Shoe Palace Offsets Nike’s CDA and Supply Chain Issues via Private Label

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Source: Shoe Palace | Shoes, Clothing, & Gear from Elite Brands

Shoe Palace is a West Coast retailer. There aren’t any stores in my region, but with the reach of digital, brick and mortar stores are no longer catering only to where they are located. Digital can give chains the ability to reach potential consumers in other cities or countries. When Shoe Palace was acquired by JD Sports, it gave JD an urban retail experience. Urban stores typically cater to a cash customer who doesn’t really participate in the digital marketplace. However, as Nike ramps up their Consumer Direct Acceleration, this customer is beginning to become more and more important in the business decision of retailers who have long relied on Nike as the draw to their doors.

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FDRA reports that supply chain issues will linger throughout 2022 into 2023. On a recent retail visit to a local Champs, I had a chance to speak with the manager. He discussed the secondary brands and how little Nike product the store was receiving. Champs is not a JD Sports affiliate, it’s a Foot Locker chain. I bring up Champs as a comparison to Shoe Palace because the store looked less like a traditional sneaker store and more like an “urban” account relying heavily on apparel for revenue. The store had Cross Colours alongside Nike, adidas, Champion and Champs’ own CSG line. Nike, who only a year ago held 75% of the entire sneaker section with Nike and Jordan Brand at Champs, only held about 20% of the sneaker section. The manager explained that his store was doing well, but Nike’s lack of shipping would hurt Nike in the long run. He explained while his sneaker sales were not as good as previous quarters, customers looking to match their apparel have begun to buy what’s available from the secondary brands (Fila, Puma, Reebok). He also explained that Timberland has a real opportunity to expand their share in this market.

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Maison Article men’s apparel

Champs and stores like City Gear and Jimmy Jazz in this region are similar to Shoe Palace. There is one considerable difference in these retail outlets, Shoe Palace places an emphasis on their own products just as much as they place an emphasis on adidas and Ivy Park or Nike and Puma. Since I don’t have a SP in this region, to gather information I visit the site and I reach out to different people at the company. I had a few questions about Shoe Palace after looking at the digital merchandising on the site. Instead of a heavy focus on the brands the store carries, I noticed immediately collaborations and brands I never heard of before. There were images of Scarface and E.T. (the movie) Clothing Collections, and the brands Maison Article and Sacre Clothing. I sent several questions to a rep at Shoe Palace.

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Sacre women’s apparel
1. Are the collabs on the homepage a part of your own private label? Yes, licensed collabs like Scarface and Death Row we create on our own.
2. What are the names of your private label brands? Sacre (Womens) and Maison Article (Men). They are sportswear brands we create.
3. Has Shoe Palace been affected by supply chain issues? Yes. Very much so.
4. Was the Unity Pack from New Balance made specifically for your chain? Yes.
5. What have been some of the biggest collabs for the chain? Scarface is huge for us. Death Row and Bob Marley also did very well recently.
In urban retail clothing and apparel, the immediate thought of most people is the Black consumer. On the West Coast, that demographic ranges from Asian, to Latinx and other racial demographics. Shoe Palace recognizes the value in building private label and their marketing and merchandising supports the chain in a time where the supply chain issues and Nike’s CDA contribute to considerable disruptions in footwear. While I can admire their decision to bolster their revenue with private label, I recognized that catering to that consumer when Nike isn’t really delivering as much merchandise has hurt the brand’s website traffic. SP has lost about 150,000 visits a month, going from 660K to 500K from June to November. I would have chalked this up to the seasonality of retail, but the team at Shoe Palace answered this question:
I have to ask what do you think has contributed to the decrease in website traffic? Economy and Supply chain issues.
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Shoe Palace is facing the problems of this retail environment head on. One visit to their IG page ShoePalace.com (@shoepalace) • Instagram photos and videos shows an equal distribution of coverage to Maison, Sacre and their private label collabs, but this doesn’t mean the brand isn’t feeling the effects of Nike’s CDA. Like Champs, apparel has become more important than ever and the margins on the collections made by the company create the ‘moat’ that Nike has long owned at sneaker retail. As Nike begins to limit the amount of footwear delivered to these urban accounts, and the insight gained on how the urban consumer approaches apparel vs the emphasis on athleisure and boutique streetwear brands by independent chains and mainstream stores, becomes a source of data and info for Shoe Palace, Nike may be creating a gap in the their armor, if other brands begin to look to retail outlets for direction on how to fill those holes on the sneaker shelves.

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