Foot Locker specializes in vendor stores

Discussion
May 20, 2016
Tom Ryan

Many vendors are opening their own stores. Retailers have expertise operating stores. Why aren’t retailers opening vendor-centric stores? Foot Locker Inc. is a rare retailer doing just that under its Foot Locker, Champ Sports, Footaction and Kids Foot Locker banners.

Last week, Champs Sports partnered with Under Armour to open its second Armoury location at Galleria Dallas in Dallas, TX. The concept stocks the latest Under Armour footwear and apparel releases, accentuated by digital screens displaying a “steady rotation” of graphics featuring the brand’s team of elite athletes.

While Under Armour’s other full-price stores target a broad range of customers, David Heath, SVP, U.S. wholesale at Under Armour, said in a statement that Armoury “is designed to motivate and inspire young athletes.”

The Armoury is part of Foot Locker’s expanding vendor partnership program, which also includes in-store shops such as “The a Standard” with Adidas and Puma Lab.

Not surprisingly, the biggest store partner is Nike, which accounted for 72 percent of all merchandise the retailer purchased in 2015.

At the close of the year, Foot Locker operated 199 House of Hoops, a shop-in-shop concept with numerous stand-alone locations that focuses on basketball-inspired merchandise. Also in collaboration with Nike, Footaction operates the Flight 23 concept that sells only Jordan-brand shoes and apparel, Champs Sports runs Nike Yardline, which focuses on American football, and Kids Foot Locker operates Nike Fly Zone.

At Nike’s investor meeting last year, Elliott Hill, president of Nike’s geographies and sales team, said Nike’s greater experience operating its own stores is helping it come up with targeted in-store and stand-alone shops with its multi-brand retail partners.

Said Mr. Hill, “This discipline of segmenting and differentiating multi-brand retail partners enables us to drive mutually profitable retail and allows us to confidently say, we will continue to expand the multi-brand marketplace at a mid to high single digit rate over the next five years.”

Photo: Champs Sports/Under Armour

DISCUSSION QUESTIONS: Does it make sense for other multi-brand retailers to open up stores dedicated to their top labels? Why does it seem to be working for Foot Locker?

Braintrust
"I think this is a clever collaboration between the retailer and a key vendor or two."
"What I see is temporary success that is fraught with risk for Foot Locker."
"Find a unique space you can own. Hint: there’s not many left."

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6 Comments on "Foot Locker specializes in vendor stores"

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Charles Whiteman
Guest

I think this is a clever collaboration between the retailer and a key vendor or two. It’s similar to the big box retail “store within a store” concept.

I doubt if this will catch on and extend to multi-brand retailers outside the athletic shoe business because:

1. In athletic shoes, just a few large brands account for a huge chunk of the retailer’s business;

2. The athletic shoe brands are willing to make this worth the retailer’s while because they consider “retail presence” a major weapon in competing against their rivals (and have enormous marketing budgets to wage this war).

Ian Percy
BrainTrust
And off over the cliff we lemmings go again! Look, I don’t know if dedicating a whole store to a particular vendor or having a vendor store within a store is a good idea or not. And frankly, hasn’t the latter option been in place since time began? Anyway, what irks me is that a Champs Sports or a Foot Locker comes up with a creative and successful idea and now we’re asking why all retailers don’t follow suit. For goodness sakes, come up with you own creative idea! Someone does something different and everyone thinks about jumping on the bandwagon. Too often these movements end up being the lowest common denominator, a sea of sameness and mediocrity. If everyone does it, it dies. Check out my friend Stephen Shapiro’s new book “Best Practices are Stupid.” What I don’t get is this. You can buy the same major brands almost everywhere. Champs Sports doesn’t have a monopoly on Under Armour do they? Where’s the wisdom in a bunch of other retailers also opening a store… Read more »
Rick Moss
Staff

Ian, I agree that the athletic shoe realm is already crowded with these type of efforts. But could you imagine a grocer creating a store-within-a-store for, say, Gillette shaving products? Or a fashion retailer joining forces with Ray Ban to open a sunglasses store? Personally, I think this bandwagon still has plenty of room for riders.

Ian Percy
BrainTrust

Maybe, but we need more exciting examples. I think there is a lot more opportunity IF any “specialty” store (external or internal) is focused around a purpose, a passionate customer category or a circumstance — something that has soul and energy. Gillette shaving products, which are already all in one place, don’t qualify. That’s why combining athletic stuff with seniors is actually a brilliant idea (IMHO). Active seniors are becoming a huge and very hot market sector that no one currently owns. Speaking of grocery stores, totally chemical-free food is another that is about to catch on and will make the “organic” category look anemic.

You are right, there is plenty of room for the truly creative idea … but not for “me too.” Thanks for the response Rick!

Kim Garretson
BrainTrust

I like the concept, but agree that differentiation from other retailers with the same brands might be a problem. I also see a problem with this statement, “The concept stocks the latest Under Armour footwear and apparel releases.” To me that screams: Frequent out-of-stocks on specific sizes and colors by location. But what if a retailer really took a true one-to-one personalization approach and simply asked shoppers, in-store and online, to spend a minute or two profiling their brand and category interests, and sizes and colors, with the promise that these shoppers would receive alerts on these specific items when they show up? They could even put content in the alerts about how much stock is available to stop disappointing shoppers who respond to marketing only to find the goods gone.

Bill Hanifin
BrainTrust
What I see is temporary success that is fraught with risk for Foot Locker. Just like a cobrand partnership in credit cards, FootLocker is playing the role of bank card issuer, while Under Armour is the brand partner. In payment cards, consumers tend to align with the brand partner rather than the card issuer. In retail I suspect the same will be true. The recent bankruptcy at Sports Authority should be considered by other retailers. My impression as a consumer is that SA was offering an abundance of Under Armour items. Was their fate tied in any way to this narrowing of choice for the consumer? Brighter minds may know the answer to this question. By pursuing this strategy, Foot Locker enjoys success today, but that success is tied to the popularity of the Under Armour brand. Should it fade, the results of Foot Locker will also fade. If a retailer must pursue a strategy of this sort, then at least feature a portfolio of brands to attract a wider range of customers and offer… Read more »
wpDiscuz
Braintrust
"I think this is a clever collaboration between the retailer and a key vendor or two."
"What I see is temporary success that is fraught with risk for Foot Locker."
"Find a unique space you can own. Hint: there’s not many left."

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