Inside Foot Locker’s plan to revitalize retail footprint

A brand new and improved Foot Locker debuted at a New Jersey mall on Wednesday because the sneaker retailer seems to reverse a gross sales hunch, hold model companions loyal and win back Wall Street’s confidence by revamping the footprint for its all-important shops. 

The brand new idea Foot Locker payments as its “store of the future” turns the retailer’s drained mall format on its head by means of a streamlined format that is extra immersive than the everyday format, which tends to be two partitions of sneakers with a center part used for making an attempt on sneakers. The brand new format additionally features a “drop zone” that reveals off new sneaker releases, a communal try-on space, elevated model product shows and a “sneaker hub” for personalized choices like specialised lacing.

Even the Striper uniform, the enduring black and white striped outfit worn by Foot Locker’s retailer associates, is getting a refresh, Frank Bracken, Foot Locker’s chief industrial officer, instructed CNBC in an interview. 

“They’ll be familiar and recognizable; I’d say they’ll be modernized in a really tasteful sort of elegant way,” mentioned Bracken. “We sweated the details between our men’s and our women’s tops and bottoms so that the fit and the choice that they have to put together a uniform could really personalize it to their body and for their style preference.” 

The brand new retailer, situated on the Willowbrook Mall about 20 miles west of Manhattan in Wayne, is the primary of 5 slated to open this 12 months. It’s a vital a part of the retailer’s “Lace Up” technique that CEO Mary Dillon unveiled at its investor day in March 2023. Comparable ideas are set to open at Foot Locker’s thirty fourth Road flagship retailer in New York Metropolis, in Paris forward of the Summer time Olympics, in addition to in Melbourne and Delhi. 

Because the retailer attracts about 80% of its income from its greater than 2,500 bodily areas, Dillon has centered on revitalizing Foot Locker’s retailer footprint since she took over in September 2022. She’s working to construct new, off-mall areas, shut underperforming shops and refresh present areas. 

Dillon and her staff are betting that the brand new retailer designs will herald prospects who’re purchasing exterior of malls and provides sneakerheads a motive to return to its retailers reasonably than go on to a model’s web site or retailer.

In fiscal 2023, Foot Locker spent $242 million reworking and constructing out new shops, amongst different capital expenditures. The corporate plans to spend one other $200 million on actual property tasks this 12 months, in keeping with firm securities filings. 

Along with the 5 “store of the future” retailers Foot Locker plans to open this 12 months, the retailer is utilizing the idea to encourage 900 retailer redesigns in 2024 and 2025, with about 100 deliberate for every quarter, mentioned Bracken. 

“All the standards around the storefront, the fixturing, the storytelling, the merchandising standards, we’re going to rapidly deploy that across 900 stores, and there’s a real sort of symbiotic relationship between those refreshes and then the ‘store of the future,’ so they’ll look very complementary,” he mentioned.

Foot Locker’s shifting actual property technique comes because the retailer contends with an ongoing gross sales decline and a inventory worth that’s down about 29% year-to-date as of Tuesday’s shut, in comparison with the S&P 500’s beneficial properties of greater than 6%.

Foot Locker has struggled to grow sales partially as a result of it now competes in opposition to its personal model companions, which have spent the previous couple of years constructing out their very own web sites and shops and lowering their reliance on wholesalers. 

Retaining manufacturers like Nike and Adidas joyful is not simply vital to Foot Locker’s high line, it is crucial to the corporate’s survival. That is why elevated model storytelling and enhanced product shows — two central requests from Foot Locker’s companions — are integral elements of the retailer’s new retailer ideas. 

“When we think about this, this isn’t just Foot Locker in isolation thinking what’s important, or what do we want,” mentioned Bracken. “[We’re] partnering very closely with our brand partners to bring digital storytelling and then product merchandising and storytelling to another level.”

Fortunately for Foot Locker, its retailer redesign plans come at a time when sneaker manufacturers like Nike are rethinking their gross sales technique and realizing that wholesalers, particularly ones with huge footprints, are essential for their very own progress. Earlier this month, Nike CEO John Donahoe acknowledged the corporate moved too far away from wholesale companions in its quest to drive direct gross sales and has since “corrected that” by reinvesting with its retail companions. 

That “shift in tides” hasn’t gone unnoticed, mentioned Bracken. 

“We’ve got the support of our brand partners in a way that’s refreshing and maybe hasn’t been as clear and transparent as the last couple of years,” he mentioned. “We feel like we’re very well positioned as a critical, strategic retail partner in the future and now it’s on us. [2024] is definitely an inflection point.”