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.
From a merchandising perspective, Carhartt is still learning when it comes to its brick-and-mortar retail. The brand formed a merchandising team to handle the responsibilities of selling via a new channel — e.g., making inventory purchases, figuring out an assortment strategy, tracking the flow of goods — but is still acquiring the acumen necessary to develop its stores. Carhartt has enlisted the help of outside resources to aid in that pursuit.
"We're putting in place systems that are specific to retail," says Maryann McGeorge, a retail operations consultant who's worked with Carhartt for nearly a year on the launch of its stand-alone stores. "We're not attempting to piggyback on the wholesale systems. It's important for a couple of reasons: One, we don't want retail to become an internal distraction to the existing wholesale business and, two, we need systems that work specifically for retail."
A Forum for Engagement
With a Twitter feed, YouTube channel, company blog, and Facebook and MySpace pages, Carhartt has a fully developed social media program. The brand's primary goal when it comes to social media is consumer engagement that keeps fans coming back to the brand, whether it's for company news, sharing stories, getting product feedback, among other things.
This consumer engagement was exemplified in Carhartt's use of Facebook to publicize the opening of its Wicker Park store last month. The retailer targeted fans in the Chicago area to let them know that one, it was going to be hiring for the store in that area and, two, it was seeking ideas on how it can engage with that community directly.
"The interesting thing about this brand is that it hasn't been driven by advertising," notes Ambroza. "It's been driven by consumers and their word-of-mouth sharing of stories. So many of our customers have a story to tell when it comes to our products. It really comes from how they're built and that they last for so long. They'll send us in jackets that are 15-, 20-, 30-years-old and they'll say, 'It was hard for them to throw it away, so they wanted to send it back to us.' That's the way the brand has been built for many years, and that's our primary focus with Facebook: provide a forum for those that share those common beliefs and experiences. Others will then read those stories and understand them. It's the word-of-mouth becoming the word of many."
Carhartt doesn't currently view social media as a sales driver, but that could be changing as more and more retailers roll out commerce-enabled Facebook pages. The retailer will only pull the trigger on such a move, however, if it helps consumers to further engage and embrace the Carhartt brand. An out-and-out sales tactic isn't part of the retailer's social media strategy. Risking the loyalty of our fan base isn't worth it, says Ambroza.
A New Demographic
Carhartt is intent on changing the perception that it's a brand primarily for men. The retailer considers women to be a core part of its target audience, and has a vast selection of products for females. An upcoming print and online marketing campaign will be conveying that message to consumers.
"There's a generation of doers and DIYers now that are probably as prolific as they've been since the Rosie the Riveter days," says Ambroza, referring to the fictional character representing the American woman who worked in factories during World War II. "We're embracing those women who are artisans and tradespeople and crafts people."
Customer acquisition is evolving for Carhartt. The brand relied on recommendations from its single-store wholesale partners — who were often looked at as the expert in town — to grow its customer base in its formative years. Word-of-mouth marketing stemming from the quality products Carhartt sells has been a constant acquisition source for the retailer.
Carhartt is transitioning to a louder and larger customer acquisition and retention strategy. The brand debuted a TV commercial last October, and another TV campaign is planned for the fall. Carhartt's online acquisition efforts focus on search, both paid and organic.
Building out its international business and providing a mobile commerce option for customers are two areas where Carhartt is investing time, money and resources.
Carhartt has been selling abroad — mostly in Europe, with some distribution in Asia — for over 30 years. The competitive landscape of work wear in Europe has proven challenging, however.
"When you're talking about work wear in Europe, there are almost 200-plus brands," notes Ambroza. "It's a highly competitive marketplace. It's a long-build strategy, but it's an important place for us to be. We believe in it. The worker there needs the qualities of Carhartt too. And as with anything, when you pursue new opportunities overseas, it comes with diligence and patience."
As far as mobile is concerned, Carhartt currently has a mobile version of its website, but shoppers aren't able to transact on the site. The brand views its current mobile site as a test run. Expect that to change in the near future, however.
"We understand that for many of our customers their computer is their smartphone," says Ambroza. "So we certainly don't want to ignore that. We want to be able to provide them with something that makes sense in their lives, too."
These are the next steps for a brand that's developed a loyal customer base during its 122-year existence. Now it's about evolving to meet the changing needs of today's always-connected consumers — without sacrificing what the Carhartt brand stands for.
"The consumer who's grown up with Carhartt has seen that even as the brand has evolved over the years, the consistent Carhartt DNA has never changed," says McGeorge. "There's a commitment to quality. There are things about Carhartt that it will never compromise. The core values of Carhartt are evidenced in the product, how it stands behind its product and how it presents its brand to consumers."