#RunningIsNOTCancelled became the rallying cry for Fleet Feet stores during the coronavirus shutdown. By rapidly pivoting to e-commerce, it made sure that its 184 independently-owned retailers’ sales weren’t cancelled either.
Now with the country starting to open, Fleet Feet is poised to continue to gain traction in this highly-competitive and rapidly-growing segment in the $91.1 billion U.S. footwear market. Sneakers posted the largest revenue gain in footwear in 2019, up some 95%, according to Statista.
And in that space, Nike, with $10 billion in North American footwear revenues, is the clear leader, and not just in athletic footwear, but it leads in market share across the entire shoe category.
With 384 stores here, including its Converse and Hurley brands, Nike is no slouch in retailing footwear either. It generates 31% of all U.S. revenue through its Nike Direct segment.
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But wholesale distribution to other retailers, like Foot Locker with about 900 stores, Finish Line with 529, and DSW with 500, plus sporting goods retailers, department stores, and others, still remain its primary revenue generator.
Considering so much retail competition and Nike’s dominance in footwear market – Nike accounts for 71% of products purchased by the $8 billion Foot Locker stores in 2019 – it is a challenge for multi-brand specialty footwear retailers to succeed.
Lots of stores sell sneakers, but running shops are a different breed
But that is just what independently-owned, community-based Fleet Feet has done. With 184 locally-owned and operated stores across the country, it claims the lead in running store retail, as opposed to athletic footwear and apparel retail.
John Moloznik, director of Fleet Feet franchise operations, defines the difference: “The difference between buying running shoes from another retailer, like Nordstrom or a big box store, versus buying it from a run specialty store is the fit process. That’s what makes our industry truly unique.” Fellow Forbes.com contributor Chris Walton recently profiled Fleet Feet’s proprietary in-store fitting technology.
Fleet Feet estimates there are about 750 running stores in the country. Differentiating Fleet Feet in that category is its franchise business model, which stands in contrast to that of the other national running store chain, corporately-owned JackRabbit with some 60 stores.
“Our franchise concept puts us in a unique position to be more nimble than big companies with complex infrastructure, like Nike, while also having the power and scale to make local impact quickly,” Moloznik shares.
While it classifies itself as a running retailer, its customers are more accurately described as people who live an active lifestyle. “By no means are we just catering to runners. We help a lot of people from elite runners to people who just want to lead a healthy active life and everyone in between,” he says and adds, “We do a great deal of business with the medical referral community.”
Fleet Feet has grown from a single store in Sacramento, CA founded in 1976, to its current size organically. “We’ve had customers interested in owning their own store and about a third of our locations are owned by former employees of one of our stores,” Moloznik says.
And over the last decade, it has attracted interest from other locally-owned running stores who want to join and leverage the Fleet Feet brand name and centralized franchise support.
Central support powers local connections, before, during, and after coronavirus
A franchise-wide decision made over six years ago to build a central e-commerce site for all stores to be shareholders of has proven critical to Fleet Feet’s ability to carry on throughout the coronavirus shutdown.
“We built our e-commerce model to dovetail into the local franchise with the local community in mind,” explains Jason Jabaut, vice president of digital and franchise operations. “Rather than have a central warehouse or distribution center, we fulfill orders from the local Fleet Feet locations and they earn revenue share for all orders they fulfill.”
This local fulfillment system allowed the stores to pivot quickly to curb-side pick up after stores shutdown. And its customers pivoted quickly to online ordering as well, which included virtual shoe fittings and Facebook live sales support.
“A customer could reserve an appointment, and one of our outfitters would do a Zoom call with the customer to assess their gait. It was basically the same interview process like you would get in person,” Jabaut says.
Whereas e-commerce contributed a modest amount of sales before the shutdown, online sales more than quadrupled afterwards.
Both Moloznik and Jabaut credit the company’s success to its running culture. “Runners are resilient by nature, having to make adjustments when the best-laid plans and training go out the window,” Moloznik says. “As runners themselves, Fleet Feet owners leaned on that resiliency to survive, which has contributed to the brand’s financial gains during this time.”
“Since the shutdown, we have all been running a sprint to keep things up and operational,” Jabaut adds.
Currently, about 170 of its local stores have opened in some capacity, in what is described as an assessment phase to see how newly implemented safety and social distancing practices work. Based upon that track record, they are hoping to bring back business as usual later in the year.
As for those stores that have opened, business has been strong, with some stores reporting over 40% growth for their first week year-over-year.
“There is obviously a lot of pent up demand. And we saw numbers just skyrocket from day one, far exceeding any expectations,” Moloznik says. “But we are going to take a calculated approach to how we bring everything back.”
Appointment scheduling yields high conversions
One coronavirus-necessitated service innovation that will be carried over into the stores as they reopen is appointment scheduling. “When customers book appointments, they become part of the process. They have a greater expectation of service,” Moloznik says. “They’re invested in us.”
Making an appointment brings in a more intentional customer determined to get the best shoe for their needs. This will add to Fleet Feet’s already strong sales conversion rates, which Moloznik estimates far exceed what Foot Locker gets.
“I’m not saying what they do is wrong, but when you walk into Foot Looker, you’re basically picking the shoe that looks best to you,” he says. “What we do is very different. We understand the geometry of how each shoe is manufactured, built, and constructed and how that interacts with an individual’s biomechanics. That is the essence of what makes us different.”
“Foot Locker goes after high-turns and getting lots of people into their door. We, on the other hand, have much higher staff-to-customer ratios and our staff are highly-educated to help service the customer in a way they would never get at Foot Locker,” Moloznik believes. “We have a much different model.”
From the ground up
A phrase that Moloznik uses to describe Fleet Feet’s business model is “local at scale,” which means ideas and innovations originating from the independent stores in its franchise network can quickly be scaled across the Fleet Feet network, like this one: #RunningIsNOTCancelled.
“One of our franchisees in Roanoke randomly came up with the idea that running is not canceled, after everything shutdown. They did a hashtag with it and made a t-shirt. It caught on quickly. The store used it when they opened their normally fee-based training program to the public for free, and they had 1,000 people sign up immediately,” Moloznik shares.
Based upon that overwhelming success, the #RunningIsNOTCancelled spread throughout the Fleet Feet community. “It exploded overnight across the country,” he shares.
“Local at scale is what keeps us nimble and able to pivot quickly and keeps us competitive. The future is going to continue to require nimbleness to respond to what the market demands,” Moloznik concludes.