Foot Locker’s 50th anniversary arrived this year at a time when the retailer is in transition. A year into it’s Lace Up plan, a revitalization effort spearheaded by Foot Locker’s CEO Mary Dillon, Foot Locker has just exited multiple international markets like South Korea and parts of northern Europe. It’s also handing over control of its operations in Greece and Romania to an external licensing company and moving its headquarters from its longtime location in New York City to St. Petersburg, Florida, as part of its ongoing cost-saving efforts.
The changes have already led to good results. Foot Locker’s second-quarter earnings, reported in late August, showed a 2.6% increase in comparable sales and better-than-expected profit margins that had investors feeling good about Foot Locker’s progress.
According to Kim Waldmann, Foot Locker’s chief customer officer, the next step of the Lace Up plan will be to focus on strengthening the relationship between Foot Locker and its many brand partners.
“We’re focused on long-term, multi-year plans with our brands,” Waldmann said. “We talk to our brand partners every single day. We share customer insights with them, we collaborate on our storytelling, and we work on exclusive products with them constantly.”
Most recently, Foot Locker launched a 50th anniversary collection with some of its biggest brands. It included new sneakers from Nike, Puma, Adidas and New Balance, all in a unified black-and-white colorway inspired by Foot Locker’s employee uniforms and featuring gold accents.
The fact that Foot Locker worked simultaneously with some of the biggest brands in sneakers to create one exclusive collection is a testament to the importance of those relationships important for which party?, Waldmann said. For a few years starting in 2017, major sneaker brands like Nike seemed poised to focus on their DTC channels. Nike exited nearly 50% of its retail partnerships and shifted focus to its own stores.
The effect on retailers like Foot Locker was immediate. But in the intervening years, Nike seems to have changed course, reestablishing a focus on wholesale after it saw its first digital sales decline ever, dropping by 10% in June.
“A huge focus in the last 18 months has been building our brand partnerships, and Nike is a great example,” Waldmann said. She pointed to Home Court, a new basketball-focused store concept opened last month in Manhattan in collaboration with Nike and Jordan Brand. “Our core customer is young and multicultural and that’s exactly who Nike wants to reach. So the brand partners see the value that we bring them,” she said.
On Foot Locker’s earnings call on August 28, Dillon said that continued collaboration with Nike would be a key strategy through the rest of the year.
“We’ll be launching our new mobile app and returning to growth with Nike in the fourth quarter, and we feel really good about the launch calendar,” Dillon said. “That, in conjunction with our inventories being well-controlled, gives us a lot of flexibility. [We’re being] less reliant on promotion and increasingly leading with the Lace Up plan and playing our offense.”
In addition to collaborations, Waldmann said Foot Locker has a few other strategies it’s pulling out to continue its momentum. Connected TV has emerged as a successful new marketing channel in the last six months, she said, and Foot Locker has an ambitious goal to reach 25% digital penetration among its consumers. Foot Locker data shows that customers who shop across online and offline channels shop three times more frequently and spend more on average than customers who only use one channel, she said.
Lastly, the upcoming relaunch of Foot Locker’s mobile app later this year, part of its ongoing revamp of its FLX rewards program, is “a huge priority,” according to Waldmann.
“You’ll see us activating that through unique partnerships with brands, member-only sales events and more throughout the end of the year,” she said.
