Since emerging from the COVID-19 pandemic, Rue21 outperformed all internal expectations including sales, comparative year-over-year sales and EBITDA. The company says it reported a record uptick in comparable store sales after reopening its 670 stores by the end of June, as well as a record month in terms of gross margin. The specialty retailer opened three new stores in South Carolina, Tennessee and Texas in July, during a time when competitors are finding reasons to downsize their fleets.
Now, as Rue21 prepares for an uncertain back-to-school season when it is unknown how many students will even return to schools, getting inventory trends right is a must for the retailer, especially as “see now, buy now” continues to take off while shoppers stay home.
In line with consumer-driven health concerns stemming from the pandemic, the company pivoted to offer fashion-print face masks on its website and in stores. The company is continuing to expand on its plus-size Rue+ offerings, which the brand says continue to be a market differentiator.
“We believe our assortment is fashion-right and we’re seeing that resonate with higher levels of regular-price selling,” said Steve Lyman, senior vice president of supply chain and logistics at Rue21. “Even though we’re moving into the back-to-school season on the calendar, the warm weather is driving spring/summer style selling well into July. We’re also seeing demand for masks arise as a new element in our customers’ fashion statement. Many customers need masks and want to buy them to complement their outfit.”
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Lyman said masks are now a staple item for Rue21 customers, with the fashion face coverings gaining popularity due to the various print and design options offered.
“We expect this trend to continue throughout the back-to-school season and heading into the fall/holiday season as well,” Lyman said.
The company’s back-to-school assortment varies across consumer demographics, according to Lyman. Major focuses for the company’s junior and plus customer demographics include joggers, creative styling elements on tops, denim and masks. For the male customer, Rue21 is largely focusing on denim and bottoms, as well as embroidered tops. The retailer also is gearing its collection to schools that require certain outfits as well, and will continue to have attractive fragrances, accessories and footwear to support full outfit styling, according to Lyman.
He credits the collaboration between the Rue21 merchandising team and its vendor base, as well as the company’s data analytics capabilities, for being able to make the rapid sourcing decisions necessary to continue focusing on speed to market.
The pivot to plus-size began before the pandemic, with Rue21 announcing in February that it was bringing the Plus collection into 61 additional stores during the first quarter of 2020. Rue21 now offers sizes of up to 4x for tops, bottoms, dresses, lingerie and sleepwear.
“Our plus girl has very similar interest in fashion designs as our junior customers,” Lyman said. “The fashion tops, denim styles and active lifestyle styles are key elements for the plus customer. Rue+ styles are shopped frequently online, and rue+ expansion into more stores nationwide continues as a key initiative for us.”
The move proved to be wise for the retailer as Lane Bryant and Catherines parent Ascena Retail Group went bankrupt in July, with Catherines shuttering its entire store fleet (Catherines catered to an older audience than Rue21 prior to the bankruptcy). In 2019, another competitor, Avenue, closed its entire 222-store fleet as well to become a pure e-commerce operation. The downsizing of other plus-size players could unlock new market share opportunities for Rue21 going forward.
There is definitely a market for the additional audience. One-third of female consumers identify as plus-size, according to NPD Group’s Consumer Tracking Service, while American teens who purchased plus-size clothing jumped to 34 percent in 2015 compared to 19 percent in 2012.
On top of adapting to buying trends, the retailer doubled down on its customer loyalty strategy, launching its Rue | rewards program online in April and across all stores on July 9. The free reward program—Rue21’s first—gives customers 10 points for every $1 spent, or a $5 dollar reward for every $75 spent, and includes exclusive member offers.
The retailer has been able to open three new stores through the pandemic as a result of its “good landlord relationships” that have forged a strong real estate strategy. Rue21 will continue to analyze potential locations as a strategy for long-term growth opportunities.