This week, a deep dive into Chico’s comeback plan. Scroll down to use Glossy+ Comments, giving the Glossy+ community the opportunity to join discussions around industry topics.
At 40 years old, Chico’s is getting its groove back.
This week, Chico’s kicked off a year of 40th birthday festivities with the launches of a splashy campaign and the first of four themed capsule collections it has planned for the next 12 months. Considering the company’s trajectory in the last four years, following seven years of slipping sales, it is indeed a time to celebrate.
“We’ve retooled every part of the organization,” said Molly Langenstein, CEO of Chico’s FAS, Inc., which owns the Chico’s, White House Black Market and Soma brands. Langenstein started at the company in 2019 after an 11-year stint at Macy’s.
Those updates have included right-sizing Chico’s store fleet, improving its products, leaning into customer demand for “high-touch” marketing, refreshing its loyalty program, securing advanced omnichannel connectivity and making new hires.
That’s all been possible thanks to the company’s nimble operations and “flat” structure, according to Jay Topper, chief digital officer of Chico’s FAS, Inc. since March 2021. “We don’t have a lot of bureaucracy,” he said. “We make decisions quickly, and we’re all hands-on.”
In addition, Leana Less, who joined the company as head of marketing in August, credited Chico’s old-meets-new ways. It’s evolving while continuing to do right by its established and uniquely loyal customer base, she said..
Other recent, key hires have included Melloney Birkett, vp of design, who formerly spent six years at Calvin Klein.
“Constantly challenging ourselves to reinvent ourselves is our approach to growth,” Langenstein said. “We keep reminding ourselves that what got us success last year may not get us success this year.”
On Tuesday, Fort Myers-based Chico’s FAS, Inc. reported an 18% net sales increase in 2022, to $2.14 billion. Its 6% year-over-year sales boost for the fiscal fourth quarter, ending January 28, pointed to slowed growth, consistent with retail overall. The company’s prior earnings report, released in November, highlighted a seventh consecutive quarter of double-digit sales growth, at 14%. Chico’s is the largest brand in the portfolio, driving 49% of the group’s 2022’s net sales. In late September, Chico’s FAS experienced minor damage to its headquarters when Hurricane Ian hit Florida. Four of its stores were destroyed, while 109 stores were “affected,” according to a company statement.
The companies’ earnings also noted the rise of a younger customer base. Langenstein told Glossy that the average age of new customers is 10 years younger than it was three years ago, at 45. First-time customers continue to shop with Chico’s for 12 years, on average. They stick with White House Black Market and Soma for nine years and seven years, respectively.
That stickiness is a key differentiator of the company that its leaders are being careful to retain. That includes ensuring the high level of connectivity their repeat shoppers want.
“Our definition of content is so different from the industry’s; everyone else is focused on building algorithms to scale, but we do a lot of one-on-one communication,” Less said, pointing to the “inverted pyramid” representing the company’s customer base. “Our biggest channel is our loyalty channel, rather than occasional shoppers. She’s extremely reactive, and she expects high touch and high intimacy from us every day.”
As an example, Langenstein called out shoppers’ close relationships with store associates, which became more apparent at the height of the pandemic. “Customers contacted us to check on the wellbeing of their ‘person,’” she said, adding, “We’ve continued to provide the type of localized boutique experience that went missing as other brands grew.”.
Meanwhile, Less spoke about a hurricane victim who lost a prized Chico’s jewelry collection spanning decades. The company replaced it with pieces from its archives.
She also noted that Chico’s shoppers are active in customer-launched Facebook Groups. There, members compare notes on securing hard-to-find Chico’s styles and praise each other’s Chico’s outfits of the day, she said.
As Less put it, “what’s old is new” when it comes to effectively marketing to Chico’s customers. But the success of rudimentary marketing tools and tactics hasn’t hindered the company’s tech-forward direction. For example, Chico’s FAS has a strong in-house performance marketing team. It’s “well-versed in finding lookalike audiences” and understands which shoppers to “go after,” Lee said. In addition, the accessibility of the company’s vast, high-quality data enables advanced processes at speed across Chico’s FAS.
