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Marshal Cohen, a retail analyst for the NPD Group, says this messaging strategy is Spanx's biggest advantage over its competitors. It may have reinvented shapewear--turning the embarrassing experience of wearing a girdle into something that celebrities happily discuss on the red carpet--but rivals were quick to catch on. Spanx is still the category leader, but as the shapewear industry has grown--tripling over the past decade to more than $750 million--the company has lost some market share to competitors that already have a strong in-store presence, like Maidenform, American Eagle and Victoria's Secret.
So Spanx is doing more of what it does best--and building stores to showcase it. "The core of Spanx has always been about shapewear, but with a bit of whimsy," says Catherine Moellering, executive vice president of Tobe, a fashion and retail consulting firm. "If Blakely can continue to expand with products that are seen as secret helpers, the consumer will move with her."
It's a strategy that other retailers have also adopted. The high-fashion online retailer Net-a-Porter set up pop-up "window shops" in Paris, London, New York City, Berlin and Sydney. E-commerce giants like Amazon, eBay and Google have been tinkering with their own storefront strategies, erecting pop-up shops that showcase products customers prefer to try out and feel before they buy, such as cosmetics and flat-screen TVs. The trendy eyeglass retailer Warby Parker, meanwhile, set up showrooms at retailers in several cities because there is no way to replace the experience of trying on frames in person and will open a brick-and-mortar flagship store as well. Footwear companies Ugg and Croc have also benefited from opening stand-alone stores that separate their products from those of competitors.
As a way for retailers to establish and promote a unique brand identity, flagship stores are nothing new: Nike opened Niketown in 1990, and Apple opened its first store in 2001. But for a company like Spanx, which has traditionally driven most of its sales through department stores, there is a new urgency. In-store retail sales in the U.S. grew only 5% last year, far behind e-commerce, at 13%. Boutique retailers, though, are far outperforming department stores. The NPD Group reported that in-store sales of intimate apparel grew 2.2% from June 2011 to June 2012 in specialty stores, compared with a 1.1% drop at department stores and a 5.3% drop at national chains. Rather than relying on department-store clerks to sell Spanx and other brands, the company is taking control of the shopping experience. "The big benefit is that Spanx can offer the full range of products as opposed to being subject to retailers cherry-picking," says Cohen. "It's also helpful to have dedicated staff translate what the product can do. What makes Spanx more expensive is what makes Spanx better. When you rely on someone else to convey that message, it's a game of telephone. By the time it reaches the consumer, it's been diluted."