While Jeff Bezos is jumping back into traditional newspapers, the rest of the world is drifting ever further into the fragmented world of Internet news. The shift has given blogs and social media more sway over the way we interpret what's happening, and nowhere has that been more meaningful than in the world of retail. Corporations now employ social media managers, bloggers, and community managers to oversee the company's online brand perception and messaging.
The most recent push came from Guess? (NYSE:GES), when the company launched an online, blogger-led campaign at the beginning of this week. The push is part of Guess?' fall and winter line launch, and it gives the company one more foothold in a market that it's working so hard to win back.
The core demographic
Last year, Guess? wasn't doing so well. The company's annual revenue dropped, and comparable sales in the U.S. fell 6.6% compared to the prior year. The problem is that Guess? has seemingly failed to connect with its core audience. Year-over-year comparable U.S. sales also fell in the first quarter of this year. Customers are just going to other retailers, and Guess? hasn't been able to crack the problem.
The blogger push is an attempt to get back in the good graces of the U.S. consumer. It's part of a bigger plan to relaunch the company's iconic lines, with new washes and at entry-level prices. Getting a good buzz online is supposed to get new customers into the store, who will then be tempted by the lower priced denim they find.
There is certainly an appetite for denim in the U.S., and brands like Gap (NYSE:GPS) and Buckle (NYSE:BKE) have had good runs recently on the back of U.S. denim sales. Gap has also launched a new campaign to support the success it's seen recently. The Gap brand had a 6% comparable sales increase in the second quarter, and the company is also making an online push, promising new digital content every single day.
The online opportunity
Gap and Guess? have decided to make online a focus, while Buckle has remained firmly planted in the physical stores. That may offer a growth opportunity for the retailer, as online sales have outpaced in-store growth, even without management's focus. Last quarter, Buckle's online revenue grew by 6%, while comparable-store sales grew only 1.2%.
Guess? had much better success online than in its stores. While in-store comparable sales have fallen, they have risen for six consecutive quarters online. To bring some of that business home, the company is planning to start integrating in-store fulfillment of online orders, which will help it move more stale merchandise and get new customers in through the doors.
For all three brands, online offers a new way to compete for denim customers. While Gap is winning the sales war right now, Buckle's online opportunity and Guess?' in-store potential could both put pressure on the leader. As the year rolls on, this should offer some great opportunities for investors interested in growth.