Cover Story: Working its Way Into a New Channel
Recognized for its durable and high-quality products designed for working men and women, Carhartt has over a century's worth of trust built up with its customers. The cross-channel retailer has built that trust not only through its quality products, but also by engaging consumers on multiple levels: as a B-to-B/B-to-C hybrid brand; a wholesale supplier to thousands of brick-and-mortar stores throughout the country; and a direct retailer via catalogs and an e-commerce site. Carhartt believes company-owned retail stores is its next big opportunity.
Carhartt identified three strategic areas as it evaluated the merits of opening its own stores:
- the ability to penetrate the underserved areas of the country from a distribution standpoint;
- the chance to showcase the depth and breadth of its product line, including testing new assortments, collections and line extensions; and
- the opportunity to physically engage with and listen to consumers directly.
Within the last two years, Carhartt has opened its first company-owned retail locations in Portland, Ore. (June 2009); Murray, Utah (November 2010); and the Wicker Park section of Chicago (April 2011). Not exactly Fifth Avenue in New York or Rodeo Drive in Los Angeles, but Carhartt carefully scouted and studied these locations before any leases were signed or shovels put in the ground.
"We're not interested in pursuing markets where we're going to be taking on our current distribution headlong," says Tony Ambroza, Carhartt's vice president of marketing, of the store locations. "We're seeking out places where we're underpenetrated and we know there's a consumer interest or need because there's a large blue-collar population in most of these areas. It's typically an urban market."
Dearborn, Mich.-based Carhartt is actively identifying additional markets in the U.S. for future retail expansion. Nothing has been finalized, but the retailer is pursuing locations where its sees a match between opportunity and potential.
Leveraging its Database to Drive Retail Traffic
Carhartt is taking advantage of its robust customer database built over the years to target past purchasers, making them aware that there's now a physical store they can visit for the Carhartt brand experience. In particular, online buyers are being targeted.
"We have a database that's helped us better understand the markets where we can serve our customers far better than we have in the past based on where our purchases come from through our e-commerce business," says Ambroza. "We'll continue to mine and leverage that database, and do the same with our Facebook community, to drive continued awareness and traffic into our stores in places where we're not taking it away from our beloved wholesale accounts."
Finding that balance between driving Carhartt store sales and not cannibalizing sales from its wholesale retailers is of utmost importance. Carhartt was built in large part from solid working relationships with its wholesale partners, many of whom are the "Main Street" retailers of today — smaller one-, two-, five-, 10-store operations around the country. Those wholesale retailers range from sporting goods stores to farm stores to hardcore work wear stores. Even today, wholesale accounts for the vast majority of Carhartt's revenues.