The combined data enables Lids to promote loyalty programs and electronic cash-transfer services for purchases, interchangeably, at its Web site (www.lids. com) and for stores in 46 states.



The company sells about 10 million hats annually, mostly baseball cap styles. About 75% of the 10,000 products it offers are exclusives featuring logos from major league and college sports teams and brands such as Adidas, Nike, Rebook, No Fear, Calvin Klein and Stussy.

"Our core customers like newness," says Nancy Babine-Kucinski, president and CEO at Lids. "In order to fulfill their newness quota we work closely with vendors."

The company depends on a data-driven strategy to overcome the demographic challenges of marketing online to a young customer base between 12 and 24 years old, the majority of whom are under 18, with low credit card penetration.

Lids generates traffic for stores and provides a method of payment online by offering private-label debit cards for gifts, family accounts and children's debit accounts, with electronically stored cash values. Customers can use their account offline by swiping cards at checkout registers, which also simplifies sales tracking at stores.

Another way Lids targets credit-less youth online is by encouraging youngsters to fill out e-mail wish lists for merchandise, which naturally are forwarded to designated adults as gift suggestions.

To further integrate its online and retail shopping, Lids installed computers in 100 retail stores, providing customers with limited Web access to Lids.com and other sites controlled by co-marketing partners.

Customer and inventory data at Lids is managed online. The company essentially runs its entire backend operation using merchandising and content management software acquired from New York-based InterWorld Corp.

Besides operating the Lids.com site, the software allows Lids to create contests, sweepstakes and other special events. The site even includes a downloadable measuring tape for customers to check their hat size.

Lids also uses the software to manage a frequent-shopper program called Headfirst, which rewards customers with discounts. One promotion, for example, offers customers who buy seven hats an eighth hat for free.

Recent special promotions to boost loyalty and retention included online basketball trivia games during the National College Athletic Association championship playoffs in March. Lids puts together these kind of special events each month because they spike sales about 40%, says Babine-Kucinski.

Web site content and e-mail promotions are personalized. Offers are geographically segmented so products featuring local sports teams pop up on computer screens.

"If you've purchased a product with a specific team logo, we send e-mail special offers segmented by purchasing history," says Babine-Kucinski.

Another simple but highly effective tactic is to prominently feature Lids' 10 most popular products on its home page, allowing customers to do online searches to indicate team and brand preferences, which generates data for clickstream analysis.

Since all records are accessible through one database, customers can pick up products at retail stores that they purchased online. This allows them to avoid shipping charges. They can also return products bought online to stores.

Customer records including the prices paid for online transactions pop up on terminals at store registers, which is important because Lids has greater pricing flexibility online than at the stores. Providing stores access to Web site data eliminates any possibility of a customer paying lower online prices and returning items at stores to receive refunds reflecting higher retail prices, says Charles Rich, director of strategy and planning at InterWorld.