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. Since then, the footwear and sports apparel company has managed to deliver 17 consecutive quarters of comparable store sales growth and its best-ever financial results in 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.
FierceRetail spoke with Hicks to find out how Foot Locker's divergent brands and channels work together, and what it takes to achieve tangible omnichannel success.
FierceRetail: 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. Because 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.
FierceRetail: 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.
FierceRetail: Foot Locker has been closing some stores and refocusing on the experience. What are the biggest changes in that experience?
Ken Hicks: As we're closing stores, we also have new formats that we are putting in place in all of the divisions. And we're telling more stories. We used to have a wall of just shoes when you walk into a Foot Locker. Now we've organized it by ideas. It may be basketball or running, and we call out the key ideas as you walk in the Foot Locker store. Rather than having a whole bunch of signs and tables, there's a key shoe for today. We do more signage.
We also are creating more shopping environments like the House of Hoops. We've got over 140 House of Hoops in Foot Lockers. We've got Puma Labs in Foot Action and Adidas Collector Shops and Jordan Phase 23 shops. We're testing Fly Zone in Kids and we've got the Nike Yardline in Champs.
These environments make the store a bigger draw than just, "Here's a store with shoes in it." It focuses on ideas. It focuses on excitement. It focuses on newness that will attract the customer.
FierceRetail: And how do you tie this into online efforts?
Ken Hicks: We will have those same ideas online. And we connect with the customer through having that depth of assortment and by talking about new releases. By having the designer talk about what their inspiration was or what their thought process was when they designed the shoe. Or the athletes who wore the shoe, why they liked it and what the shoe did for them.
FierceRetail: How does your business break down in terms of where you are seeing sales come from, online vs. stores?
Ken Hicks: As a company, we're getting a little over 10 percent of sales from online. Our fastest-growing business is what we call our 'banner dot-com.' We have a business called Eastbay, but we also have a 'banner dot-com', which is FootLocker.com, LadyFootLocker.com, Six02.com, FootAction.com, ChampSports.com and KidsFootLocker.com. We've got dot-com sites in Europe and in Canada now. Those businesses have been growing at over 40 percent each quarter over the last year. They're much smaller, but very fast-growing.
FierceRetail: And all this is separate from the Eastbay business, which is only online?
Ken Hicks: Eastbay right now is just online, except about a month ago we opened up four Eastbay Performance Zones in Champs stores (in California, Florida, Minneapolis and Milwaukee). They are 150 sq.-ft. and provide the Eastbay experience, which are 250,000 SKUs of equipment for the elite high school athlete. We're taking a pure dot-com play and putting it in brick-and-mortar. We put out an assortment of the best products, the best shoes for example. This time of year it's football cleats and soccer cleats that we don't normally carry in a Champs store. A kid can come in and try on a shoe to see if it fits, order it right there, and we'll deliver it to the store or to their house.
We're testing it, and quite frankly we're pleased with the test.
But that's taking the dot-com and going backwards. You hear the dot-com people, the pure play dot-coms, say, "Boy, we need some sites." But I firmly believe the [multichannel] people will win. It's going to take both. Omnichannel includes the stores, the Internet, digital and the whole community of that shopper. You have to put them all together.
FierceRetail: A lot of retailers have been struggling to post sales and comparable store sales gains, and Foot Locker just announced, what is it, your 17th consecutive quarter of comp-store gains? To what do you attribute this performance?
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 fresh and new products and experiences. We're remodeling our stores. We've revamped our websites. We continually update them with what we have and the services that we offer our customers.
FierceRetail: Sometimes retailers like to talk about what keeps them up at night. What leaves you sleepless?
Ken Hicks: I sleep really well—I've got a Jawbone that tells me that—but there are things that I think about.
I think that the biggest challenge that we have is that as a company, we've got many facets and many opportunities. We've got different banners; we're international; we're brick-and-mortar and dot-com; we service men's, women's and kids'; we sell apparel; we sell footwear; and so people sometimes look at Foot Locker and say, "Okay, you sell sneakers, right?" And we're much more than that. That's a challenge.
There are two things that concern me. One is why good companies fail and it's usually hubris. So we are making sure that we are continually hungry and pushing ourselves. As a company, we're in a competitive business. Sports is in our DNA. We're competitive, so we constantly push ourselves. That's what you need to be a winner.
And the second thing is to continually challenge ourselves toward newness and new ideas. We are open to listening and open to trying new ideas. So we were the first with Google Wallet, one of the first with PayPal, one of the first with Isis. We were early to offer buy online, ship from store. We've moved aggressively on visual inventory. We're trying something like Eastbay Performance and we're taking a dot-com business and putting it in brick-and-mortar as a virtual store, not by creating an Eastbay store. We could have done that, but because of the size of the business and what it is, I think this is a better way to go. And it supports the brick-and-mortar business as well by drawing traffic in.
Because one of the things I think when you get to omnichannel and start to define it, the objective is to build both businesses. A rising tide raises all ships. So if dot-com is doing well, the stores do well. If the stores do well, dot-com does well. Five years ago they were completely different businesses. They didn't talk to each other. What was online had nothing to do with what was in stores and vice versa. We've now got them talking and working together.
Omnichannel includes the stores, the Internet, digital and the whole community of that shopper. You have to put them all together.