SNEAKERS

Locking it down

Foot Locker laced up its Jordans and is ready to ball. Earlier this month, the footwear chain agreed to two acquisitions that will cater to new geographic and generational demographics.

New shoes: In two separate all-cash deals totaling a cool $1.1+ billion, Foot Locker will acquire WSS, a national shoe retail chain, and Atmos, a Japanese sneaker company.  

• WSS’s 93 stores are 100% off-mall, making them an appealing target for mall-centric Foot Locker, Jed Berger, its global CMO, told Retail Brew. The acquisition also allows Foot Locker to make inroads with the West Coast Latinx community and diversify its product mix. 
• With Atmos, Foot Locker taps into a whole new market. As of 2020, Foot Locker—which brought in ~$7.5 billion last year—holds less than 1% of market share in the Asia Pacific region. Atmos also carries an exclusive in-house label and has a robust omnichannel presence; 60+% of its sales are online. 
• In 2020, WSS and Atmos generated $425 million and $175 million in revenue, respectively. Foot Locker believes the former could be a $1 billion brand in the long term. 

“They both gave us an opportunity to broaden our customer base and cater to different aspects of youth culture, which is our mission,” Berger said. “From an Atmos perspective, it’s not every day you get to partner with a globally recognized sneaker cultural brand like that. There is a huge part of sneaker culture that is from Japan, and we want to incorporate that in other parts of our business where it makes sense.”

Collabs on collabs

Foot Locker wants to reach more customers beyond these acquisitions. For example, the company recently partnered with HGC Apparel to better cater to Black customers.

• It pledged $200 million over the next five years to invest in youth-centric, Black-owned businesses. 
• Foot Locker and Champs Sports, a subsidiary chain, are hosting an exclusive partnership between Puma and (believe it or not) American fashion doll line Bratz. 

“These are all different types of partnerships that we bring into the sneaker creation process that celebrate all different parts of youth culture,” Berger said. “That is one of the places that the sneaker culture has met youth culture in new ways.”

For the kids

Appealing to the youths, especially during the back-to-school season, is vital for Foot Locker. Shoes are one of the most frequently shopped items this time of year; consumers are spending $161 this year on kicks on average, per the National Retail Federation. 

• Berger said back-to-school has “been amazing” thus far, mentioning the unrelenting success of Crocs, a relatively new brand partnership. Behind its digital-first strategy, Crocs’s wholesale business was up 112.1% last quarter.  
• From a consumer perspective, Foot Locker has seen demand increase as more kids, teens, and young adults want to flex on their classmates IRL this fall.

“We sell an incredible amount of choice of great products from great brands and it has been really, really strong, including apparel,” Berger said. “There is the casualization, which is really great for somebody like us who sells athletic-inspired products.” 

• The company’s blowout Q2 earnings suggest as much.

The big picture: Foot Locker wants to grow beyond its namesake stores and expand its e-commerce presence. In 2019, the company invested $100 million in Goat Group, which owns an online marketplace for streetwear and sneakers. Berger said the majority of Foot Locker’s traffic comes from mobile. 

“There is a lot of research and discovery that's done on your phone—whether it’s Instagram, TikTok, wherever,” he said. “We're happy to serve you wherever you are, but it is true that the discovery begins on your phone.”—KM

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RESALE

I’ll trade you

Legacy brands are eyeing Gen Z as the demographic’s spending power grows, but companies must learn the different ways these buyers think about luxury. Fashion marketplace and resale platform StockX, where 70% of the users are under the age of 35, has been watching their consumption habits evolve since 2016—and facilitating the shifts. StockX started as a place for sneakerheads to buy and sell rare kicks. The company has since expanded its focus to include designer bags, clothes, accessories, and even trading cards.

Designer collaborations are big in the world of luxury resale, as younger shoppers view these limited-edition goods as assets. According to StockX’s new Big Facts report, the company has seen a 200% increase in designer collabs traded on its platform over the last two years. 

