Zoe Alvarez
Stein Mart is an American discount retailer and former department store chain that was founded in 1902 in Greenville, Mississippi, by Russian immigrant Sam Stein. The company began closing its physical retail locations in 2020 and now operates exclusively online. In 1995, Stein Mart started leasing its shoe and fragrance departments to independent operators to provide customers with full-service without increasing its stock. In 2007, Stein Mart selected DSW as its exclusive shoe lessee, transitioning the inventory in 102 of its shoe departments to DSW.
| Characteristics | Values |
|---|---|
| Does Stein Mart lease or rent their shoe department? | Yes, Stein Mart leased its shoe departments to independent operators. |
| When did they start leasing their shoe department? | 1995 |
| Why did they lease their shoe department? | To provide customers with full service without taking on additional stock. |
| Who did they lease their shoe department to? | DSW Inc. |
| When did they enter a deal with DSW Inc.? | January 2007 |
| Why did they enter a deal with DSW Inc.? | To transition to DSW inventory in 102 Stein Mart shoe departments. |
| What type of retailer is DSW Inc.? | Leading U.S. specialty branded footwear retailer offering brand name and designer footwear for men and women. |
| How many stores does DSW operate? | 204 stores in 33 states |
| How many locations does DSW supply footwear to? | 240 leased locations (25 for related retailers and 215 for non-related retailers) in the United States |
| Did Stein Mart own physical retail locations? | Yes, but they started closing them in 2020 and now only operate online. |
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What You'll Learn
Stein Mart's transition to DSW shoe inventory
Stein Mart, an American discount men's and women's online retailer and former department store chain, announced in August 2020 that it had filed for Chapter 11 bankruptcy due to the COVID-19 pandemic. As a result, the company planned to close all of its 279 physical stores, primarily located in the Southeast, Texas, and California. However, Stein Mart continues to operate as an online retailer under new management, offering the same high-quality products and customer service.
In 2007, Stein Mart made a strategic decision to enhance its shoe department by partnering with DSW Inc., a leading U.S. specialty branded footwear retailer. DSW offered a wide selection of brand-name and designer dress, casual, and athletic footwear for both men and women. The transition to DSW inventory involved 102 Stein Mart shoe departments, mostly located in Alabama, Arizona, Florida, Louisiana, and parts of Texas.
This collaboration with DSW was a natural complement to Stein Mart's fashion presentation. DSW's extensive footwear selection and cohesive fashion assortment resonated with Stein Mart's apparel customers, creating synergy and opportunities for both companies. Stein Mart president and CEO, Michael D. Fisher, expressed confidence in DSW's broad offering, believing it would provide a comprehensive shoe department for their stores.
The transition to DSW as the exclusive shoe lessee demonstrated Stein Mart's proactive approach to staying competitive in the evolving retail landscape. By partnering with DSW, Stein Mart could offer its customers a diverse range of footwear options at competitive prices, enhancing their shopping experience. This move also allowed Stein Mart to focus on its core strengths while leveraging DSW's expertise in the footwear industry.
In summary, Stein Mart's transition to DSW shoe inventory was a strategic decision that improved their shoe department's range and quality. By partnering with a leading footwear retailer, Stein Mart elevated its fashion merchandise and maintained its commitment to offering designer products at discounted prices. This transition occurred amidst Stein Mart's broader shift towards online retail and demonstrated their adaptability to market changes and customer needs.
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The reasons behind Stein Mart closing physical stores
While Stein Mart has closed all its physical retail locations, it continues to operate as an online retailer. The company's decision to close its physical stores was influenced by various strategic and market factors, including:
Shifting Consumer Behaviour and the Rise of E-commerce
The growth of e-commerce has significantly altered the retail landscape. Consumers are increasingly opting for the convenience of online shopping, resulting in reduced foot traffic in traditional brick-and-mortar stores. This shift in consumer behaviour is a critical factor in Stein Mart's decision to focus on its online presence.
Strategic Realignment and Market Adaptation
The closure of physical stores is part of a broader strategic realignment by Stein Mart to adapt to evolving market dynamics. The company recognised the need to redirect resources towards more profitable ventures, such as enhancing its e-commerce capabilities and investing in successful online store models.
Underperforming Assets and Operational Costs
Closing physical stores is a strategic move to eliminate underperforming assets and reduce operational costs. By freeing up capital, Stein Mart can reinvest in more profitable areas, such as developing its e-commerce platform and modernising its online store. This improves the company's overall financial health and increases its competitiveness in the market.
Impact of the COVID-19 Pandemic
In August 2020, Stein Mart filed for Chapter 11 bankruptcy due to the COVID-19 pandemic and announced plans to close all its stores. The pandemic significantly impacted the company's financial performance, and the decision to close physical stores was a necessary step to ensure the long-term viability of the business.
Historical Financial Challenges
Even before the pandemic, Stein Mart faced financial challenges. In October 2017, the company announced cost-cutting measures in response to a downward trend in its stock price. In February 2020, the company entered into a deal to go private, indicating ongoing financial pressures that likely contributed to the eventual closure of physical stores.
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Stein Mart's current business status
Stein Mart is an American discount men's and women's online retailer and former department store chain based in Jacksonville, Florida. Stein Mart had locations primarily in the Southeast, Texas, and California. Stein Mart stores sold recent trends in clothing for both men and women, along with home decor, accessories, and shoes at discounted prices.
