The Q4 fiscal 2013 results for Guess (NYSE:GES) remained weak due to low store traffic in North America and Europe. The weak holiday season in the U.S., payroll tax increase and low store traffic due to adverse weather conditions led to 6% decline in the retailer’s comparable store sales in North America. [1] In addition to this, sluggish economic conditions in Southern Europe, which accounts for more than 60% of Guess’ Europe revenues, weighed on its international growth. However, Asia was a bright spot and continues to be promising market.
To address the weakness in North America, Guess is making a few changes in its management and working on multiple strategies to attract more customers. Moreover, it is looking to reduce its dependence on Southern Europe by expanding in lucrative markets of Russia and Germany. Complemented by healthy growth in Asia, these strategies can pay off for Guess in the long term.
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What Is Guess Doing To Attract More Customers?
Guess is focusing on elevating its brand image through in-store events and social media marketing. [2] In-store events such as the summer festival are aimed at attracting more customers with distinct product offerings. Guess is launching a music festival capsule collection for this summer, which includes unique bohemian style handcrafted vintage apparel and accessories. [3] On the social media front, Guess has made significant strides with its Facebook (NASDAQ:FB) fan following increasing from 1 million in 2012 to 4.6 million presently. [2] [4] Social media marketing can be very helpful in reaching out to a large audience with relatively small investment.
Additionally, Guess is undertaking omni-channel retailing by combining the online and in-store mobile platforms with a social experience. [2] The company has installed iPads in its stores to better interact with the customers. [5] The intent is to create a seamless shopping experience across all channels.
Guess’ competitor, American Eagle Outfitters (NYSE:AEO) is also looking to develop its omni-channel capabilities. Guess recently started fulfilling its web orders through its store inventory and also introduced a feature that allows online orders to be picked up at its stores. A similar strategy has worked well for other retailers such as Urban Outfitters (NASDAQ:URBN) and Ann (NYSE:ANN), and is likely to help Guess as well.
On the product side, Guess will be increasing its denim and iconic style offerings at opening price points of $75-$95 to better balance its product mix, which we believe can help sales. Currently, the majority of its products fall in the $108-$148 price range. [2] The company is also looking to add new prints, fits and washes in its denim range, which defines its heritage. Additionally, it is working on reducing the lead time to about five weeks in order to remain responsive to changing trends. [2] Guess’ main problem has been low store traffic and these strategies might provide the solution.
Changes In North American Retail Management For Effective Execution
It’s clear that Guess’ management needs to enhance its focus on formulating and implementing effective strategies for North America. The retailer is hiring new executives for crucial departments of design and merchandise. The new design head comes with a strong 15-year experience in women’s apparel segment. [2] The company believes that the new management will help it execute its strategies better.
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