• “[Designer collabs are] desirable partially because they’re scarce limited editions. It’s not like next year there'll be a very close version of that product coming to market, which can be the case with other releases. That creates hype,” StockX CMO Deena Bahri told Retail Brew.

The hype is real: Investors are getting younger. See the rise of Robinhood and #stonk memes as further proof. “Being cost conscious and committed to [securing] their financial future as early as possible, combined with the possibilities that a digital world has opened up for them, Gen Z displays a great sense of entrepreneurship and interest in creating multiple income sources,” Hana Ben-Shabat, founder of the research firm Gen Z Planet, told us.

• “Platforms like StockX offer them this opportunity to buy and sell products. By reselling an item, they can cover part of the purchase cost, or in the case of luxury goods, even make a pro­fit.”

A recent Harris Poll survey shows that 23% of US adults have bought or plan to buy limited-edition sneakers this year. 37% of them view the shoes as an investment opportunity. In 2020, StockX facilitated over 7.5 million trades, while active buyers surged more than 90% year over year. StockX racked up $1.8 billion gross merchandise value (GMV) in 2020. 

“There’s a very strong interest from our consumers around having more offerings in the investment space,” StockX’s Bahri told us. “That may be digital assets, that may be fractional participation in purchasing of assets. That line between goods and assets is blurring, and the whole space is very fertile.”

Investors in Kaws x Uniqlo Tees saw an 82% return on their portfolio over the past two years, per StockX’s data. Meanwhile, searches for collabs on StockX are soaring.

• “Bape x Coach” searches are up 1,680% YoY.
• “Crocs” has risen 430% year over year, following the brand’s collaborations with celebs like Justin Bieber, Bad Bunny, and Post Malone.
• Searches for “Birkenstocks” are up 610% YoY. The company recently collaborated with designers like Jil Sander and Rick Owens. 

All eyes on the next gen: Gen Z is leading the trends, not following them. StockX is seeing new growth in the 45+ demographic this year. “It speaks to the influence of Gen Z and young millennials on the older set, whereas historically it was the inverse,” Bahri told us. “The rest of us are following this next gen.”—JG

WHAT ELSE IS BREWING…

• On, the Roger Federer-backed shoe company, filed to go public. 
• Target will add 100+ Disney shops to its stores this year, tripling its total. 
• Tiffany & Co. unveiled its new ad campaign featuring Beyoncé and Jay-Z. 
• DoorDash won’t invest in delivery startup Gorillas after talks went south, according to Bloomberg. 

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SWAPPING SKUS

Today’s top retail reads.

Turn of the century: Iris Apfel turns 100 this month—and there’s plenty more she wants to do. (The Wall Street Journal)

Straight talk: How Zoom created a boom in teeth-straightening. (WWD)

Dog eat dog: Why retailers want in on private label pet food. (Modern Retail) 

HOT TOPIC

At the mall, it’s where band tees are the only tees. In Retail Brew, it’s where we invite readers to weigh in on a trending retail topic.

Amazon dominated the news cycle last week after The Wall Street Journal reported that the everything store has plans to open department store-like locations. 

• One school of thought is that this move will be the final nail in the coffin for department stores. 
• Others suggest Amazon will fall victim to many of the same ills that have plagued department stores in the 21st century. 

You tell us: What’s the best way for Amazon to expand its IRL footprint? Cast your vote here. 

Circling back: Last week, we asked what your preferred dining method is, given the recent spike in Covid cases. The majority of you (55.7%) are cooking at home, while just under a quarter (24.5%) are still comfortable going to restaurants. 17% use delivery apps, while just 2.8% use ghost kitchens. 

ICYMI

Catch up on the Retail Brew stories you may have missed.

• TikTok #dorm content is driving a new category of home decor
• Cupshe and New York & Co. explore new product categories
• Petco CEO Ron Coughlin on the company’s continued growth