Multiple Shoe Brands & Retail Brands Appeal to Different Customer Segments
Athletic shoe retailer Foot Locker has grown with a portfolio brand strategy template that features two approaches:
- Offering a portfolio of vendor brands, e.g., Nike, Adidas, etc., and
- Providing several different retail brand store experiences e.g., Kids Foot Locker, Champ Sports, etc.
Foot Locker competes in a growing market. The U.S. athletic footwear market was estimated at $30.2 billion in 2021, with the world market estimated at $133 billion. Another source estimated the global athletic footwear market at $77 billion in 2022, growing at 4.6%.
The Foot Locker Brand
According to Merriam-Webster, a footlocker is:
“a small trunk designed to be placed at the foot of the bed.”
The definition and use is that the shoes and apparel in a footlocker are among the wearer’s favorites. These items make their “short list” to keep close by. In line with this definition, former Foot Locker CEO Dick Johnson said,
“We allow (youth) to use sneaker, apparel and hoodies for their own self-expression.”
Moreover, Foot Locker’s brand purpose is:
“To inspire and empower youth culture through our family of brands by fueling a shared passion for self-expression and creating unrivaled experiences at the heart of the sport and sneaker communities.”
Portfolio Brand Strategy Template Approach #1:
Foot Locker Expands Relationships with Vendor Brands Beyond Nike
Like other retailers, Foot Locker has a portfolio of vendors, and is following an intentional vendor brand portfolio strategy. A strong brand portfolio delivers a curated mix of well-established brand partners, new brands and private label offerings.
The Nike brand is the most important brand strategic partner for Foot Locker. Foot Locker and Nike’s historical relationship dates back to the origins of the brands in the 1970’s. Nike was founded in 1972, while Foot Locker’s first outlet opened in 1975.
The two brands helped fuel each other’s growth for decades.
In 2002, Foot Locker had sales of $4.5 billion, approximately 50% of which were from Nike. Conversely, Foot Locker was approximately 10 percent of Nike’s 2002 sales of $9.9 billion. In 2003, the brands had a publicized rift when then Foot Locker CEO Matt Serra reduced Nike brand orders.
Over the years, both brands have continued to grow. In 2021, full-year Foot Locker sales were $9 billion. In 3rd quarter 2022, Foot Locker sales came in at $2.173 billion, down 0.7% vs. 3rd quarter 2021. Approximately 16% of sales were online, with room for growth. By comparison, Nike revenues came in at $49.2 billion for the 12 months ending November 30, 2022, up 5% from 2021.
While brand diversification is important for business health, Foot Locker stock was hit in February 2022 when the Nike mix reduction was publicly shared.
Nike accounted for 75% of Foot Locker’s sale in 2020, 65% in the fourth quarter of 2021, and an estimated 55% in the fourth quarter of 2022.
Says Mary Dillon, CEO of Foot Locker:
“Our relationship with Nike is very important. It’s strong.”
In addition to Nike, other prominent brands in Foot Locker’s vendor portfolio include:
- New Balance (grew 70% in 3rd quarter 2022)
- Crocs (grew 25% in 3rd quarter 2022)
- Converse (grew 25% in 3rd quarter 2022)
- UGG (grew 50% in 3rd quarter 2022)
- adidas (grew mid-single digits in 3rd quarter 2022)
- PUMA (grew “high single digits” in 3rd quarter 2022)
- Others in the top 20 vendor list for Foot Locker (grew mid-single digits in 3rd quarter 2022)
Dillon explains how having multiple brands at Foot Locker fits with consumers’ desires to have several brand favorites on the short list of items in their personal Foot Locker.
“As a category grows and customers realize they can build a sneaker wardrobe, their appetite for variety and desire for choice is growing and we know that 80 percent of our best customers already buy three or more brands,” said Dillon. “We are under-penetrated in virtually all of our brands outside of our top vendor. We continue to see opportunities to bring the customer a broader and richer set of product offerings across brands and categories. And we believe our third quarter results are further evidence that our efforts to broaden our portfolio are driving growth across multiple brands and helping us expand our customer base.”
Foot Locker has scores of brands on their website to meet the consumer’s needs. Of these, 29 brands had over 200 items listed as of this writing as shown on the chart below. Nike topped the list at 10,362. Additional brands with over 1,000 items include:
Brands that are featured as logos on the site’s brand tab include Nike, Jordan, adidas, New Balance, On, crocs, Timberland, UGG, VANS, PUMA and Reebok. Six brands including adidas, Nike, Jordan, New balance, UGG and HOKA are found on the home page. It’s a safe bet that these featured brand’s prominent placement means they are part of Footlocker’s vendor brand portfolio strategy.
Foot Locker will continue to follow the vendor brand portfolio strategy. Ms. Dillon said:
“Our stripers in our stores are real curators, experts in the category… We’ve got merchants all around the world who are experts in trend, function, form and fitness, all of those things…If you are into the category you will prioritize it, we’ve seen our customers demonstrate extreme resilience….what I love at Foot Locker.. we offer a wide variety of choices for everybody…This industry is driven by innovation, not just fashion and trend but also form and function. And that matters, not just for the serious athlete but for the everyday athlete.”
