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The mighty are mightier. Thanks to an increasingly complicated set of pressures, retailers are challenged to find new ways to win greater market share and become the must-shop stop. In Footwear News’ second annual list of the 50 most powerful shoe merchants they examine the changing retail landscape, looking at those stores that increased their power, the firms that slipped and the new entrants that simply took the industry by storm.
1. FOOT LOCKER
New York 3,260 stores in 50 states: 1,428 Foot Locker, 567 Lady Foot Locker, 346 Kids Foot Locker, 570 Champs Sports, 349 Footaction.
2004 RANK: 1
And the big just get bigger. Foot Locker, which boosted its market share with its 2004 buy of Footaction, continues to rule the athletic world — controlling an astounding 25 percent of the U.S. athletic market, according to analyst estimates. Last year, Foot Locker’s global full-year net income from continuing operations rose 17 percent, to $1.64 per share, while sales accelerated 12.1 percent, to $5.4 billion. The company continues to benefit from a resurgence in higher-price performance footwear, which is helping raise its average selling prices. In the meantime, Foot Locker has also flexed its muscle overseas, purchasing 11 athletic stores in Ireland. Europe continues to be the biggest focus for deepening the retailer’s presence.
KEY PLAYERS: Matt Serra, chairman, president and CEO; Rick Mina, president and CEO, Foot Locker USA
STAY TUNED: Look for Foot Locker to ramp up its international presence this year, particularly in Europe. Target markets include Greece and Switzerland. Expansion in the Asia-Pacific region is also a priority down the road. At home, the company plans to grow its Champs division during 2005.
Bentonville, Ark. 3,066 stores in 32 states: 1,353 Wal-Mart, 1,713 Wal-Mart Supercenter.
2004 RANK: 2
With more than 3,000 stores in the U.S., there’s no denying the sheer heft of Wal-Mart. Though the subject of much negative press in recent months, the retailer is still tops when it comes to inventory distribution and price. While footwear continues to make up a relatively small percentage of the chain’s $288.1 billion in annual sales, the $2.5 billion to $3 billion generated from footwear sales is still a serious business. (The company also operates 551 Sam’s Clubs, though they offer virtually no footwear.) And recent moves will only up the stakes for competitors. The discount giant inked a deal in March to roll out a new line of performance athletic kicks marketed under Nike’s Starter name, adding to its Thom McAn and Dr. Scholl’s branded business. Still, analysts estimate that as much as 80 percent of the chain’s footwear is private label. Shoe departments are packed with upward of 20 brands of basic styles for men, women and children, priced from $3 for women’s tennis shoes to more than $50 for men’s workboots.
KEY PLAYERS: Lee Scott, president and CEO, Wal-Mart Stores Inc.; Claire Watts, EVP, merchandising, Wal-Mart Stores Division
STAY TUNED: The mega-chain plans to open 40 to 45 new discount stores this year and as many as 230 supercenters.
Seattle 151 stores in 27 states 2004.
2004 RANK: 4
Revered by footwear vendors across the high-end and mid-range markets, Nordstrom offers a rich blend of labels. It carries trendy Stuart Weitzman and Marc by Marc Jacobs in its salon sections and more than 100 athletic, women’s, men’s and children’s brands in its regular shoe departments. Having started out as a shoe store in Seattle in 1901, the retailer is continuing its gradual expansion. The company opened two full-line stores in 2004 — one in Charlotte, N.C., the other in Miami — and an additional door in Atlanta last month. Now boasting roughly 19 million square feet of retail space, Nordstrom consists of 95 full-line stores, 49 Nordstrom Racks, 5 Façonnable boutiques, 31 international Façonnable stores (mainly in Europe), one clearance store and one freestanding shoe store. And the smart growth moves are playing out well: Full-year 2004 earnings jumped 62 percent, to $393.5 million, compared with $242.8 million in 2003, while sales rose 10.6 percent, to $7.1 billion, up from $6.4 billion a year earlier.
KEY PLAYERS: Bruce Nordstrom, chairman; Blake Nordstrom, president; Jack Minuk, EVP, footwear; Sam Sato, GMM, VP
STAY TUNED: With increased competition from Federated/May, look for Nordstrom to open three additional stores, in Irvine, Calif.; San Antonio and Dallas by year’s end.
