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Abercrombie and Fitch held their Q2 2010 results conference call today. Although they announced an increase in sales and comps, they also touched on closing 110 stores over the next year, higher inventory levels and lower gross margins. Not a good quarter for the teen retailer.

However, I did like this quick bite from the question and answer portion of the call.

Christine Chen – Needham & Company

I’m wondering, your e-Com business is doing so well. Have you been able to use that to test product, and is that something that you can react quickly enough of certain things that you have on the internet only, like the Epic product you’re selling, and maybe getting it into different locations?

Mike Jeffries

The direct-to-consumer business, we have been experimenting with that; we have been testing categories of direct-to-consumer. And the direct-to-consumer results are proving to be pretty predictive of what happens in store. We’re fascinated with the potential of direct-to-consumer; are in fact, expanding our assortments. We have a major goal for that business and what you’re describing is very definitely a part of where we’re taking it.

Leveraging the e-commerce division to test new ideas, categories, and merchandise assortments is a fantastic way to drive in-store sales with less risk and overhead. A mass market retailer can roll out pilot programs to brick and mortar locations around the country, but not in the time (or without the cost) that they can do it online. With a targeted buying, marketing, and social media strategy, a retailer can measure the success of new categories faster than ever. Measure sales and social media feedback and learn what your customers like, or don’t like, about new categories.

I imagine that Abercrombie, with a rough few quarters behind them, is going to lean heavily on the e-comm business to drive growth and look for more predictions on in-store over the next 18 months.

The other day I talked about the use of educational content in e-mails versus the use of strict promotion/sale content. Customers may go to your site to find a specific product, but they are more often going to your site to fill a need or find a solution to a problem. Educational content is needed, especially on the web, to guide customers to the products that they seek based on the problems they are trying to solve.

With this in mind, I’m impressed by the simple homepage feature that Lands’ End has on their site. The concept is simple: customers are looking for outerwear and the site is guiding them to the type of outerwear they need based on the climate that they live in. It’s a real simple concept that works well, from the user perspective:

I think apparel retailers often over look the types of problems that they are actually solving with their clothing. Focusing on fashion, trends and styles is very important but don’t overlook the utility of what you sell.