Six months into its second go-around, Lord & Taylor wants to shed the image it built over its 195-year legacy—or at least part of it.
“I don’t know that we want to call ourselves a department store,” chief merchandising officer Dan Cate told Sourcing Journal. Rather, the post-bankruptcy, rebooted retailer is laser focused on carving out a differentiated niche online, according to Cate, an alum of Saks and Century 21 and the reincarnated nameplate’s Employee No. 1 after Saadia Group plucked the icon out of last year’s Chapter 11 collapse. “We know that to stand out in a digital landscape we don’t want to carry just the same stuff you can find anywhere,” he said.
To hear Cate tell it, the Lord & Taylor of today acts more like a Silicon Valley startup than the stodgy stalwart previously familiar to shoppers nationwide. The company made an “intentional decision” to abandon its former digital infrastructure and rebuild it from scratch on Shopify Plus, he said. that agility helped get Lord & Taylor’s new site operational in 120 days with 3,500 SKUs, a number that has swelled past 35,000 as of this fall and shows “how fast we can run,” Cate said.
“Being digital first I think is a huge advantage for us as we move forward,” he added. If there was any discussion about holding on to stores in the bankruptcy’s wake, “it probably lasted a minute or two.”
Even inventory got the start-from-scratch treatment as Lord & Taylor “rebuilt and restrengthened” vendor relationships. Though it’s prioritizing the women’s apparel business that made it famous, the company is eyeing opportunities in the “under penetrated” home, jewelry and designer businesses, the latter of which launched in recent months, Cate pointed out. Private-label brands, too, will be “a huge piece of the future” with arrivals slated for next year.
“I’ve hired people from Nordstrom, Macy’s, Saks and Bergdorf so we have a kind of an all-star team,” Cate said, referring to the newly assembled brain trust as the “’27 Yankees.”
Not having to worry about dedicated floor sets anymore has its perks. “We’re not going necessarily too deep in any one particular style before we see the success in it,” Cate said, drawing on the “chase mentality” he picked up from his off-price years. He believes the model of buying inventory nine months in advance of the selling season is largely “dead,” a lesson many retailers are learning the hard way amid the current supply-chain meltdown. Digital’s “endless aisle” allows Lord & Taylor to “chase what’s working” even harder, he said.
Without stores to fall back on, capturing every potential sale matters more than ever, prompting Lord & Taylor to bring Signifyd on board to fortify its e-commerce business against fraud.
The Bay Area company crunches data from companies like Walmart and eBay to “fundamentally understand identity and intent behind every checkout,” chief marketing officer Indy Guha told Sourcing Journal, driving an “almost immediate” conversion lift after implementation. “I think the strategic importance of that found money keeps ticking up, because any number of industry trends [like] internet advertising has gotten wildly expensive.” As return on ad spend craters against spiraling marketing costs, “you certainly can’t afford to yank one in 10 people out of line when they’re trying to give you money,” Guha said.
What’s more, when many retailers are pouring millions into building out world-class expedited shipping omnichannel fulfillment operations, “you really don’t want to operate those channels and turn away that business,” Guha said.
The problem with a lot of fraud management solutions is that they “one dimensionally” focus on lower chargebacks rather than holistically reviewing the consumer’s trends, behaviors and attributes. That limited perspective poses an even greater challenge for a company like Lord & Taylor launching with a “massive new book of business with a lot of net new shoppers,” Guha said.
With the holiday season underway, Cate believes Lord & Taylor’s special occasion dress category—already a million-dollar business for several vendors—is positioned to perform. Though retailers across the board are concerned about getting peak-season product in on time, Lord & Taylor is “taking some product risks” and pulling goods in earlier than usual, Cate said. “There’s certain businesses that we had maybe anticipated working as a dropship model” that it makes sense to control in house at the North Brunswick, N.J. warehouse, he added.
The reborn retailer is also ripping up its outmoded playbook on coupons and discounts. “The level of promotionality that Lord & Taylor had in 2019 is not sustainable for the long-term health and success of the business,” Cate said of the company’s previous reliance on savings passes and other gimmicks. With its first friends-and-family event under its belt last month, the retailer has carte blanche to “rethink what our promotional cadence looks like,” he added.
Cutting back on the discounts is already paying dividends despite a bit of near-term turmoil. “I think that we might lose some customers in that transition, maybe some of the most promotional customers but maybe they weren’t profitable customers for Lord & Taylor,” Cate said. “It’s up to us to migrate the profitable ones over to our business. We’ve been excited about the margin performance so far—our [average order value] is almost 40 percent higher than it was for old Lord & Taylor. So we’ve already seen some real nice performance at regular price, which gives us some optimism for the future.”
Testing and learning will be part of Lord & Taylor’s arsenal as it races toward its one-year anniversary in April.
“We’re not perfect today,” Cate said. “We’re still on that journey to get better and better and better, but we want to be an easy frictionless shopping experience.”