4. FAMOUS FOOTWEAR
Madison, Wis. 919 stores nationwide.
2004 RANK: 5
Famous Footwear is on a roll. After three years of intense repositioning efforts, the family-footwear chain is delivering strong results for parent company Brown Shoe. Under the leadership of President Joe Wood, the company continues to bring in fresher styles at higher prices than in the past. The efforts are paying off: During the fourth quarter of 2004, Famous Footwear posted comp increases across all categories, with the strongest sales coming from the athletic and children’s categories. Sales rose 8.7 percent, to $263.1 million, compared with $242 million from the year-ago period. For full-year 2004, revenues climbed 4 percent, to $1.12 billion, compared with $1.07 billion in 2003. Growth was also a top priority for Famous Footwear in 2004, when the retailer opened 70 new units.
KEY PLAYERS: Joe Wood, president; Ron Fromm, chairman and CEO, Brown Shoe Co.; Diane Sullivan, president, Brown Shoe Co.
STAY TUNED: After parent company Brown Shoe’s recent $205-million buy of Bennett Footwear, it remains to be seen if the high-end shoes will gain a foothold — and bump up price points — at the retailer.
New York, San Francisco 428 units.
2004 RANK: 7
Behold, Macy’s. Cincinnati-based parent company Federated Department Stores had just moved to consolidate its many banners under the Macy’s name, when, in a bold stroke, it coughed up $17 billion in equity and debt to buy rival May Co. Founded in 1858, Macy’s, known primarily on the coasts, will now jump into America’s heartland — and 15 new states — when about 300 May Co. units are stamped with the Macy’s name. But according to Federated Chairman, President and CEO Terry Lundgren, the changes will go far beyond just the banner. Lundgren has said he plans to retrofit stores with wider aisles, reduce clutter and improve signage and amenities, including fancier fitting rooms.
KEY PLAYERS: Macy’s East: Ron Klein, chairman, and Jim Gray, president; Nancy Feldman, SVP, fashion accessories; Richard Arnstein, GMM, women’s footwear; Macy’s West: Robert Mettler, chairman, Michael Osborn, president; Carol Baiocchi, DMM, women’s shoes; Rick Smith, DMM, men’s shoes; Ruth Hartman, GMM, women’s shoes; Paul Fitzpatrick, GMM men’s shoes.
STAY TUNED: Here’s where the department-store channel finds a new beginning — or its bitter end. Watch in the coming year to see if Lundgren can deliver on his promise to reinvent Macy’s and turn around the performance of so many May Co. units.
The mighty are mightier. In this year’s Retail Power list, independents get special treatment, as we appropriately gauge them against their competitive set.
1. JEFFREY NEW YORK
New York, one store; second store: Jeffrey Atlanta
2004 Independent Rank: 1
Off the beaten track, this retailer remains the boutique for the chic — and holds the top spot among independents nationwide. Relatively unfazed by the high costs of carrying European designers, owner Jeffrey Kalinsky continues to bank on big names in the high-end shoe arena, with the majority of women shoppers snatching up pairs from Manolo Blahnik, Prada and Christian Louboutin. Meanwhile, male consumers, which account for a smaller fraction of sales, were busy buying Gucci, Christian Dior and Yves Saint Laurent. Tucked away in New York’s Meatpacking District, the retailer, which opened in 1999, posted a 20-percent increase in business in 2004 — a rise Kalinsky attributes to consumers’ increased fashion fascination and his old-school service. “People can buy stuff anywhere, but if you give them a special experience, they’ll come back,” he said. Most of the 30 staffers he has between the two stores have worked with him since the beginning — the Atlanta shop bowed in 1990 — coming to peg the hottest designers and know the fashionable clientele.
KEY PLAYERS: Jeffrey Kalinsky, owner; David Rubenstein, buyer
STAY TUNED: Look for the specialty retailer to create more buzz with an informational Website in the coming months that Kalinsky hopes to someday turn into a place for e-commerce.
2. FRED SEGAL FEET
Los Angeles, one store.
