Magazines Archives - 2009 July

SM Department Store - A passion for fashion
Story 7 - Cover Story

SM Department Store has updated its fashion selection to cater to the changing needs of its customers. From trendy clothes and classy accessories to tastefully-decorated shopfloors one would not mind hanging out in, SM once again shows its shoppers that it’s “got it all” for them. Jennee Grace U Rubrico tells more.

The transformation is perceptible and pulsating — from the softer ambience created by the more subdued lighting to the wider aisles and the chic clothes adorning the mannequins, SM Department Store’s fashion section is unmistakably undergoing a makeover that is giving it a classier look.

The usual no-nonsense, what-yousee- is-what-you get feel of its shopfloor is being replaced by the more dramatic atmosphere that brings to mind a welldesigned fashion boutique. Narrow spaces walled in by racks of shoes on each side have given way to elegant stands that are spaced farther apart to allow for a more leisurely browsing. In some areas, shoe displays come with suggested bag pairings to give shoppers an idea on what tote could go well with the footwear that catches their fancy.

The Php200-million (US$4.16 million)-per-store refurbishment programme, which began last year, is steadily being implemented by the country’s largest retailer.

According to Teresita Sy-Coson, president of the SM Non-Food Retail Group, the shopfloor makeover is part of the group’s thrust to spruce up its department store and position it as a place for buying stylish fashion items at affordable prices.

Already, three SM Department Stores, not counting the newlyopened outlets, sport the updated look. The rest of the stores in the group will be transformed over the next few years.

The changes are far from skindeep. The SM Non Food Retail Group, which operates the 35 SM Department Stores, has put in place a transformation plan that alters the fashion retailing business from the bottom-up.

Included in the plan is the addition of trendier fashion pieces to the existing basics; more frequent inventory updates; putting in place stricter quality control measures; and engaging in tie-ups that promote fashion.

In an interview with Retail Asia, Coson explains that all these changes are geared towards giving shoppers what they want. “The reason we’re refocusing on fashion is because of the changes in the marketplace. Our customer has been wanting more fashionable items, so we thought of serving that need.”

Coson notes that the fashion business of SM Department Store has been “generic for quite some time, offering good-value merchandise at very affordable prices”.

“We don’t want it to continue that way because it will be boring to some customers. Fashion, after all, is all about change,” Coson notes, adding that SM wants to reflect that change by offering contemporary fashion items, with the goal of being known as a place for trendy people to shop.

“We’re going for the more fashionable items... maybe in two years, you’ll see a very different, more fashionable SM. Right now, our plans are all geared towards that direction,”she says.

What shoppers want

Coson attributes the change in shoppers’ taste on constant exposure to international trends. “Right now, people are more exposed through a lot of communication channels like the Internet, television, and magazines.

“That makes our customers more aware of fashion trends because of media,” she observes.

Finding out exactly what SM’s shoppers want to see on the shopfloor entails knowing the shopping habits of its clientele, which Coson identifies as those from the “A-minus income segment all the way to the C, and even D market”.

In describing the process, Coson says: “We take a look at the sales figures [to find out what kind of items sell], get feedback from the shopfloor, research and customer data.”

Armed with information from these sources, SM then presents the goods that shoppers want at price points that they are comfortable with.

For clothing and shoes, shoppers apparently want merchandise that make them look good but do not burn a hole in their pockets.

“People talk about designers, and how many clothes they have in their closet that carry international designer labels. Elsewhere, there’s always an abundance of designer clothing in people’s closets.

“Here, we don’t have an abundance of international designer clothes, but people like to be fashionable so they look for alternatives to more or less maintain that look. I think people are coming to our stores for that alternative need,” Coson explains.

“As for footwear, our shoes are so affordable that some regard them to have disposable prices,” she quips.

Shoppers in the Philippines, however, tend to give themselves more leeway when buying accessories. For instance, shoppers at SM stores sometimes buy watches, which cost tens of thousands of pesos, although they are not likely to spend as much for articles of clothing.

The same goes for fragrance, sunglasses, watches and — to a certain extent — bags,” observes the SM executive. For such items, SM department stores carry lines that are more upscale, but still practical.

“We go for affordable luxuries; shoppers can go with their regular attire and can have designer accessories,” Coson explains.

“In accessories, we look for the prices the customer wants to pay. If the designer items are too expensive, then we will give them more affordable options.”

Delving further into the Filipino shoppers’ psyche, Coson notes that affordability is only one aspect that they consider. Another, she notes, is their penchant for bargains.

“Filipinos are very concerned about affordability. Sometimes they do not want to spend so much for designer items in the Philippines, so we give them affordable options,” she says. “If we don’t have these in our store, our customers can find them in our shopping malls.”

