Converse Talks Retail Plans

On the heels of the debut of Converse’s first West Coast flagship last month, analysts said the long-term potential of the brand’s retail strategy remained unclear.

Mitch Kummetz, an analyst at Robert W. Baird & Co., said that while Converse was following parent company Nike Inc.’s lead by developing its direct-to-consumer business, a small-scale retail push was unlikely to impact bottom-line sales.

“If they are only going to open a handful of stores, that’s probably not going to do a lot for the brand,” Kummetz said.

Morningstar Inc. analyst Paul Swinand agreed: “Converse is doing well and they want to show the breadth of the brand, but I don’t see it as a huge growth driver for the brand.”

But Swinand said he liked the idea of establishing flagships in key markets, as long as the brand does not extend far beyond that.

And, for the time being, that’s the plan, according to Converse VP of global retail Dave Powers. “We’re still at a stage where we know that the Converse brand offers a lot more [range of product] than people think,” he said. “We’re using retail as a way to bring the brand and additional products to the consumer.

“We haven’t quite identified the right number yet, but [retail] will be part of our growth. We will probably open 10 to 15 [additional stores] in the next couple of years in the U.S.,” he added.

Last month, the brand bowed its first West Coast flagship store on the trendy — and highly trafficked — Third Street Promenade in Santa Monica, Calif. The company has two other flagships in Boston and New York.

The new 7,000-sq.-ft. store showcases a full range of footwear, apparel and specialty items not commonly found in the U.S. market. It also drastically expands on the brand’s customization options.

“[The customization station] is roughly 700 to 900 square feet, all dedicated to customizing your footwear, T-shirts, hoodies, or pretty much anything in the store,” Powers said. “You can bring in your own ideas and graphics, we’ll help you design it, you can watch it being made and then walk out with it that day.”

In May, Converse will expand into malls for the first time with a 4,500-sq.-ft. store in Garden State Plaza in Paramus, N.J. “We’re offering a very different product offering that will complement wholesale and expand the brand,” Powers said. “It will still have customization and that core experience, but a little bit tighter and more edited.”

Powers said the brand was still experimenting with different store formats to determine what will work best for the label.

“That’s one of the things we’re going to find out over the next 10 or 15 stores,” he said. “We’re still deciding what’s right for us and where we want to take the retail business.”

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