How Foot Locker is Winning the Multichannel Race: An interview with CEO Ken C. Hicks, Part II

Foot Locker, Inc. has leveraged its advanced supply chain capabilities to provide a superior shopping experience for its customers. Recently Wayne Usie, JDA’s sr. vice president of retail strategy, sat down with Foot Locker Chairman and CEO, Ken C. Hicks, to get his thoughts on winning the multichannel race for our CEO Insights series. In Part I of this series Hicks described how Foot Locker connects their online sites and stores to enhance the shopping experience across channels. We continue below with questions related to a recent CEO survey from PwC in which Hicks participated.

Usie: In the PwC survey, the CEOs said that the number one thing they see helping them to create competitive advantage is improving product availability. How does Foot Locker’s supply chain help to accomplish this?

Hicks: By making the inventory visible to the customers and the stores. When you go into a store, instead of seeing just the inventory in that store, you can effectively utilize the entire inventory of the company. So if you go into a Foot Locker store and you see a particular shoe, say a Jordan basketball shoe, the store may have six colors, but online may have 12 colors. And our sizes go all the way up to 21 in some shoes, but the store may only go up to size 13 or 14. You can order from among the 12 colors and all sizes.

From the customer’s perspective, they have much more to shop from. From the store’s perspective, our inventory is much more productive because it is now available to everybody. At the store register, if a customer asks if you have this shoe in a 12, the associate can scan it and if the store doesn’t have it in a 12, they can order it online and have it shipped to the store or shipped to the customer’s home for a small fee. Or it may be available in the mall down the road and they can go and pick it up there right away. We are trying to allow the customer to shop the way they want to shop.

We continue to upgrade and update our websites, which each look different. For example, Foot Action is much more about the outfit. One of the things we do every two or three months is go out and photograph 30 or 40 complete outfits that go with a particular shoe. So when the site shows you the shoe, you will see the t-shirt, the shorts or pants, the socks, or the hat and you can say, hey, I really like that hat with those shoes, or I want those shorts or Levi’s jeans and I can buy the whole outfit.

On FootLocker.com, customers have complete visibility into our product inventory and product releases. If a new release is coming out, we may have the story behind the release and an interview with the designer. Or during the Final Four, we may show the shoes the teams are wearing so people can go get those shoes. The idea is to make it entertaining to give people a reason to go back to the site, just like when we come out with new shoes to get people coming back to the store.

Usie: Surprisingly, only 17 percent of the CEO survey respondents felt their supply chains were optimal. You have put a major emphasis on supply chain improvement at Foot Locker. If you don’t feel yours is optimal yet, what additional initiatives are you undertaking to get it there?

Hicks: How do we make it faster and easier? How do we give the associate in the store the same information as the customer with their smartphone? We have unilaterally disarmed associates by saying you can’t have your cell phone on the store floor, but the customer can. So how do we give the associate that same visibility?

We have different ways we are trying. The register is one way. We are experimenting with handhelds as another so the associate can tell you here is the shoe, we have it in stock, we have your size or we can get your size, or here are some features and benefits. And we give them selling tools along with it. We’re making sure the handheld is quick and that we can ship from the store as quickly as from the DC.

What we are trying to do is make our stores more interesting and exciting places to shop.  We’re putting in features like House of Hoops for basketball from Nike, Yard Line Football from Nike, Puma Labs with their new Dazzling shoes, and Adidas Collection with their new shoes. We’re not adding new stores, we’re making our stores bigger. In fact, we’re actually closing a few more stores than we’re opening, but our stores are adding square footage to accommodate larger assortments and more breadth.

We’re telling stories on the walls, or at Champs, we took the shoes off the wall and put them down the middle of the store along with matching apparel. So next to the Jordan shoes is the Jordan apparel. Next to the Adidas shoes is the Adidas Apparel. Next to training shoes is the training equipment and apparel. The customer can shop right in that place. They can look at the shoes and turn around and there is the apparel to go with it.

Probably one of the most interesting features in stores is we will begin testing East Bay, which is an online-only site for elite athletes. They have all of the cleats, gloves and equipment for the major sports. We’re going to put a section in four Champs stores this month where the customer can walk in and see key features of the cleats from Nike, Adidas and Under Amour in all colors and sizes. The customer can try the cleats on. They will also be able to touch the video wall and the shoe or glove they want will pop up and they will be able to rotate it so they have a 360 degree view. They’ll be able to see the ratings from other people who have worn it. They can print out a bar code and description of the product and go to the register and order it right there. They will also have access to a computer screen with all 250,000 SKUs in East Bay’s inventory that they can shop from. They will have football this time of year, basketball and training will always be there, plus soccer and cross-country. They will be able to try the shoes on and order them online. Thus we are augmenting our physical stores with our online East Bay site.

Usie: That sounds very interesting, Ken. Thanks for your insights. We have so much more information in our recent PwC CEO Survey Report so please take a look

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