A Foot Locker, Inc. store.
Courtesy: Foot Locker, Inc.
A new and improved one Foot Locker debuted Wednesday at a New Jersey mall, as the sneaker retailer looks to reverse a sales slump, keep brand partners loyal and regain Wall Street's trust by revamping the footprint of its all-important stores.
The new concept Foot Locker bills as its “Store of the Future” turns the retailer's outdated mall format on its head with a streamlined layout that's more immersive than the typical format, which usually consists of two shoe walls with a center section used to try on sneakers. The new format also includes a “drop zone” showcasing new sneaker releases, a communal fitting area, elevated branded product displays and a “sneaker hub” for custom options like specialized lacing.
Even the Striper uniform, the iconic black-and-white striped outfit worn by Foot Locker store employees, is getting a refresh, Frank Bracken, Foot Locker's chief commercial officer, told CNBC in an interview.
“They will be familiar and recognizable; I would say they will be modernized in a very tasteful, elegant way,” Bracken said. “We've studied the details between our men's and women's tops and pants so that the fit and choice they have to put together a uniform can really personalize it to their body and to their style preference.”
A Foot Locker, Inc. store.
Courtesy: Foot Locker, Inc.
The new store, located in the Willowbrook Mall about 20 miles west of Manhattan in Wayne, is the first of five to open this year. It's a key part of the retailer's 'Lace Up' strategy that CEO Mary Dillon unveiled at investor day in March 2023. Similar concepts will open at Foot Locker's flagship store on 34th Street in New York City, in Paris ahead to the summer. Olympic Games, but also in Melbourne and Delhi.
Because the retailer generates approximately 80% of its revenue from its more than 2,500 physical locations, Dillon has focused on revitalizing Foot Locker's retail footprint since the acquisition in September 2022. She works to build new locations outside of shopping centers, close underperforming stores and renovate existing locations.
Dillon and her team are betting that the new store designs will attract customers who shop outside of the malls and give sneakerheads a reason to come into stores instead of going straight to a brand's website or store.
A Foot Locker, Inc. store.
Courtesy: Foot Locker, Inc.
In fiscal 2023, Foot Locker spent $242 million on remodeling and building new stores, among other capital expenditures. The company plans to spend another $200 million on real estate projects this year, company filings show.
In addition to the five “store of the future” stores that 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, Bracken said.
“All the standards around the storefront, the design, the storytelling, the merchandising standards, we're going to implement those quickly across 900 stores, and there's a real kind of symbiotic relationship between those innovations and then the 'store of the future.' ' so they will look very complementary,” he said.
Frank Bracken Executive Vice President and Chief Commercial Officer of Foot Locker, Inc.
Courtesy: Foot Locker, Inc.
Foot Locker's changing real estate strategy comes as the retailer faces an ongoing sales decline and a stock price that is down about 29% as of Tuesday's close, compared with the S&P 500's gains of more than 6%.
Foot Locker has struggled to grow sales, in part because it now competes with its own brand partners, which in recent years have built out their own websites and stores and reduced their reliance on wholesalers.
Brands like Nike And Adidas Happy is not only critical to Foot Locker's revenue, but also critical to the company's survival. That's why enhanced brand stories and improved product displays – two central requests from Foot Locker's partners – are an integral part of the retailer's new store concepts.
A Foot Locker, Inc. store.
Courtesy: Foot Locker, Inc.
An overview of a Foot Locker, Inc. store.
Courtesy: Foot Locker, Inc.
“As we think about this, this isn't just an isolated Foot Locker thinking about what's important, or what we want,” Bracken said. “[We’re] working very closely with our brand partners to take digital storytelling and then product merchandising and storytelling to another level.”
Fortunately for Foot Locker, the store redesign plans come at a time when sneaker brands like Nike are rethinking their sales strategies and realizing that wholesalers, especially those with huge footprints, are necessary for their own growth. Earlier this month, Nike CEO John Donahoe acknowledged that the company has gone too far away from wholesale partners in its quest for direct sales and has since “corrected” that by reinvesting with its retail partners.
That “shift in the tides” has not gone unnoticed, Bracken said.
“We have received support from our brand partners in a way that is refreshing and may not have been as clear and transparent as in recent years,” he said. “We feel we are very well positioned as a critical, strategic retail partner going forward and now it's up to us. [2024] is certainly a turning point.”