Retailing is a tough business. And with dramatic cuts in consumer spending, increased competition and a lack of fresh product, selling shoes has become even more daunting.
Still, with challenges come great opportunities. On the first day of the CEO Summit, six executives — Jim Estepa, president and CEO of Genesco’s retail group; Ron Halls, president and CEO of Foot Locker International; LuAnn Via, president and CEO of Payless ShoeSource; Diane Sullivan, president and CEO of Brown Shoe; Tarek Hassan, president of The Tannery; and Isack Fadlon, owner of Sportie LA — gathered for a Town Hall meeting to assess the lay of the retail land. Here are the highlights:
LV: The challenge for us all, as retailers, has been traffic. Over the last 18 to 24 months, the traffic patterns have significantly declined, more so in off-mall than on-mall formats. It started with single-digit decreases to double-digit decreases. In apparel and accessories, we’ve been a bit luckier. But overall, it’s a significant challenge. With that challenge comes an opportunity. There’s a significant opportunity for when those customers do come into stores to convert them.
DS: We’ve seen that traffic has been really challenging for the last 12 to 18 months. Those issues have recently ramped up. So I ask myself: How much [of that] is really economic? How much is behavioral? Is this something that’s going to change permanently, or is it going to pass? The flip side is the opportunity side of all this. There is no one secret formula. The opportunity is in how we communicate and leverage this digital and direct-to-consumer aspect in the marketplace today.
RH: One of the biggest challenges today is the speed of the marketplace and the way it’s changing. We’ve seen two big retailers in Europe — H&M, which is over here now, and the Inditex Group — they work on a very simple formula. They put product out there and if it sticks, they make more of it. Our business also has that sense of anticipation, reading [those trends] on a daily if not hourly basis. The reality is, how close can we get to the consumer, because a kid these days doesn’t want to see a mass-merchant approach; they want to feel special, they want to be different.
TH: With consumer [spending] way down, the biggest challenge to retailers is how to offer the customer a compelling reason to buy. This is one of our biggest challenges we face today. But for us, that’s also an opportunity. Many retailers have lost confidence; they are cutting down on staff and on product assortment. This is a great opportunity for retailers like us to step up to the plate and make a difference and offer that special service.
IF: As an independent with six stores, one of our main issues is maintaining and sustaining credibility culturally. For our consumers, it’s an experience to come into Sportie LA. It gets difficult [to keep that experience intact], especially now, when there is a mass exodus of goods you can find in different levels of distribution. How does one maintain that sense of experience when you can go to stores in Los Angeles, Tokyo, London and see that same exact product?
JE: The sameness that’s going on in every store has absolutely created chaos in our industry. It’s what has caused a lot of the discounting to go on. We have to turn up the volume on working with our suppliers and vendors on product development. At our company, we probably do more special makeups than before because we have to create some point of difference. We have to take a long hard look at what we can do to help our resources be more innovative and to create a reason for our customers to buy.
IF: The most effective means for connecting with consumers today is through Twitter and Facebook — they are so powerful. That’s where everything is going. As a retailer, you can’t succeed in this environment without those outlets. The consumer wants a dialog. They don’t want to come into our stores, go to a wall and have an empty experience. There has to be something relative, whether it’s through blogs beforehand or the follow-up communication afterward.
LV: For the fall, we’re going to be shifting into new types of media that we’ve never been in before. Another opportunity in the marketplace is that the cost of media is a little bit less. Your ability to try new things is more open than it has normally been.
Also, price compression from the department stores has absolutely affected all our businesses. The Payless consumer is very cost-conscious, and there were several times during the fourth quarter I’d walk into the department stores and they would have price points for our customer. That price compression really impacts those moderate- to low-cost providers. But there’s an opportunity now because they pulled back their inventories. All of us are doing that. We have to use a laser focus on our expenses and our inventory levels.
DS: No doubt there was a tremendous amount of price compression in the marketplace. The jury is still out as to where everybody is going to position themselves. So we really need to be thoughtful about how we make sure our concepts are relevant and well differentiated.
• Foot traffic
• Speed of innovation
• Department store markdowns
• Product sameness
• Lower consumer spending
• Retail buyer hesitation to experiment
• Converting customers
• More communication with shoppers
• International expansion
• Lower media costs
• Mobile retailing
• Designer collaborations