To date, SM, through its publicly listed company, SM Prime Holdings, Inc, has 35 shopping malls in the Philippines, three of which — the SM Mall of Asia, SM City North EDSA and SM Megamall — are among the largest in the world.

“Our mall tenants carry the branded items. There are no fake labels, just a matter of alternative fashion. That way, we turn runway fashion into reality for our customers,” she explains, adding that the department store does not carry lines that overlap with what tenants sell.

“We will always look into complementing [the items in the mall]. There’s really not much overlap because there’re endless possibilities in terms of design and collection.

“Even though there could be lines that are similar, you’ll see that the workmanship is different, the pricing is different, the collection is different. And even when things are similar, there’s always going to be somebody with a novel idea.”

The makeover

The overhaul of the fashion section of the SM stores is being implemented gradually, starting with where it matters most — the merchandise. As early as two years ago, SM tweaked its fashion collection across all segments to come up with more colours and designs.

“This is across the range and for all genders and ages. We still have basics but, you know, our customers’ demands have also been changing and we have to change along with them,” Coson says, adding that to meet the shoppers’ needs SM’s merchandising group has become more fashion-conscious, more inventory- conscious, more displayconscious.”

SM upgraded the merchandise selection in terms of quality and style, giving emphasis to “fashion lifestyle”.

According to SM’s merchandising team: “We create a more exciting fashion mix with styles that have a more affluent look, yet are very affordable.”

Merchandise selection is guided by one principle: To offer merchandise that enhances the department store’s positioning as a fashion store.

Guidelines, meanwhile, have become more developed in terms of inventory to make sure that its stores have the right mix and merchandise. When buying, its merchandisers look more at fashion collections for different target markets.

Meanwhile, SM works closely with consignors, “conferring with them closely so that they will complement the house brands”, the merchandising team adds.

The retailer has also expanded its stable of brands and designers, working with Philippine suppliers who carry international brands. In addition, these suppliers have also tapped manufacturers that are used to doing designer quality. The group, Coson mentions, continually searches for new suppliers.

She adds that the store also carries known international brands for watches, bags and other accessories as well as personal-care items.

“But we don’t go into the very highend luxurious items; ours is affordable luxury. We go more for the international masstige brands,” she explains.

The upgrade also calls for more stringent quality control, reveals Coson, who says that low-quality items “are taken out of our shelves”.

“The goods now are of relatively good quality, maybe not like designer itself because of the price, but it is acceptable quality. In the store, fashion is still inexpensive,” she explains.

To keep inventory fresh and keep customers who visit the stores frequently interested, stocks are always new, delivered twice a week, with items in fashion displays updated twice a month.

“With fashion items, you have to put the latest on display. The change is gradual and you don’t see it that much; but when you don’t come to the store for about three months, you’ll see that the stocks are completely different [when you step in],” Coson says.

Aside from its investment for its new thrust in fashion, SM has also invested in IT and human resources.

“We now have a lot more people in our organisation and we have a bigger budget for marketing,” she says.

SM has also started tie-ups with shows that generate buzz for fashion, such as the local edition of Fashion Week (see related story).

Good business

The investments have been paying off.

“The result is that our inventory is more efficient and that makes up for the outlay,” Coson says.

Sales, meanwhile, have experienced a double-digit growth , hitting the target of the group and indicating that it is on the right track.

Figures from SM, for instance, show that, last year alone, the department stores sold over 21 million pairs of footwear.

Coson also notes that the changes in the fashion retail business have made SM Department Store more relevant to its market. For the 51-year-old business, it is a comeback because the changes give it a new look.

As to weather the timing for the fashion makeover is right, “during these times where there is a global crisis, people want more value and we’re giving them more value. I think they like it because our numbers are growing,” she explains.

What’s in store?

The changes that have been happening are only the beginning for SM Department Store, Coson says. “There is a noticeable change and people are talking about it.”

Going forward, SM will continue to transform all its department stores into fashion stores “for a couple of more years”.

She also says that the tie-up with Fashion Week will likely continue, and adds that the group wants to continue be a launching pad for local designers and brands.

“There are a lot of good designers right now, so it’s a matter of whether they recognise the ready-to-wear market as a place they want to participate in as against their view on couture and made-to-order clothes.

Plans are also afoot for a foray into cyberspace.

“Part of the plan is to spruce up our online presence in the fashion arena,” she says. “Right now, we are sprucing up our website.”

At the moment, “we are giving more person-to-person shopping experience rather than through the Internet. But online shopping is part of the plan. We hope to do that within the next two years”, she says.

SM is not about to rest on its laurels, with Coson noting that the group enjoys “trying to make things more exciting” for its customers.

After all, she notes that “addressing our customers’ needs makes us improve ourselves”.

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