In August 2020, Stein Mart filed for Chapter 11 bankruptcy due to the COVID-19 pandemic and announced the closure of all its 279 physical stores. The company continues to operate as an online retailer, now under new management by Retail Ecommerce Ventures, which acquired Stein Mart at the beginning of 2021.
The transition to an online-only business model was a strategic move to focus on e-commerce success, given the changing retail landscape of brick-and-mortar vs. online stores. Stein Mart's current business status is that of an online retailer, serving its community and loyal customers through its website, steinmart.com. The company provides the same high-quality products and exceptional customer service that it was known for in its physical stores.
In the past, Stein Mart targeted customers who regularly shopped at department stores, enticing them with significant discounts of 25 to 60 percent off department store prices. By the late 1970s, Stein Mart had established itself as a leading retailer of clothing for families in the Mississippi Delta. The company strategically chose locations for new stores, targeting cities with populations of 125,000 or more and using demographic research to predict the potential success of a discounter of designer merchandise.
While Stein Mart no longer operates physical stores, its online presence allows it to continue serving customers across the country. The company's focus on providing trendy and discounted merchandise remains a key aspect of its business model, even as it adapts to the challenges and opportunities of the online retail environment.
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The history of Stein Mart's shoe department
Stein Mart was founded in 1902 in Greenville, Mississippi, by Sam Stein, a Russian immigrant who arrived in the US by steamboat from New York City. Stein's first store was a general merchandise department store, providing basic goods to Greenville residents. After Stein's death in 1932, his son Jake took over the store and shifted its focus to discounted clothing.
The company expanded in 1977 with new branches in Memphis and Nashville, and by 1984, it had rapidly increased its number of branches to a total of 261 stores across 30 states in the US. During this period, Stein Mart became a leading retailer of clothing for families in the Mississippi Delta. Under the leadership of Jay Stein, the company grew from three stores in 1977 to 40 stores in 1990 and 123 stores by the end of 1996.
In the 1990s, Stein Mart carried brand-name merchandise, including apparel, accessories, hosiery, costume jewellery, glassware, dishes, and cookware. The company focused on designer apparel at discounted prices, offering 25-60% discounts on department store prices. To maintain its upscale image, Stein Mart limited in-store "sale" signage, used discreet price tags, and avoided shopping carts. They also displayed merchandise in "lifestyle groupings" rather than traditional size/age departments to encourage multiple purchases.
Beginning in 1995, Stein Mart leased its shoe and fragrance departments to independent operators to provide full-service to customers without increasing stock. In 2007, Stein Mart selected DSW, a leading US specialty branded footwear retailer, as its exclusive shoe lessee for 102 shoe departments, primarily in Alabama, Arizona, Florida, Louisiana, and parts of Texas.
In 2020, Stein Mart began closing its physical retail locations and transitioned to an online retailer, focusing on e-commerce success. The company filed for Chapter 11 bankruptcy due to the COVID-19 pandemic and closed all 279 of its stores. Stein Mart continues to operate online under new management, offering high-quality apparel and accessories.
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The benefits of leasing the shoe department
In 2007, Stein Mart selected DSW as its exclusive shoe lessee for 102 shoe departments.
Leasing a department within a store can be beneficial for both the host department store and the third-party company leasing the space. Here are some advantages:
Benefits for the host department store:
- Generating new revenue and customers: By leasing a department to a specialized retailer or a popular brand, a department store can attract new customers and generate additional revenue. This is especially true if the leased department offers products or services that complement the host store's offerings.
- Increased customer base and traffic: The right lessee can generate interest in the overall department store and attract customers from different demographics.
- No long-term commitment: Department stores can choose to renew or relocate at the end of the lease term, allowing them to reevaluate their real estate needs and find the best solution for their business.
- Lower financial burden: Leasing a department typically requires less capital than purchasing or building a new space. Department stores can avoid the high upfront costs associated with buying commercial property, such as down payments and mortgage deposits. Instead, they can invest their money into their core business or other areas that need improvement.
- Fewer restrictions and more flexibility: Lease agreements often provide more flexibility and fewer restrictions than mortgages. Department stores can focus on their business growth without the same level of responsibility for repairs and maintenance that comes with owning a space. They can also benefit from lower insurance costs and included property management services.
Benefits for the company leasing the space:
- Infrastructure and amenities: The company leasing the space can take advantage of the host store's existing infrastructure, such as parking, restaurants, and other facilities, to attract customers without incurring additional costs.
- Co-branding opportunities: The leased department can be independently owned or co-branded with the host department store, providing an opportunity for the lessee to associate with an established brand and potentially reach a new customer base.
- Lower costs and risks: Leasing a department within an existing store may be more cost-effective than opening a new standalone store. The lessee can save on rental or construction costs and benefit from the host store's marketing and promotional activities.
Overall, leasing a shoe department can provide benefits such as increased revenue, expanded customer base, reduced financial burden, and flexibility for future expansion or relocation.
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Frequently asked questions
Yes, Stein Mart leases its shoe department to independent operators.
Stein Mart leases its shoe department to provide customers with full service without taking on additional stock.
Stein Mart started leasing its shoe department in 1995.
Stein Mart selected DSW as its exclusive shoe lessee in 2007.
No, Stein Mart closed all its physical stores in 2020 but continues to operate online.