2004 Independent Rank: 2
Fred Segal Feet is all about fashion. But that doesn’t necessarily mean the selections here carry astronomical price tags. In fact, co-owner Patti Silver is constantly scouting for hip and stylish footwear across a broad range of prices, from $45 to $250. That quest takes her all over Europe in search of trendy, unique shoes that appeal to her clientele of fashionistas and celebrities — who can help break the bank. “I need moderately priced shoes, and I go out and find them,” she said. “Not everybody can walk in and buy $500 shoes.” The store carries a broad range of brands, including Cole Haan’s G-Series, Giuseppe Zanotti and Pucci. But Silver also is known for discovering new designers — such as George Esquivel — and was one of the first stores to play up Uggs as a fashion must-have.
KEY PLAYERS: Patti Silver, buyer, women’s shoes; husband Stanley Silver, oversees the men’s section
STAY TUNED: Patti Silver introduced several new moderately priced European brands, including the Chene sandal line, for spring. Watch to see if it becomes a consumer craze.
3. SPORTIE LA
Los Angeles, four stores.
2004 Independent Rank: 7
Since opening in 1985, Sportie LA has become the sneaker boutique for hipsters and fashionistas on the hunt for uncommon kicks. And its profile as a sneaker destination is continuing to grow, both in expansion and recognition (the retailer won FN’s Independent of the Year award in 2004). In October, the store made its first move away from trendy Melrose Avenue, its home base, opening a door in Sherman Oaks, Calif. A recent remodel of the chain’s main footwear store added 2,000 square feet of space, as well as a dedicated area called The Vault Lounge for special make-ups and featured products. The Lounge officially opened this month with a program sponsored by Reebok.
KEY PLAYERS: Isack Fadlon, Orna Amzaleg and Elli Amzaleg, owners
STAY TUNED: To boost Web business, the retailer will take its Mini Cooper car, branded with the Sportie LA and Saucony logos, on a college tour this fall. In September, coinciding with the 20th anniversary of the store, an array of vendors will help celebrate the milestone with special co-branded shoes. And a fifth store is expected to open by year’s end.
4. THE TANNERY
Boston and Cambridge, Mass.; two stores.
2004 Independent Rank: 3
A brutal winter hasn’t kept Bostonians away from The Tannery. In fact, owners Tarek and Sam Hassan say the cold weather has led to a 25-percent boost in business, especially for boots and outdoor-apparel sales. And while customers continue to bag plenty of cozy kicks, they also have been busy buying tons of Ecco, Mephisto, Clarks and Keen. With two stores — the Boston location is 18,000 square feet and Cambridge is 10,000 — serving up a menu of more than 200 brands, the independent retailer is widely viewed as one of Beantown’s top destinations for fast fashion trends, with exclusive styles from Nike on display.
KEY PLAYERS: Sam Hassan and nephew Tarek Hassan, co-owners
STAY TUNED: Watch for the owners to open a third store in fall ’06 (they bought the 24,000-sq.-ft. building four years ago). Next month, the owners will put the final touches on a $540,000 overhaul of the store’s Website, Thetannery.com, which will entail more customized features that can help shoppers piece together the perfect toe-to-head ensemble as well as recommend suitable sporting gear.
5. ALFIE RIVINGTON CLUB
New York; one store.
2004 Independent Rank: 5
While it’s no longer one of New York’s best-kept secrets, Alife Rivington Club remains a must-visit sneaker boutique. The unadvertised and unmarked location on Manhattan’s Lower East Side continues to hold a top position among dedicated sneakerheads and celebrity shoppers alike, thanks to its offering of exclusive and limited kicks from eight brands: Adidas, Nike, Jordan, Puma, Reebok, New Balance, Visvim and Asics. The sneaker shop also stocks RTFT, an athletic-inspired collection aimed at young men that is designed and created by the store’s founders. According to Arnaud Delecolle, co-owner and creator, the retailer is doing better than ever — sneaker sales for the last six months are the highest in the store’s almost-5-year history. The popular boutique is part of parent-company Alife, which comprises the Alife creative agency and, coming this summer, two new Alife shops — a different concept from Rivington — that will feature apparel, accessories and the firm’s own RTFT footwear collection.
KEY PLAYERS: Arnaud Delecolle, Tony Arcabescio and Rob Cristafaro, co-owners and co-creators; Damany Weir, buyer
STAY TUNED: Look for a second Alife Rivington Club location to open later this year. The location? As of now, it’s a secret, of course.
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