December 29, 2021
The Chico’s FAS chain of upscale boutiques and fashion brands is providing a template for female leadership of digital transformation efforts. The company has five core priorities that illustrate how savvy companies are responding to the disruptions roiling the retail sector.
Chico’s FAS, based in Sanibel Island, Florida, has more than 1,000 boutiques across the United States specializing in upscale women’s casual apparel and accessories. Women hold 69% of its executive officer positions and almost all field-management roles in the company’s three core brands: Chico’s, White House Black Market and Soma.
In 2019, Chico’s FAS launched an ambitious five-point turnaround plan that combines digital technologies with sophisticated business strategies. While the COVID-19 pandemic pinched the company’s ambitions in 2020, the chain staged an impressive rebound by the second half of 2021, according to the Q3 earnings report released November 30, 2021.
Indeed, excerpts from Q3 results provided vivid examples of the company’s turnaround efforts and its five priorities:
Turning Chico’s FAS into a fully digital enterprise is the first pillar of the chain’s turnaround program, which produced a 29 percent jump in year-over-year revenue from Q3 2020. “Over the last two and a half years we have successfully transformed Chico’s FAS into a seamless digital-first customer-led company, as evidenced by the trajectory of our digital sales over this time. Even as store revenues have continued to rebound, digital sales have remained very strong,” CEO and President Molly Langenstein said during the Q3 conference call with financial analysts.
Good products have to get better. At Chico’s FAS, this means upgrading fabrics and sharpening styles to stay in tune with the women who keep them in business. “On the product front, we are doing two key things at each of our brands to take market share and drive results,” Langenstein told analysts. “First, leveraging our customer data and insights; and second, constantly innovating and elevating our assortment. Customers are clearly responding across all three brands.”
A core tenant of digital transformation is using apps and online media to deepen people’s connections with a brand and its products. Chico’s FAS does this two ways: online applications that help shoppers match apparel and accessories to their current wardrobe; and social media programs that communicate directly with influencers and customers. Langenstein noted that customer count is up 8 percent from Q3 2020 and the average age of consumers is getting younger.
As the online retail marketplace gets ever more competitive, Chico FAS makes a point of controlling costs and keeping operations within well-defined parameters. “We achieved our highest third-quarter gross margin rate since 2014, driven by strength in full-price sales and the corresponding reduction in the promotion, strategic inventory management, and improved leverage of occupancy cost on higher sales,” Langenstein reported.
Chico’s FAS imported its Soma brand into some of its Chico’s stores, expanding Soma’s reach while making better use of available store space.”We have successfully opened 64 Soma shop-in-shop inside Chico’s stores, which are exceeding expectations, driving new customers to both brands, lifting store productivity, and further expanding our digital business,” Langenstein said. The chain also negotiated more favorable deals with some of its landlords.
Data and digital technologies are becoming fully baked into Chico’s FAS operations to improve operational efficiency and increase customer engagement. This is rapidly becoming the default requirement for legacy businesses like brick-and-mortar retail, which needs digital tools to create remarkable shopping experiences.
The women making this happen deserve a salute — not just for making the right decisions but also for helping to retire the notion that technology success requires male leadership.
Zipline is the operations technology platform built to solve the unique challenges of communication and task management across retail categories. Reach out to learn more about how your stores can deliver on your brand promise today and in the future.
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