Foot Locker Transforming Stores To Keep Momentum Going

By Christine Kern, contributing writer

Retailer aims to log $10 Billion in sales by 2020 through new initiatives.

Sports apparel retailer Foot Locker Inc. has set a goal of $10 billion sales by 2020, up from $7.5 billion in 2014, and sales-per-square-foot of $600, up from $490 last year. It plans to accomplish this goal by transforming its stores and offerings, according to The Street. 

The retailer is also increasing its display and offerings of higher-margin apparel and expanding its reach abroad. Foot Locker is continuing to phase out its underperforming Lady Foot Locker brand and replacing it with its successful SIX:02 brand for women, which is designed to compete with Lululemon and Gap Inc.’s Athleta. 

According to a press release, Foot Locker initially articulated its strategic vision five years ago, when it set a goal of becoming the leading global retailer of athletically inspired shoes and apparel.  To achieve this vision, the Company also established a set of strategic priorities and ambitious long-range financial objectives to measure its progress.  The Company updated those priorities and elevated its long-term financial goals in 2012. 

The retailer is responding to the increased demand for sports apparel booms for both athletic activities and weekend leisure, trying to create the right mix of merchandise and store concepts to cash in. Its basic approach has worked well enough, at least at its flagship stores, especially when it comes to sales of booming Nike products.

But as consumers shift the way they use sports apparel and gear, Foot Locker needs to be responsive to those changing needs.  Some of the biggest changes have come from women in particular, who are not only participating in fitness and athletic pursuits in greater-than-ever numbers, but are also wearing well designed fitness apparel in their casual work and leisure moments. With so many sports and apparel retailers alike getting in the game, the company needs to bring women’s sports apparel into the forefront, and abandon its afterthought Lady Foot Locker approach.

"You will see performance zones, more emphasis on ladies products," Foot Locker CEO Dick Johnson told The Street at its Mar. 16 New York City investor day. "We have to think like an apparel company,” noting that the rise in fast-fashion retailing -- spearheaded by companies such as H&M, Forever 21 and Zara -- requires that Foot Locker step up its game.

Apparel represented 21 percent of Foot Locker's total sales in 2014 compared to 28 percent back in 2004. Johnson said last year likely was the "bottom" in its apparel performance as its latest strategies kick into gear.

"We have some things in discussion with Under Armour regarding vendor space," Johnson stated, indicating that there is a likelihood of Under Armour shops opening within Foot Locker locations in the near future, similar to those the shoe and apparel maker has been opening inside of Dick's Sporting Goods stores over the past few years. Under Armour shops would join a growing number of those from Adidas and Puma inside of Foot Locker stores. 

In addition to the store transformations, Foot Locker also is planning a social media upgrade.  "We are focusing on Snapchat," said Foot Locker President and CEO of Footlocker.com/Eastbay Dowe Tillema. Foot Locker has 150 million total followers across Instagram, Facebook, Twitter and YouTube, and has leveraged these platforms in the past to promote user photos and videos of their products.