This isn’t Cliff Sifford’s first go-round.
As retail observers issue dire warnings about the future of brick-and-mortar and the increasingly unpredictable customer, Shoe Carnival’s chief believes he sits atop a business that’s always been one step ahead.
“Everyone talks about the millennial today and how you have to entertain them,” the executive said. “We’ve been doing that for 40 years. Part of our store concept is, when you come in, there’s always music playing. We have ‘spin and win,’ a ‘pop a shot,’ we run trivia contests and we announce specials over the microphone. There are all kinds of ways for a customer to be entertained while they’re in our doors. We’ve been doing that long before millennials began to demand it.”
Back-to-back quarters of blockbuster earnings growth lend credence to Shoe Carnival’s winning strategy. The company last month said its second-quarter revenues advanced 14 percent to $268.4 million during the all-important back-to-school period. Meanwhile, its comparable sales surged nearly 7 percent — a figure that’s hard to come by in the current retail climate.
Watch on FN
“They’ve done a solid job — there’s no question — of navigating the dynamics in their industry,” said Wedbush Securities analyst Christopher Svezia. “There were some things that Cliff put into place — national advertising, [doing] e-commerce more effectively and productively, slowing the store growth — they were all the right moves.”
Although Sifford, who joined the Evansville, Ind.-based company in 1997 and became CEO in 2012, has taken lots of cues from his predecessors, he hasn’t shied away from ditching unfruitful concepts. Most recently, the executive nearly halted store openings across the company — announcing only three new doors for 2018 and none in 2019. Two decades before that, he spearheaded the firm’s move away from generic brands.
“When I [started at] the company, we were heavily private-label — especially in our women’s and kids’ [departments],” Sifford said. “At the time, Payless was probably our main competition. We made the decision that that’s not who we wanted to be. I’m an ex-department store guy — I came from Belk. I knew brands. I wanted to take the store upmarket.”
Now buzzy labels such as Vans, Converse, Nike and Adidas are all stocked at Shoe Carnival, and that undoubtedly helped the retailer hit the $1 billion revenue mark in 2016.
While Sifford is proud of that financial milestone, these days, he’s more focused on getting to the next billion.
Here, the executive reveals the strategies he’s banking on, lessons from the past and why some retailers lost their way.
Shoe Carnival has been at it for 40 years. How are you approaching retail differently?
Cliff Sifford: “Our concept is this: We know the customer today has very little time, and they’re not after the thrill of the hunt the way they used to be. They want to get in, find what they’re looking for and get out quickly. We think of ourselves as an open-sell store. Our inventory is out on the floor, but we have help in the aisles so customers find what they need. We buy a broad assortment with deep runs. Very seldom is a customer disappointed because we don’t have a size. We’re also excellent at identifying key items and going hard after those key items.”
Many of your peers have gone bankrupt over the past three years. Where did they go wrong?
CS: “When it comes to the segment of our customer profile, when I look at the stores that haven’t made it, I don’t think it has nearly as much to do with the millennials as it has to do with debt. That’s one thing we will not do. We have no debt, and we run our business to stay completely out of debt. We generate a lot of cash in our stores. Having too much inventory and too much debt are the two biggest sins a retailer can commit. The companies that have major debt — you can walk in their stores and tell they’re not keeping them relevant.”
As e-commerce skyrockets, are you worried about the future of brick-and-mortar?
CS: “What’s going on with e-commerce is terrific, and it’s something we play in well. However, the customer prefers to come in, touch and feel, and try on the shoes. Customers are more connected than ever. When they’re in our stores, they’re also looking at shoes with their phones. It’s amazing to watch our customer shop today, because there are no surprises — she knows from a pricing standpoint what things should be.”
How do you measure your success?
CS: “Over the past several years, brick-and-mortar traffic has been down low- to mid-single digits — but we’ve concentrated on average ticket. To get that average ticket up, we try to sell that customer one more pair of shoes. We’re very proud of our conversion. Our conversion rates in our stores are probably higher than anyone else in family footwear.”
