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American Eagle goes live with Web site to give its young adult brand a national presence
Thursday, April 03, 2008
Suzanne Guzzo is marking manager of martinandosa.com, shown on the monitor in American Eagle headquarters on the South Side.

Forget the state-by-state deliberations. Access to Martin + Osa fashions has finally been thrown open to a national audience, and the returns should help determine if the new clothing chain can live up to its promise.

A Web store that quietly opened for business in recent weeks represents the broadest move yet by South Side teen retailer American Eagle Outfitters to expand its experiment in clothing 28- to 40-year-olds. Until now, the brand's customers were mainly those living near its 20 shops around the country.

"We're inviting people in to experience Martin + Osa," said Michael Dupuis, senior director, marketing, whose team has been polishing e-commerce images and systems that will be many shoppers first exposure to the brand.

Investors and analysts have been debating just how long American Eagle should stick with this project. Since the first prototype store opened more than a year ago, officials have tinkered with styles, real estate and even leadership of the venture.

Top management thinks changes are paying off. Susan McGalla, president and chief merchandising officer, told analysts on a recent earnings call the newest assortments fit better, use color better and generally offer more value for the price. In February, she said, more customers coming in were buying something.

"We think the product's right. It's getting better every season," said Fred Grover, executive vice president, e-commerce and AE International. Comments on some online message boards seem to indicate store customers agree.

Yet Internet shoppers can't feel the cashmere or try on the pants made with cotton/linen blend. To convince virtual visitors to give an unfamiliar brand a chance, the company is offering them a prime perk: free shipping and returns.

It's a smart move, even if it could initially be costly, said Tom Filandro, a specialty retail analyst at Susquehanna Financial Group. "This is a business about trial. You've got to get it in their hands."

Only then, officials believe, will consumers begin to understand the brand's "refined casual" message and appreciate details meant to give Martin + Osa a reputation as a higher quality clothier fussing over nuances such as better fabrics and well-constructed seams.

If customers don't send it all back, officials will know they've solved some earlier issues with fit and style. "If your returns are low, you've got it," said Mr. Filandro.

Such lessons can also be learned building a brand the old-fashioned way, one store at a time. That allows a certain amount of control over the experiment but limits customer awareness. Even in the company's hometown of Pittsburgh, there are no Martin + Osa stores.

Perhaps more importantly, there are no stores in Manhattan where trend-setting fashion editors and writers congregate. The company's marketing strategy, now that the Web store is open, calls for hosting events in New York later this month to show off the brand's clothes to groups of fashion bloggers and magazine editors.

Driving traffic to the site will also involve direct mail and e-mail efforts, starting this week, as well as buying space on search engine pages to reach Web users searching terms such as "cashmere."

Shoppers who do visit the Martin + Osa site will find a place carefully crafted by teams at American Eagle's South Side headquarters to subtly educate them on the brand as well as to be distinctly different from the company's namesake retail concept. The models here are likely to wear wedding rings, after all.

Then there's the 'shop by outfit' feature. A dark-haired model is seen posing and moving around in several different looks assembled from Martin + Osa styles. In one pose, she has on a shirt dress, long sleeve T-shirt, a braided leather belt and espadrilles. Another shows her in a more complicated outfit layering a shirt, sweater, anorak over jeans with a strappy sandal and a silver tote bag.

Since the Web store went live to let designers work out bugs, the outfit tool has been a hit. "So far, this is one of the highest trafficked pages on the site," said Mr. Dupuis.

Suggested outfits have been assembled for both male and female shoppers, but women are also being offered a 'layer your own look' feature that allows them to drag clothes onto a virtual mannequin to see how separates work together.

Fine-tuning the Martin + Osa presentation has involved more than just Web page design. The distribution center in Kansas has worked out details of wrapping the clothes in tissue paper and packing them in special boxes. A photo studio at the South Side headquarters put together detail shots to give shoppers tight views of fabrics, pockets and other hard-to-see elements.

While the company has kept merchants for its different brands separate, a certain overlap in operational support functions is seen as an efficient use of the American Eagle administrative structure. That's important as the economy slows. Retailers of all sorts are looking to cut costs and justify expenditures, such as investments in new growth concepts.

As Pali Capital analyst Stacey Widlitz noted in a February report, the division is estimated to drag down American Eagle earnings by 15 to 17 cents a share this year. "If the concept is not revived in 2008, we expect a discontinuation of operations and a corresponding bump in margins."

Mr. Filandro doesn't see top American Eagle management letting the project linger too long if it doesn't become productive but he noted the company still believes there is an underserved customer who will respond if the concept is done right. The company has announced plans to open 13 more Martin + Osa stores this year.

The new Internet launch could also offer useful lessons for the next project on American Eagle's plate. This fall, the retailer plans an online launch for a new children's clothing chain to be called 77kids by american eagle. By fall 2009, the company expects to open brick-and-mortar locations.

"You can utilize online to figure out what product sells best," said Mr. Filandro. Internet results also help identify markets where traditional stores might find customers. In hindsight, he said, going online first might have been a good strategy for Martin + Osa, too.

Teresa F. Lindeman can be reached at tlindeman@post-gazette.com or at 412-263-2018.
First published on April 3, 2008 at 12:00 am
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