Rick Bunka, president of Ohio-based Dots, said what emerged early on in the business was a strong appreciation for value and current fashion. “We recognized we didn’t have an ability to consistently deliver fashion from available goods in the closeout market. It tended to be product that was left over or not necessarily in fashion.”
As a result, Dots went through a four-year period rebranding, redefining itself to be less about ceiling price and more about great fashion at everyday value. In 2000, Dots rolled out its product under a new sourcing and pricing model that has given the retailer a comparable amount of success as it had in those initial three years.
Seal of approval
As Dots made the transition to its new identity, it still relied heavily on brands available in the market. But Bunka said the company realized when it started producing under its own labels, taking costs out and passing the value onto the customer, brand labels wouldn’t be as important.
The company invested in inhouse brand names for about seven years. In 2008, the company introduced the Dots brand. Today, the Dots brand makes up about 75% of the product in the stores.
Bunka said since introducing the Dots brand, sales experience and research shows customers favor the private label. “She often calls it the seal of approval,” he said. “Because our customers have a long appreciation and trust of Dots, the moment we introduced our own label, they recognized the improved quality of our product, especially in the fit. It has received extremely high marks.”
With the majority of its product under the Dots brand, the fit inconsistencies inherent to having a number of different brands practically disappeared. The products are made to Dots’ specifications and specific quality standards. In addition, the fit is a fuller, crossover fit, giving the customers yet another reason to look for their fashion at Dots.
Operationally, with its history as a closeout retailer, one of Dots’ core competencies was the ability to move product for pennies, from vendor dock to store door. As the company became more of a specialty retailer, it refined that sourcing model to keep efficiencies while delivering product tailored using Dots’ quality specifications.
“Dots had outgrown its previous facilities and looked to consolidate its operation into a single office and distribution center,” said Bunka. “To make this move, we needed to ensure that we retained our efficient distribution model by bringing in all the product through a new headquarters in Glenwillow.”
Dots partnered with California-based distribution and equipment provider SDI. Dots continues to be efficient in case pack, cross-dock, and individual pick units that it will deliver to stores. “We’ve retained an efficient distribution model by bringing all product through our headquarters and distribution center in Glenwillow,” said Bunka.
Prior to launching its private label in 2007, Dots needed to figure out how to define its brand. The company began by enlisting New York-based research firm IRG to do studies on the Dots customer, including surveys, shop-alongs, and focus groups to understand what her relationship was with Dots.
The immediate feedback was that customers loved Dots’ fashion and prices, which made them extremely loyal, in many cases, for many years. In response, the company focused on two key areas to retain its customer base: a service culture and sales associates.
“From that study, we built what we call our girlfriend relationship,” said Bunka. “If you walk into a Dots store today, in many cases, our associates know our customers by name. It’s more of a relationship than a service culture.”
The evolution to the girlfriend experience dramatically changed Dots’ operational structure. It transitioned the company from a largely task- and visual-based focus to a service culture built around relationships. Understanding the impact it would have on the company’s sales associates, Dots brought in a talented leader to help the transition.
“The exciting part about Dots is its unique culture,” said Bunka. “It’s a fun place to work, and it’s developed a culture built on communication.”
Dots began the cultural shift by actively communicating the research, sharing the results with sales associates, and giving them room to understand what was expected of them, model the new behaviors, and apply them consistently throughout the chain. The message was clear: the success you have on the floor when helping the customer with her wardrobe should reinforce the expected behavior.
“It’s what retail is meant to be,” said Bunka. “It was an enormous shift but one that was very natural for our organization.”
In the pink
With a focused associate team, desirable fashion product, and great prices, the next opportunity for Dots was to develop a store environment that defined its new brand. The company launched a new prototype store in Cleveland in 2007 that included all the brand elements built around having a store for her, providing an experience in the store that’s associated closely with her expectations.
“It’s a girlfriend experience. It’s a store for women, and it’s a brand experience comparable to our product,” said Bunka. New Dots stores use pink and white as their primary colors, and the décor is bright and clean with a fashion runway as the centerpiece.
Bunka said when a customer walks into a new or remodeled Dots store, she will feel like she’s walking down a fashion runway. Vibrant music and friendly associates complete the picture, giving customers an experience unlike any they’ve had with other retailers.
Dots is still in the process of remodeling its existing stores. Last year, 10 of the company’s 420 stores were remodeled. By the end of 2010, more than 100 Dots stores will reflect the updated prototype format.
In addition to rebranding, Dots is expanding its footprint. Bunka expects the company to open 20 new stores this year and to increase that yearly total moving forward. With the recent slowdown in the economy, the company slowed its growth projections; many of its new stores have been opened in existing markets.
“Our primary focus in 2010 is to fill out newly established markets in Tennessee and the Carolinas,” said Bunka. “In addition, we’ll open stores in two new states: Arkansas and Mississippi. Aside from that, we’ll be backfilling in markets across the Midwest, East Coast, and Southeast.”