Portfolio Brand Strategy Template Approach #2:
Foot Locker’s Several Retail Brands
Foot Locker has a portfolio of retail brands within its corporate portfolio. In early 2022, the total portfolio totaled 2,858 stores. In addition, there are websites for these retailers. Foot Locker’s online website was recently reported to contribute 16% of Foot Locker sales.
The retailer’s three largest brands by store count are:
- Foot Locker: 1,647 locations as of 1/29/22, down 39 from 2021. This is the largest brand, and the company’s namesake. Approximately half of Foot Locker stores were in the U.S. (802), another 38% are in Europe, 6% in Canada, with the balance in Pacific and Asia.
- Champs Sports (acquired in 1987): 525 locations as of 1/29/22, down 14 from 2021.
- Kids Foot Locker (started in 1987): 410 locations as of 1/29/22, down 12 from 2021.
In addition, Footlocker has a number of other retail brands, some of which are newly acquired (WSS, atmos), others are being discontinued (Lady Foot Locker, Footaction), and the remainder serve specific market segments.
- Sidestep (acquired in 2013): As of 1/29/22, Sidestep had 86 stores in Germany, Netherlands, Belgium, Luxemburg and Switzerland.
- WSS (acquired in 2021): As of 1/29/22, WSS had 98 stores in California, Texas, Arizona and Nevada.
- atmos (acquired in 2021): As of 1/29/22, atmos had 34 stores in Japan and 3 stores in the US.
- Eastbay (acquired in 1997): No stores listed in 2021 annual report. This is a “sporting goods direct-to-customer business” in the US focused on the high school athletics market. It was merged with Champs Sports in late 2021.
- Foot Locker has discontinued Lady Foot Locker (14 stores as of 1/29/22) and Footaction (41 stores as of 1/29/22).
The history of Foot Locker’s acquisitions suggests that several of these smaller brands will be merged or discontinued in the future.
Focusing on the three largest store count brands in the portfolio, each has a target consumer, store format and recent market actions.
|Retailer Brand||Foot Locker||Kids Foot Locker||Champs|
|Target Consumer||Current: Consumers ages between 15 and 35 years old, fashion conscious or involved with athletics, sports or general exercise Modern Athletes (bringing “A” game.) Historical: 12 to 20 year old males who are influenced by competitive sports and urban trends.||Sneakerhead parents buying for their 5-11 year old children Core consumers: sneakerheads “the parents tend to be sneakerheads, and we have a young generation of sneakerheads”||Male high school varsity athletes “The retailer’s target audience is male high school varsity athletes. It often seeks to appeal to them through its ‘We know game’ tag line and campaign themes.”|
|# Stores as of 1/29/22||1,647||410||525|
|Recent Market Actions||Focus on Foot Locker’s “omnichannel presence, loyalty program and overall digital marketing”||Metaverse experience on Roblox called Kids Foot Locker House of Play (11/22). Users can play and compete high jump, speed/parkour track and mini hoops basketball.||Haley and Hanna Cavinder star in Champs Sports “Win Better” campaign. “Win Better” aims to show how these athletes “win every day.” (8/22)|
|Prototypes, flagships and new formats||Power Stores In London, Liverpool, Hong Kong, and Compton, CA – 12,800 square foot. Prior to COVID, Foot Locker was expanding Power Stores. The community or “local” focused stores connect with consumers through localized product assortments and events and activations.||8,000-square-foot Miami “House of Play” store. Areas for specific age groups: toddler and baby, little kids and kids with age-appropriate activities, e.g., study tables and stools for grade-schoolers.||35,000-square-foot “flagship.” Champs Sports Homefield store in Pemrbroke Pines, FL has a full-sized basketball and multi-sport court and a Champs Sports Combine digital VR system.|
|Average store size||1,500 square feet to 3,500 square feet||2,400 square feet||3,500 to 5,000 square feet|
Check out this Champs’ “Cavinder Twins Win Better” ad:
The retailer prototype stores have the theme of creating more in-store experiences.
“We want all Foot Locker customers to have a shopping experience tailored to them, from the littlest sneakerheads to their parents,” said Jill Feldman, VP, general manager, Kids Foot Locker. “Our ‘House of Play’ Community Store in Miami is just the beginning of how we at Kids Foot Locker are looking to revolutionize the experience for kids of all ages when shopping for their favorite apparel, sneakers, and accessories.”
“At Champs Sports, we are committed to listening to our consumers. We’ve been a part of athletes’ lives since inception and this new Homefield concept directly caters to their total needs,” said Guy Harkless, Senior Vice President and General Manager of Champs Sports and Eastbay.
As consumers become accustomed to more engaging retail environments themed around sports, such as Top Golf and Chicken N Pickle it will be interesting to see how well the Foot Locker stores and online experiences evolve to meet this trend.
It’s clear that the Foot Locker portfolio brand strategy template will continue to evolve under the new leadership.
For more brand strategy examples, visit our brand strategy resources page.