According to Topper, 99% of every customer “touch” is now digital. That’s largely through social media and the brands’ e-commerce sites. On social, where Chico’s has recently been discovered by Gen Z, the company regularly features user-generated content. The company’s digital channels have 43% penetration among customers, he said.
Digital tools have been put in place to foster human connections, as well as enable a unified customer experience across sales channels. Chico’s FAS launched the Style Connect digital platform during the pandemic to allow store management teams to stay connected with customers through email and virtual appointments, for example. That spurred the idea for a platform dubbed My Closet, which is best described as a customer data hub. Partially populated by sales associates across channels. My Closet houses information including what someone has purchased, what events they’ve shopped for and when they celebrate their birthday.
“It’s become a third selling channel for us,” Topper said. “It allows [associates] to make very catered recommendations digitally, by adding something to a customer’s Closet at the moment of intent.”
Also during the pandemic, Chico’s FAS introduced “social stylists,” or part-time workers who sell the company’s three brands out of their homes and at social events. “It’s powerful, in that it allows us to establish micro-communities where we don’t have stores,” Langenstein said.
Less provides marketing support for those sellers’ events. She also leads Chico’s own events, which provide another customer touchpoint. On Thursday night, at Chico’s Boca Raton store, she co-hosted a book signing with model and author Paulina Porizkova, the face of the brand’s anniversary campaign. Chico’s has a book club, making the event a great fit, Less said.
The Chico’s brand was originally inspired by travel and prioritized easy-care, no-wrinkle fabrics. To kick off its 40th birthday, it’s paying homage to those roots with a new travel-themed product collection. The limited-edition styles were inspired by the work of Frida Kahlo and a print found on an Uzbekistan robe. The line marks the introduction of travel accessories to the brand, including a suitcase. “We’re business people at heart, so if the customer loves it, you’ll see more,” Langenstein said.
Chico’s will launch three more capsule collections this year, each with a unique theme. Loyalty members get early access to the styles, thanks to the company’s refreshed loyalty program. As of June, loyalty perks center on exclusivity and access, replacing promotions, based on customer demand.
According to Langenstein, Chico’s FAS used the downtime during the pandemic to overhaul its products. That included moving to higher-quality fabrics, updating fits, redefining inspirations and prioritizing versatility.
For its part, Chico’s aims to cater to women of every style, offering products from dresses to denim to activewear. Meanwhile, WHBM specializes in versatile wardrobe staples and Soma sells lingerie. All have offered sizes 0-22 from day one. Other than merchandising and design teams, Chico’s FAS employees work across brands.
Chico’s FAS currently has 7.6 million active U.S. customers, with the largest concentration residing in Southern California, Arizona, Texas and Florida. It also operates a licensing business in Mexico — a Canadian counterpart closed during the pandemic after filing for bankruptcy. A top tier of Chico’s loyalty members spends $25,000 or more with the company per year. WHBM has a customer that spends $19,000. Among women age 45 and older who make $100,000 or more per year, both apparel brands saw sales growth of four times the market average in 2022, Langstein said.
Chico’s FAS now operates 1,300 stores, including around 600 Chico’s locations, after closing 230 stores in 2019. Langenstein owed the closures to too-high rents and changing malls. Currently, stores are evenly split across traditional malls, lifestyle centers and strip malls. There’s an intentional move away from traditional malls and into lifestyle centers, with the goal of malls accounting for just 25% of the total fleet.
Moving forward, the plan is for the company to close around the same number of stores as it opens – about 20 will close across brands this year, and 15 new Soma locations are expected to open. In 2022, the company invested in refreshing 40 Chico’s and WHMB stores. It plans to update all longstanding stores over the next few years. Everything from fixtures to fitting rooms is being modernized.
In addition, while the brand has mastered customer segmentation, allowing for catered communication from digital channels to direct mail, further personalization is needed, Less said. Topper said he and his team are working to enable that through the company’s e-commerce site. Increasingly harnessing the “billions and billions” of first- and third-party customer data points the company has collected will remain a focus.
Forty years in, “we’re just getting started,” Langenstein said.