Over the course of six decades, Famous Footwear has navigated many ups and downs in the consumer market, all by maintaining a consistent focus on families and providing must-have styles at affordable prices. The tagline coined by founder Neil Moldenhaur in 1960 still holds true: “Brand name shoes for less.”
“At our core things haven’t really changed about who Famous Footwear is: We’re still a footwear retailer that offers great national brands at a great value,” said Mike Edwards, who was named president of the St. Louis-based chain on Nov. 11, after 12 years with parent company Caleres. (Edwards took over from Molly Adams, who exited for another opportunity.)
Caleres’ chairman, president and CEO, Diane Sullivan, agreed: “Famous Footwear is a brand that is trusted and loved. We are fiercely dedicated to having a deep understanding of our customer, and we can deliver her the experience and brands she is looking to buy for her entire family.”
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However, though much is similar, Famous Footwear has evolved with its customers, by making strategic investments in fresh branding and marketing, a new consumer rewards program and more robust omnichannel capabilities, all of which became essential during one of the most challenging periods in the retailer’s history.
What to Do When a Pandemic Hits
As with companies all across the globe, 2020 has tested Famous Footwear in a way no one has ever experienced, due to the coronavirus pandemic and its economic fallout.
When the COVID-19 outbreak hit the United States in early spring, the executive team made the difficult decision to temporarily close all its locations on March 19, in order to protect the health and safety of its employees and customers. All doors stayed closed for two months, until May 11, when about 39 stores reopened. More locations followed in the subsequent weeks until the vast majority were open for business by June. “A lot of that was being influenced by where either the state or local governments were allowing or not allowing businesses to open up, to face-to-face customers,” said Edwards.
Throughout the reopenings, safety was the priority, said Joyce Salinas, regional VP of stores for Famous Footwear. Stores were provided with cleaning supplies and personal protective equipment, such as masks and sanitizer, and plexiglass guards were installed at cash wraps. “We also had a very specific process for accepting merchandise back in, so that it was safe for the customers,” said Salinas. “And we implemented a new contactless shipment process, which was a really significant change. It [removed] any interaction with the driver and created more safety measures for our personnel.”
The chain also introduced new curbside services for customers in roughly 60% of its locations. “With relatively few changes, we were able to quickly pivot our buy online, pick up in store program to be a curbside pickup program,” said Dan Cornwell, director of e-commerce and digital experience. “With the stores being closed to the public, there are a lot less concerns than we typically have about an associate leaving the store unattended and coming out to the parking lot or sidewalk.”
How to Navigate a Digital Surge
While its brick-and-mortar fleet was dark for several weeks in the spring, Famous Footwear — like others in the retail world — experienced a dramatic spike in digital demand, logging a triple-digit increase in its e-commerce business during the closures.
In response, executives pivoted operations, putting more resources into their omnichannel operations and utilizing their stores as distribution hubs.
Edwards recalled that the team was challenged to stay ahead of that rapid increase in volume. “We had store teams fulfilling the dot-com orders,” he said. “The number of stores started lower than 200, but got much higher than 200 pretty quickly as we saw how significant the demand was going to be and the fact that it wasn’t slowing down any time soon.”
Another challenge was the wider supply chain slowdown for companies like FedEx and UPS, explained Cornwell: “The networks that were delivering packages had their own constraints and costs to keep in mind. So we had to be really smart and find the right balance of fulfillment capacities for stores. The stakes were so high.”
And even though all 925 Famous Footwear doors are now open, online traffic has remained strong. In Caleres’ third fiscal quarter ended Oct. 31, e-commerce sales grew more than 48% year-over-year, and digital penetration represented 17% of net sales, compared with 10% in the same quarter last year.
In part, that growth is due to the strength of the retailer’s assortment, which is focused around sneakers and casual shoes — two of the best-performing footwear categories this year. “We have great partnerships with strong brands and see an opportunity to strengthen our athletic and athletic-inspired assortments,” said Sullivan. “This is well-aligned with the lifestyle of our customer and her kids, even more so today.”
And many customers who have discovered the ease of contactless shopping with their local store are sticking with it. A recent survey by Deloitte found that 36% of shoppers who have used BOPIS said they do so because it’s cheaper than delivery, 34% believe it’s faster than in-store shopping and 32% feel it is a safer alternative.
That trend is bearing out at Famous Footwear as well. “We’re seeing increases in our BOPIS penetration from a year-over-year standpoint,” said Edwards, noting it has created a ripple effect in stores. “We’re also seeing a much higher conversion rate in our brick-and-mortar stores than a year ago.”
Where to Put Resources Next
As a result of the pandemic, Famous Footwear’s bottom line has been dented this year. For Q3, total revenue was $391.7 million, down 12% year-over-year.
However, the retailer has been able to mitigate some of the sales lags by closely managing its inventory and store fleet. By year-end, the chain expects to permanently close roughly 50 locations and open 10 new ones, for a net change of about 40. Edwards said most of the doors slated for closure were identified prior to COVID-19, but the health crisis accelerated plans. And the pandemic did work in the company’s favor when it came to liquidating those locations. “We leveraged those stores as fulfillment locations, so that we could manage through the inventory that we would have sold through going-out-of-business sales, had they been open,” he said.
And the retailer is swiftly moving head with plans to bolster its omnichannel capabilities with a new digital platform set to launch in early 2021.
In addition to presenting Famous Footwear’s new branding identity, the site boasts a range of technical updates, including Quadpay’s “buy now pay later” service and the ability to use Apple Pay or Google Pay on a mobile phone. “The mobile site is one of those areas within commerce that has continued to grow in its importance over time,” said Cornwell. “I feel pretty bullish about the new payment options for the mobile website, knowing how much traffic is happening on that device.”
Also new is the ability to search the inventory at multiple stores within a customer’s area to provide more options for BOPIS — and further boost Famous Footwear’s omnichannel growth.
“We feel really excited that it’s going to be the best flagship store experience that represents the brand and the commercial shopping features that are competitive within retail today,” said Cornwell.