ability to deliver merchandise quickly, access to information, networking, product review, shopping with friends, getting the sites more tacked up; this is all happening so quickly it is fantastic."

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