Ken Hicks, Foot Locker chairman and CEO, took the reins of the retailer in 2007 as the United States was facing down its worst recession in decades. Under his leadership, the footwear and sports apparel company has managed to deliver 17 consecutive quarters of comparable store sales growth and its best-ever financial results for the 2013 fiscal year.
How did Hicks do it? By closing underperforming stores, refocusing on shoes and creating banners that appeal to finicky younger shoppers. Foot Locker operates 10 banners and has managed to create cross-channel synergies that are the envy of smaller, less complex retail organizations.
FierceRetailIT spoke with Hicks to find out how Foot Locker's divergent brands and channels work together effectively, and what systems are being put into place to support its many banners, websites and programs.
Read the first part of our interview, and find out what Hicks thinks of omnichannel retail, at FierceRetail. His thoughts, and Foot Locker's efforts in mobile, can be found at FierceMobileRetail. But for more about how omnichannel is impacting the inventory, read on...
FierceRetailIT: Everyone in retail is talking about omnichannel, but it means different things to different companies. What does omnichannel mean to you?
Ken Hicks: The connection with the customer that we have, be it true digital or physical brick-and-mortar, is very high. Omnichannel means one channel. The customer looks at it as one voice and one mindset from that organization. You have to talk and communicate and merchandise as if it is coming from one place. Now, there are some very successful retailers, but their online [operation] and stores are two completely different organizations, and they don't necessarily speak with one voice. Our goal is to have one merchandising strategy. That may mean we have different merchandise—for example, we'll have more sizes, colors and assortment online than in the store—but the messaging is the same.
FierceRetailIT: Foot Locker has several different banners complete with different taglines. Does that further complicate your efforts? You aren't just trying to be omnichannel or multichannel for one brand, but for several.
Ken Hicks: Each of our banners has a different message that we are trying to communicate, so the sites and the stores are different. That makes it challenging from the point of view that each brand has their own message, but we have different organizations for each one that allow that. It's about designing each of the sites for each of the customers that we have, that fit with the idea and the story that we have for each.
FierceRetailIT: Implementing that kind of supply chain and inventory control, was it complicated from a technology perspective?
Ken Hicks: It took some work but it's not rocket science. The challenge is obviously getting the stores to understand the importance of it. We already shipped between stores, so if a store didn't have an item but they knew another store did, that other store could ship to the first store. All we did was extend that to the customer.
FierceRetailIT: And you are doing ship-from-store and ship-to-store?
Ken Hicks: We do. We call it "buy-online, ship-from-store" or "buy online, reserve-in-store." We ship from wherever we have the product and we have universal inventory. Both the store and customer can see the inventory.
FierceRetailIT: We hear about how all the channels have to blur, all the departments have to blur, that it doesn't matter where the sale comes from. How do you reward your store managers, your team managers, your district managers? How have you had to change your organizational structure to facilitate that?
Ken Hicks: We haven't changed the organizational structure. We still have the dot-com business [located] where Eastbay is in Wausau, Wisconsin. We have marketing units located within each of the divisions. If the store manager sells something online, they get credit for that sale. So that counts as their sale. They get commission on it, so they're encouraged to use it. If they can find the stock and sell it, they get credit for it.
We also are looking at the labor. Does the store have the labor to handle that? So let's say an individual store may have 10 ship-outs in a day. Well that's about an hour's worth of work. We need to make sure we provide the store with the labor to do that.
We have, I would say, good acceptance. Our biggest challenge is just making sure that they remember they've got that big inventory to sell from. They're so intent sometimes, they don't want the person to walk out. Well they won't walk out empty-handed if they access inventory online.
FierceRetailIT: A lot of retailers have been struggling to post sales and comparable store sales gains, and you announced your 17th consecutive quarter of comparable store gains. What are you attributing this to?
Ken Hicks: Great team, great vendor, great products, great customers. We work hard to make sure we stay fresh and new. And if you look at the industry now, the people that are performing well are the ones who constantly have a fresh and new product and experience.
We're remodeling our stores. We've revamped our websites. We continually update them with what we have, the services that we offer our customers. We talked about shipping, but one of the other things is payments. We [accept] PayPal, Google Wallet and Isis. In Europe, we've got about nine different methods of payment. Europe has a lot more different ways to pay beyond just credit, debit, Google Wallet and Paypal.
FierceRetailIT: Why do you think the payment variety hasn't caught on here in the United States?
Ken Hicks: One reason is security. Quite frankly, it's easier right now to use the cards. If I've got to enter a code anyway, I might as well use some other method. When we go to chip-and-PIN in October 2015, it will be different.
FierceRetailIT: How much of Foot Locker's business is done through alternative payment methods?
Ken Hicks: Google Wallet, PayPal and Isis are pretty small numbers now, but they are growing.