As it seeks to stay at the center of youth culture, Foot Locker wants to be known as more than just a sneaker shop. (Photo by Eduardo MunozAlvarez/VIEWpress/Corbis via Getty Images)
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Foot Locker, the largest U.S. specialty athletic-shoe retailer, no longer wants you to think of it just as a sneaker shop. Instead, try identifying it as a place for “youth culture empowerment.”
The changing consumer behaviors that have got brands of all kinds scrambling to respond to have also sent the New York-based retailer on a journey to transform itself – at a pace that it’s never seen since its first store opened in 1974.
One example, since January, Foot Locker has invested in four startups, including kicks resale business Goat; sneaker design academy Pensole; online children’s clothing subscription box service Rockets of Awesomeness; and Super Heroic kids’ shoe and apparel brand. Last year, Foot Locker, with over 3,200 stores globally under banners that also include Champs Sports and Footaction besides its namesake chain, also took a minority stake in women’s luxury activewear brand Carbon38.
Rockets of Awesomeness and Super Heroic will begin to be featured at more Kids Foot Locker as the brands’ first major brick-and-mortar play.
Andria Cheng
“We’ve changed a lot,” Richard Johnson, Foot Locker president and CEO, said in an interview. “The pace of change isn’t going to slow down. The consumer moves fast. We’ve got to be agile to adapt to it….All these things we are identifying to invest are capabilities we want to add to the ecosystem that serves youth culture.”
Foot Locker has also made its first foray in Asia, where it described as having “a vibrant sneaker culture.” Last year it opened three company- owned stores, in Hong Kong, Singapore and Malaysia each, and partnered with Alibaba’s Tmall to reach China consumers.
In the company’s home market in North America, Foot Locker this year opened the region’s first “power stores” in Detroit and Philadelphia after first introducing them in markets including Liverpool and London. These stores feature not only local touches and locally-tailored exclusive products. They also aim to deliver on the retail buzzword of the day: experience. Meant to be “a hub for local sneaker culture, art, music and sports,” in the company’s words, they have space to host traffic-driving community events including pop-up nail salons and Xbox gaming sessions.
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Foot Locker is also rolling out across its fleet a new FLX loyalty reward program, the company said at its investor day in New York on Thursday. Unlike the traditional program that’s mostly about discounts and promotions, the new plan comes with perks including early access to shoe releases and free online shipping, CFO Lauren Peters said.
Shoes Foot Locker co-produced with Adidas through Adidas’ Speedfactory.
Andria Cheng
Foot Locker said it’s also starting a “Greenhouse” incubator program to come up with new partnerships and brands. To respond to local and customized demand faster, it inked a deal with Adidas in January to produce sneakers at Adidas’ “Speedfactory” in both the U.S. and Germany that the companies said can make shoes up to 36 times faster — think in weeks or at times days from product design to landing on store shelves– than traditional industry production.
In a familiar industry pattern, Foot Locker said it’s also using RFID to track in-store inventory and is studying data to better come up with personalized products and marketing that consumers want and demand instead of its traditional more top-down position. Some of the company’s stores also have lockers for online order pickups. To be where customers are at such events as NBA All-Star Game, Foot Locker has also dispatched more mobile trucks that serve as pop-up shops.
Foot Locker lockers.
Andria Cheng
Johnson, a 20-plus-year Foot Locker veteran, said these changes were imperative after the company “got punched pretty hard in 2017,” when comparable sales declined following 28 straight quarters of positive increases. Declining traffic to malls, where majority of its stores are, also didn’t help.
“We suddenly missed the shift with the consumer,” he told me. “We didn’t realize how quickly the consumer was moving. That was the epiphany moment that we have to go faster….Suddenly the customer told us, ‘Hey, we are in charge. We don’t’ want to just transact business with you.’ For us to go from the leading global retailer of athletic inspired shoes and apparel to having a purpose of empowering and inspiring youth culture is a dramatic difference.”
The Walking Dead themed merchandise at Foot Locker.
Andria Cheng
Taking those cues from its customers has helped to return Foot Locker’s comparable sales to positive territory in Q2 of 2018 and this month, it reported Q4 same-store sales jumped 9.7%. Foot Locker forecast annual sales to rise in the mid-single digit in each of the next five years. After net store closings this year, the retailer expects to open more stores than closing each year. The percentage of its stores inside malls will decline.
And being at the center of youth culture also involves getting on board with the pop culture. At Foot Locker’s Times Square flagship on Thursday, its new Pop (stands for pop culture) by Foot Locker section features things you wouldn’t have normally expected to find at a Foot Locker in the past. The marquee display in the section? A mostly exclusive collection of AMC’s “The Walking Dead”-themed sneakers, baseball bats and other merchandise that Foot Locker jointly created with partners including Puma and AMC.
“We have to really think about how we honestly put the customer at the center of everything we do and say ‘Hey, we get it,” Johnson said.
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