Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
A deliberate web approach pays off for Redcats
Redcats USA com sure has come a long way in the last four years when it comes to online sales.
In 2001, the French-owned catalog company, which operates under such brands as Lane Bryant, Chadwick’s, and Brylane Homes, had seven retail web sites operating in the U.S. But not one of those sites had direct sales capability and they lacked consistency among the brands.
The company hired Alex Betancur and a team of executives and technology experts with experience in online retailing. Their assignment: create a common platform for all the brands and spur online sales.
Today, all the Redcats books are selling a sizeable portion of their business online with Internet sales accounting for about 30% of U.S. sales volume. In 2004, the combined sales of $401 million at Redcats sites were sufficient to rank Redcats as the 25th largest online retailer in the U.S., according to Internet Retailer’s Top 400 Guide to Retail Web Sites. And as for creating a common platform, successful elements and functionality from all the brands have been duplicated and spread throughout the organization.
But even though the company has made great strides in the four years it has been executing this strategy, it’s not ready to stop. “We will soon be operating on a next-generation platform to support greater scalability and provide additional features and functionality,” says Betancur, Redcats’ vice president of technology.
Those new features are expected to offer greater real-time customer segmentation and personalization, including a virtual model application. “The individual features themselves aren’t what is important,” says Mark Friedman, chief marketing officer. “What is important is that we’ll be able to strengthen the use of our central database to market and segment to our customers better. We’ll be better able to understand each customer and able to segment specific offerings to them. And our offerings will be consistent across all our sales channels.”
In keeping with Redcats’ heretofore under-the-radar approach, it’s not planning to make a big splash with its changes. “This will be evolutionary in that you won’t see a lot of changes immediately,” says Betancur, previously vice president of e-commerce for Urban Brands, where he was responsible for developing the operations to support the sale of the firm’s tween girls brand. Urban Brands owns the chains of Ashley Stewart and Marianne women’s clothing stores that specialize in the plus-size and Latino markets. He also has been director of operations and development of Starmedia’s Periscopio portal throughout Latin America, Spain and Portugal.
Better customer knowledge
Among the expected new features at Redcats’ sites are unique credit offerings for each customer based on what the company knows about her and quicker and more accurate segmentation for online marketing, Friedman says. Additionally, the new platform is expected to support greater consistency of information about customers among the catalog, store and web channels, an important consideration for the multi-channel retailer. “We want a better understanding of who each customer is and what she typically buys. We have that information today, but it is not consistent across all sales channels,” Friedman says.
The new platform may be coming just in time. While Redcats has a competent online sales offering today, some observers believe it lacks pizzazz. And, just like in stores, a sense of excitement is important online. “Everything works fine and the sites are functional, but Redcats is not trying to push the envelope with anything different,” says Lauren Freedman, president of Chicago-based consultants The E-Tailing Group Inc. “Their sites are definitely template-driven; they have been able to leverage their core functionality throughout the organization. But in some ways, there is little brand differentiation. You see the same layout and the same features at every site.”
Redcats’ Chadwick’s brand, which the company is developing into its US flagship, is typical of its approach to the web. While many Redcats brands appeal to older shoppers, Chadwick’s line appeals to younger, upscale consumers seeking style at a moderate price. And they’re taking to the web to buy. In fact, as with most retailers, Chadwick’s younger customers are more comfortable shopping online than the company’s older customers. And the company has found that Chadwick’s sells well to teachers who use broadband web access from their workplaces to buy online.
But just as important, Chadwicks.com reflects the direction that Redcats’ web sites are heading. It offers the complete product line, but it also includes features that allow customers to order online using a catalog item number, apply at the web site for a credit card, make payments on a credit card bill online, request a catalog online, shop a broader selection than in the catalog of prom dresses and bridal wear and view the entire catalog at the web site.
Using the catalog
Redcats uses its 600 million annual catalogs aggressively to promote its web sites. “Our URL is promoted as heavily as our phone number in all our catalogs and we put the URL on all our bind-in cards,” Freidman says. “We have a number of callouts in the catalogs informing customers that they can find even more selection on our web pages.”
While Redcats has been aggressive in promoting its sites to catalog customers, only about half of online customers are also catalog shoppers. The balance are new customers who come in through online promotions, particularly through its 30,000 affiliate partners. It also has a deal with Upromise.com which allows customers to contribute to a college savings fund each time they shop.
And Redcats isn’t afraid to spend the necessary marketing dollars to make sure its name comes up near the top on many of the leading search engines. “We’re pretty aggressive with search as we find this is an economic model that pays off in acquiring new customers,” Friedman says. Redcats markets itself on all the major shopping sites, including both Google and Yahoo. It also sends weekly e-mails with special promotions.