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Foot Locker’s 28% Stock Drop: Wrong Info & How to Stop the Bleeding?

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Unlike many platforms that only report I take the time to dig into a deeper analysis of e-commerce and retail. My thoughts on the storytelling of Foot Locker and how this has helped the company to create a stronger in-store experience have always been steady and present.

Insider Ties: Why Foot Locker Is Still Killing It

It’s the reason I thought the company was performing so well and kept away the issues that have plagued Hibbett Sports and Finish Line. The fact that $FL has over 3000 locations meant that they were in a position to utilize their multitude of sales strategies to remain fresh and relevant. With Stock Locator, a feature other store chains have had a difficult time implementing successfully, Foot Locker was able to track down shoes between their channels (Eastbay, Champs, Footaction, Kids FTL and Foot Locker) to have shoes shipped directly to customers. The price match feature allowed the company to match prices of comparable pairs in stores at the same mall location; and their in store purchase with free delivery remains an omni channel experience that matches what works for a better brick and mortar retail experience.

Even with all of these options the company’s alignment with Nike, which I once touted, has become a liability as Nike has made a concentrated effort to double down on DTC. When I stated that Foot Locker has a GPS I was saying that they were the only company capable of adapting to the shift in the market. It seems that even with this ability to adapt, Nike’s issues have finally caught up with Foot Locker, which is not surprising.

Insider Ties: Footlocker Has a GPS

When companies begin to sell directly to the customer it inevitably will shape the market. I thought Foot Locker could survive this as I noted in the articles above. I recently clarified my position on how Nike’s alignment with Amazon would hurt retail.

2 Reasons Nike Selling On Amazon Will Disrupt Foot Locker, Finish Line and Other Retail Outlets

Boy was I right. This recent slump by Foot Locker, in my opinion, has been a direct result of search and the news that Nike would begin to sell on Amazon. You read that right… the mere mention that Nike would open a brand registry delivered incredible search to Amazon. Customers who probably shopped in other locations for Nike automatically began searching for the brand on Amazon. It doesn’t matter that Nike has yet to integrate their registry on Amazon.

This is a guess, but I’d be willing to gamble that Nike sales spiked on Amazon after the announcement. Yes, that is speculation and I can’t prove it… but if a comparison was to be made to Foot Locker’s continued slide from Q1 to Q2 this has to be taken into consideration because those tax return bumps happened in Q2, but they made little difference as the banter of Nike + Amazon began around May into June. Can I verify this? No. It does make for dialogue though.

Enough with the guessing, what exactly is it that Foot Locker can do to offset the shifting spending environment that has hurt their stock and sales?

Foot Locker’s Disadvantage

Foot Locker needs to close strip mall stores. This has already begun in Memphis and should continue across the country. The standalone/destination store is in direct competition with City Gear and Jimmy Jazz stores in many areas. The urban customer has direct access to the heavy promotional environment of stores like City Gear/Jimmy Jazz/DTLR who are often offering prices at below retail. These stores literally prop up the foundation of grey market sellers, but more important they have created this current promotional era that is really at the root of Foot Locker and every other retailers problems in sportswear. Foot Locker is slated to close over 100 stores so this ball is already in motion.

Foot Locker’s Advantage

Private Label – Apparel is a difficult thing to build, but Foot Locker’s in house brand creates some of the best apparel on the market. A stronger focus on the apparel created by the company will undoubtedly enhance their sales strategy. Foot Locker should take a stronger, more Amazon approach to pushing their brand. Right now Foot Locker apparel does not adorn the mannequins in the store. It is tucked away on shelves and racks. If you’ve seen how Amazon has manipulated search, Foot Locker has the ability to do something similar. The mannequins even with a Nike or adidas shoe, should feature Foot Locker apparel. Sales leads and associates should be allowed on certain days to shift from the stripes to the apparel in store. Apparel isn’t a big adjustment, but private label creates a unique opportunity. At a store like Champs they’ve done a great job of promoting their new online app for sneaker releases. That same flyer should have had a mention of Champs’ private label apparel. Private label should begin to get more ad/brand awareness and promo.

Decrease promo and sales – I know that the promo environment at other stores will undercut Foot Locker’s sales. This is a fine line. When an item isn’t selling through it clutters storerooms and makes it harder to inventory and have auditors do their jobs. Red tags are likes cuts pouring blood. It not only looks bad, it makes the company look thirsty. More important it destroys the integrity of storytelling in the store. It’s hard to make a Jordan look high end when a bloody sales tag is hanging from the shoe. If the company is looking to discount, and this is a difficult measure, but not quite, implement a new telephone system that utilizes cell phones. The in store phone line can then be used to allow sales associates to offer customers who are checking out a text code for sign up. Upon sign up the customer has now placed their info into a text system and they get a discount at the register. This idea needs work, but could possibly replace the need for hanging those red tags everywhere which gives customers too many sale options which ultimately lead to the customer walking out to check sales at other stores. This needs work.

Content Creation -Every major brand has fallen victim to the belief that social media and influencers drive the marketing arena. Companies have completely forgone the simple fact that getting people to your platform reduces the amount of clicks needed to convert. Foot Locker, like every chain spends more time on their Facebook and Instagram pages than developing the information on their site which helps to improve search. Foot Locker is doing one thing right: video. They are spending time on their YouTube platform. That information is integrated into their site, but website is formatted in a way that doesn’t invite a daily visit.  Consider Amazon’s platform. The entire homepage is dedicated to the individual. It is also updated daily with a different campaign or deal. More important the customer reviews provide insight into the items available. Amazon is customized.

Foot Locker, like most retail sites, features product. There isn’t any engagement, no active blog (the blog hasn’t been updated since March 10th Q1). People know you have product. What is the story behind the product? Creating indexed content makes the site searchable and allows the company to compete with the storytelling being done on most footwear sites. The only interaction, even on social is when there is a major event happening or a major release. Even though people are on social, utilize the site and drive engagement towards the site as opposed to halfway monitoring and engaging on social.

These are just a few corrections that could help stop the bleeding. Will they happen? Probably not. When companies are big it takes a long time for them to change and shift.

Who am I to give advice? Who is actually listening? Someone is, so here is a video we did to discuss the issue in greater detail.