How did you accomplish that?
CS: “Here’s the secret sauce to what Shoe Carnival does: We assume when you walk into our stores, you’re there to buy a pair of shoes. We’re a destination shop — you literally have to get in your car and drive to our store. So if you’re in our store, you’re there to buy a pair of shoes. Our job is to try to sell you the second pair.”
How often do you think about your competition?
CS: “All the time. We shop our competitors — online and in stores — just like they shop us. The shoe business is unique in that we’re all friends but we’re all very competitive. I know my competition is in my stores, and we require our buyers to be in their stores. They’re very smart people; they’re good at what they do.”
Are you concerned about the other major player in your space, Famous Footwear?
CS: “Other than Amazon, they’re our No. 1 competitor. They’re incredibly strong at what they do. Everything I’ve said about [the strength] of our stores differs from them. We’ve got music in our stores — classic rock. We have an entertainment value in our stores and help in the aisles. And we’re not afraid to buy a broad assortment of deep runs. Those are all different than our competitors.”
Shoe Carnival has historically been a growth story. Why are you slowing down store expansion?
CS: “The reason for that is the launch of our customer relationship management program. We’ve been working on it since June of last year, and our plan is to launch it by spring 2019. We want to know exactly [where to open stores]. Today, with all the brick-and-mortar activity — we’ve had major department stores close their doors, sporting goods stores close their doors — we want to be careful. We want to understand exactly who our customer is and what motivates them and where they live. Through the new CRM, we’ll collect all that information, marry all of that together, analyze it, and at that point, we can start opening stores again.”
Where will you go first?
CS: “My goal is to grow in the Northeast, and as we accomplish that, start marching west. We have no stores in California and no stores on the West Coast at all — so that’s a tremendous opportunity for us. [We’ll] probably [expand in the West] about four or five years down the road. In 2020, I expect us to begin our Northeast movement.”
Are you eyeing international expansion, too?
CS: “My priority is the U.S. because we have so much growth there. However, we have stores in Puerto Rico, and some of our strongest stores happen to be Hispanic stores. Internally, we’ve talked about international growth in Mexico and Central America. But it’s not on our radar [right now].”
Are your growth goals part of the reason you pushed for national advertising?
CS: “When you go into a new marketplace, you want people to have heard of your brand. We opened in several new markets over the past few years. It helps if they know who you are before you get there, because you won’t have to explain to a customer what Shoe Carnival is and what makes us different. Four years ago, we started a national ad campaign for back-to-school, and we advertise on cable during the holidays. We also advertise in every major market we’re in [via] local television. [Increasingly], digital is also getting a healthy chunk of my wallet — but it probably needs even more.”
Are you buying into the social media craze?
CS: “I love it. We market on all forms of social media, and it drives customers to the stores. It does a good job of that, so I’m a believer. I personally don’t play around on social media myself. I don’t know what my excuse is for not doing it.”
Describe your leadership style.
CS: “I like to hire the strongest people we can find in the area of their expertise, and then I just let them do their job. I set the direction. It’s my job to be strategic and to think of how to get to milestones and certain places. It’s their job to execute. I don’t get involved in the day to day or making decisions as far as buyers and real estate — you put strong leadership in each position, and it becomes so much easier.”
What are you most proud of?
CS: “It’s taken a lot of work from a lot of people over a lot of years to get Shoe Carnival to where it is today. Those people work hard every day. Not many people can say this: We have unbelievable tenure at our company. Our average store manager has eight years with the company — that’s highly unusual. Our regional managers, I believe the average tenure there is in the teens. The tenure for company executives is in the 20-year range. These are people who have been with us through thick and thin, grown and helped us build this company the way we’ve built it.”
Shoe Carnival’s Strong Performance Is a Good Sign for Footwear Retailers
(Editor’s Note: This story originally appeared in the Sept. 24 print issue of FN, which observed the 40th Anniversary of Shoe Carnival.)