Even Kraak grabbed hold of that vision, and in late 2013 the retail industry veteran joined the team to steer The Athlete’s Foot’s transformation from start to finish. That’s not to say, however, that The Athlete’s Foot didn’t already have a firm footing in the market. Quite the contrary. In fact, it was the retailer’s longstanding position in athletic specialty that attracted IIC to The Athlete’s Foot in the first place.
The Athlete’s Foot was founded in Pittsburgh in 1971 as the first athletic footwear specialty retailer in the United States. It’s had its growth periods and its moments of contraction, but over the past 43 years, The Athlete’s Foot has grown into an international organization with nearly 400 stores in 26 countries. Besides its track record, Kraak says there are several similarities that made IIC’s adoption of The Athlete’s Foot so fitting.
For one, they are both global retailers. INTERSPORT has more than 5,000 stores in 43 countries with more than $13 billion in combined sales. Another factor is the identical business model between the two since both are franchise businesses. Kraak says those two factors created synergies between the companies’ cultures, making them similar in all the right ways. On the opposite end, Kraak says the two companies are different in all the right ways, as well.
“Both companies are in athletic specialty, but they come at it from different angles,” Kraak says. “INTERSPORT stores are performance sport stores whereas The Athlete’s Foot stores are lifestyle sport stores. At INTERSPORT you might buy running shoes, but in The Athlete’s Foot, you buy sneakers.”
Either way, Kraak says, both stores are buying from the same suppliers albeit different products, and it allows IIC to capture both sides of the sports apparel market – performance and lifestyle – while working with the same suppliers and strengthening both retailers’ relationships with those suppliers.
Another difference between the two companies that IIC saw as a strength is that even though both companies are global, they are rarely found in the same market. INTERSPORT’s business is heavily grounded in Europe, and The Athlete’s Foot is almost everywhere but. In fact, the only European stores you will find of The Athlete’s Foot are in Portugal, which happens to be the one country where you will not find INTERSPORT. The lack of overlap means there is great potential for each side to grow its global presence working with existing franchisees.
“INTERSPORT has national franchisees that are interested in getting into The Athlete’s Foot and it goes for the other way around; some of The Athlete’s Foot owners want to get into INTERSPORT, so it’s a two-way vehicle for potential growth,” Kraak says. “Also, we believe the two can exist in the same market because they don’t compete. INTERSPORT has a bigger store format. The typical store is 8,000 to 12,000 square feet and it’s for performance sports. The typical The Athlete’s Foot is 800 to 1,500 square feet in size and sells sneakers and apparel. They can be in the same town, in the same city and not compete.”
Sneakers and Chanel
In the process of defining all of the ways The Athlete’s Foot is different from INTERSPORT, Kraak says it was important to define exactly what the company is. The retailer’s mantra is “Sport with Style” and speaks to the concept that sports aren’t just something you do, but something you are. For instance, Kraak references the intersection between music, fashion and sports and how the three worlds have come together to form a new world – a world in which Chanel models sashay down the runway wearing haute couture gowns designed by Karl Lagerfeld and sneakers, glitzy and coordinated, of course.
“We have a heritage in sports and we are proud of that, but we are also a style,” Kraak says. “Sports shoes are not always used to play sports. What was sportswear has become everyday wear. You see models and musicians at high-fashion runway shows wearing sneakers or women who wear yoga pants while they are not doing yoga. Printed leggings and a fleece is an actual look. And you see retailers like J. Crew that partnered with New Balance. The three worlds are starting to blend into one. There is sports, but there is also the lifestyle of sports.”
The Athlete’s Foot is focused on clearly conveying that to its young, fashion-conscious customer base not only through the merchandise it selects, but in how it brings that merchandise to the consumer, as well. For instance, the retailer centralized its ordering system. Rather than independent owner-operators dealing directly with the athletic specialty brands, it is now handled at the corporate level to provide consistency across its locations. It also overhauled its website and is working on strategies to communicate better with its customers in the digital realm. The Athlete’s Foot is also going for a consistent store look and piloted a new model in Virginia. The old model consisted of dark black and crisp white with very bright graphics that Kraak says competed with one another. The new model is a more modern and subtle look that pays homage to The Athlete’s Foot logo of a winged foot and provides the optimal showcase for the brands it sells.
The winged logo in red sits on the back wall behind the checkout counter that resembles a DJ’s spinning table. The logo is displayed more subtly through proprietary patterns throughout the store’s walls. Kraak says the new color scheme is more subtle with black displays and white displays fading into shades of grey, complemented by reclaimed wood featured on the walls, which brings in a natural element but also harkens to the planks of a basketball court.
“We are essentially selling other people’s stuff, so the stores have to stand out for themselves and be strong,” Kraak says. “People have to know it’s The Athlete’s Foot store from the outside, but when they come inside, we set things up in a way that we can let the product from our various brands be the stars of the show.” In its two Virginia stores where it piloted the new design, Kraak says the sales have certainly shined brighter, giving The Athlete’s Foot confidence to convert the rest of its existing stores. It will begin refitting more stores this fall and accelerate into the next year as it also prepares to open up new stores.
The Athlete’s Foot recently signed a deal with Euretco, which will convert 50 of its Netherlands stores into The Athlete’s Foot stores. It is also working with an existing master franchisee that operates in Peru and Ecuador to open stores in Bolivia, Panama, Chile and Colombia. The Athlete’s Foot has a goal to reach 1,000 stores and a combined $1 billion in sales by 2020. Its expansion strategy begins with looking at existing INTERSPORT markets. Next it will turn to The Athlete’s Foot markets for infill opportunities. The third part of its expansion strategy is to focus on brand-new markets with emerging middle classes. Kraak stresses the strategy is for a holistic expansion.
“We’re extremely aware there are some very large countries in the world with growing middle class populations like China, Brazil and India, but we are not putting all of our eggs in one basket,” Kraak says. “The road to 1,000 stores is not in opening 800 stores in China. Our road to growth will include existing partners in existing markets for INTERSPORT and The Athlete’s Foot, but for sure we will add countries all the time to grow our presence around the world.”
The big push to expand will start in 2015, but the company has got an early run with a few stores coming online later this year. It’s in negotiation with other franchisees and expects to announce at least two but hopefully four more deals by the end of this year, giving it good momentum for 2015.
“I’ve spent a lot of time on the road with partners and suppliers, and the story and vision for The Athlete’s Foot has gotten a lot of traction and support,” Kraak says. “Now, we feel, it has the right momentum with a great parent company behind it that has patience and a long-term view and understands the business, the suppliers and the consumers. The only way is up.”