I had some trouble navigating your site. You guys should observe users navigating (look over their shoulders). Give them a few tasks, e.g. find a watch you like, find a shoe you like.
Your UI is simple, but not always intuitive.
Also, I kept thinking that if I scrolled down I would see more shoes on the shoes page (there isn't enough space between the bottom row of shoes and the border of the browser).
We do use the typical complement of in person user testing (headed out to do some today) and obsessing over Google Analytics data.
Right now our biggest issue is IE performance, but we also have some other UI elements that confuse people that we are trying to resolve (often think clicking on a product will add it to their favorites list).
I'd love to hear more about your navigation issues. If you are so inclined, please email me (rich@stylous.com) some more information about the issues you faced.
Your UI is simple, but not always intuitive.
Also, I kept thinking that if I scrolled down I would see more shoes on the shoes page (there isn't enough space between the bottom row of shoes and the border of the browser).