Foot Locker

Online or In-store, Foot Locker Is Charging After the Youth Consumer.
Bright Lights, Big City: Foot Locker’s flagship in New York City gives its major brand partners a showcase.

HEADQUARTERS
New York, NY

DIGITAL FOOTPRINT
Our quick scan of Foot Locker’s digital presence: Website, app and social media channels all speak to the sneaker-obsessed consumer in their own language. Heavy emphasis on sneaker drops, launch dates and in-store product availability. A release locator lets customers know which stores will have specific styles. The FL app features in-app shopping. Customers are also able to track an order reserve orders in advance.

SOCIAL FOLLOWING
Facebook: 6.2M
Instagram: 9.7M
Twitter: 1.5M

IN-STORE REPORT
We visited the Foot Locker NYC flagship in Herald Square.
Top takeaways: Store includes a House of Hoops, a Puma Lab, Foundation by Adidas and SIX:02 women’s concept shop. Beautiful store, well-staffed. Video wall showcasing Nike shoes and NBA star Kyrie Irving is at the entry. Champion apparel is prominently displayed. Another classic brand, Ellesse, is featured as we walk in. Pop culture items are at the front. We see garments featuring the Golden Girls characters. Center of store is apparel. Footwear walls ring the store. Nike is most prominent in footwear. Adidas, Puma and Vans are well represented. This is a showcase store and the merchandising, product presentation and store ambiance (music and lighting) reflect this. There are some products with sale/discount tags sprinkled throughout, but discounting is not heavy.

The Rundown: Foot Locker operates 3,191 stores with 7.6 million square feet of selling space in 27 countries and a thriving online business. In 2018, the firm rang up $7.94 billion in sales (a 2 percent rise over the year prior, and the company’s highest-ever annual sales) across the Foot Locker, Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction, Runners Point and Sidestep banners, as well as eastbay.com.

Background: After taking a hit in 2017 when the retailer’s failure to anticipate consumer shifts in fashion led to comp sales falling and increased promotional activity (which Johnson described as getting “punched pretty hard”), it set out to reorient itself closer to what its core youth customer wanted.

“It was a great wake-up call. It said we have to make sure we’re relevant with our consumers, that we’ve got great connectivity with our consumers and we build engaging retail spaces for them, whether those spaces are physical or digital. And we have to be more than just a retailer: Retail of tomorrow doesn’t look like retail of yesterday.”

Major 2018 Developments: A major component of Foot Locker’s strategy has been a top-to-bottom overhaul of the way it thinks about digital. Starting in late 2017 and formalized in 2018, the firm integrated its e-commerce businesses with the banners they served under the same leadership, and it migrated its businesses onto a newer, faster platform. The retailer also announced that it will shutter all 30 of its SIX:02 women’s concept shops. But Johnson said the learnings from the effort would carry forward, with dedicated space in a larger number of doors featuring the merchandising and mix it had developed at SIX:02.

Online and In-Store: According to Johnson, a secret to being the go-to destination for the sneaker obsessed at brick-and-mortar and online is understanding that excelling at one channel means excelling at both. “Our core consumer starts their journey and engages with their digital device all of the time,” he said. “Their window into our store is however we represent ourselves digitally.”

Foot Locker has been drawing the online and in-store worlds tighter together, making sure shoppers can get the goods anyway they like: shipped to them, browsed in store, bought online and picked up in store (this year, the retailer launched myLocker, a secure locker shoppers can use to pick up online buys, exclusively at its flagship 14th Street location in NYC). To the consumer, Johnson said, it’s all one experience — and that’s how the company is looking at it, too.

“If you happen to click the ‘buy now’ button when you’re looking at your phone and you choose to have that delivered to a store and pick it up in one of the lockers that we’ve got in the store where the inventory’s coming out of the store but the click happened online, so is that a digital sale or is that a physical sale?” he asked. “For me, it’s a Foot Locker sale.”

Investments & Opportunities: Foot Locker’s network of high-profile “Power Stores,” now 10 strong worldwide including Detroit and Philadelphia, will grow by at least 20 this year and more than 50 in 2020.

At its March Investors Day, Foot Locker execs discussed “Greenhouse,” an innovation and incubation operation the company will utilize “to fuel the future of our industry and brands.”

Foot Locker ended 2018 and kicked off 2019 with a slew of investments that give it insight into some of the markets outside its core. Two of them, a $3 million minority investment in January in fledgling kids’ footwear and apparel brand Super Heroic and a $12.5 million minority investment in kids’ subscription apparel company Rockets of Awesome, give the firm some additional insight into the kids market, which Johnson flagged as a critical one for the company. In early February, Foot Locker took a $100 million minority stake in GOAT Group, the owner of the GOAT online resale site and app and Flight Club shop, giving them exposure into the disruptive resale market.

Fundamental Focus: Of course, some of the retailer’s success comes from mastery of old-fashioned retailing basics. Johnson and EVP and CFO Lauren Peters celebrated on their year-end call the achievement of a merchandising milestone the company has been chasing: getting to (and exceeding) three turns on inventory. “Inventory is our biggest asset,” Johnson said. “Making our inventory work harder is just part of the productivity gains we needed to make.”

Loyalty Matters: Johnson said Foot Locker will be relaunching its customer loyalty program to be more experience-based rewards, which could include earlier access to launch shoes, tickets to concerts and other intangibles. The idea, he said, is to cultivate even deeper connections between the retailer, the consumers and what they love to do.