Foot Locker debuts 'store of the future' as it looks to win back Wall Street's confidence

A Foot Locker, Inc. store. 

Courtesy of: Foot Locker, Inc.

A new and improved Foot Locker debuted at a New Jersey mall on Wednesday as the sneaker retailer looks to reverse a sales slump, keep brand partners loyal and win back Wall Street’s confidence by revamping the footprint for its all-important stores. 

The new concept Foot Locker bills as its “store of the future” turns the retailer’s tired mall format on its head through a streamlined layout that’s more immersive than the typical format, which tends to be two walls of shoes with a middle section used for trying on sneakers. The new format also includes a “drop zone” that shows off new sneaker releases, a communal try-on area, elevated brand product displays and a “sneaker hub” for customized options like specialized lacing.

Even the Striper uniform, the iconic black and white striped outfit worn by Foot Locker’s store associates, is getting a refresh, Frank Bracken, Foot Locker’s chief commercial officer, told 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,” said 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.” 

A Foot Locker, Inc. store. 

Courtesy of: Foot Locker, Inc.

The new store, located at the Willowbrook Mall about 20 miles west of Manhattan in Wayne, is the first of five slated to open this year. It is a critical part of the retailer’s “Lace Up” strategy that CEO Mary Dillon unveiled at its investor day in March 2023. Similar concepts are set to open at Foot Locker’s 34th Street flagship store in New York City, in Paris ahead of the Summer Olympics, as well as in Melbourne and Delhi. 

As the retailer draws about 80% of its revenue from its more than 2,500 physical locations, Dillon has focused on revitalizing Foot Locker’s store footprint since she took over in September 2022. She’s working to build new, off-mall locations, close underperforming stores and refresh existing locations. 

Dillon and her team are betting that the new store designs will bring in customers who are shopping outside of malls and give sneakerheads a reason to come to its shops rather than go directly to a brand’s website or store.

A Foot Locker, Inc. store.

Courtesy of: Foot Locker, Inc.

In fiscal 2023, Foot Locker spent $242 million remodeling and building out new stores, among other capital expenditures. The company plans to spend another $200 million on real estate projects this year, according to company securities filings. 

In addition to the five “store of the future” shops Foot Locker plans to open this year, the retailer is using the concept to inspire 900 store redesigns in 2024 and 2025, with about 100 planned for each quarter, said 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 said.

Frank Bracken Executive Vice President and Chief Commercial Officer of Foot Locker, Inc.

Courtesy of: Foot Locker, Inc.

Foot Locker’s shifting real estate strategy comes as the retailer contends with an ongoing sales decline and a stock price that is down about 29% year-to-date as of Tuesday’s close, compared to the S&P 500’s gains of more than 6%.

Foot Locker has struggled to grow sales in part because it now competes against its own brand partners, which have spent the last few years building out their own websites and stores and reducing their reliance on wholesalers. 

Keeping brands like Nike and Adidas happy isn’t just critical to Foot Locker’s top line, it’s imperative to the company’s survival. That’s why elevated brand storytelling and enhanced product displays — two central requests from Foot Locker’s partners — are integral parts of the retailer’s new store concepts. 

A Foot Locker, Inc. store. 

Courtesy of: Foot Locker, Inc.

An overall view of a Foot Locker, Inc. store.

Courtesy of: Foot Locker, Inc.

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

Luckily for Foot Locker, its store redesign plans come at a time when sneaker brands like Nike are rethinking their sales strategy and realizing that wholesalers, especially ones with massive footprints, are necessary for their own growth. Earlier this month, Nike CEO John Donahoe acknowledged the company moved too far away from wholesale partners in its quest to drive direct sales and has since “corrected that” by reinvesting with its retail partners. 

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

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Source: https://www.cnbc.com/2024/04/24/inside-foot-lockers-plan-to-revitalize-retail-footprint.html

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