The Distribution of Athletic Shoes
The athletic shoe retail distribution channel primarily involves full-line sporting goods stores, specialty athletic footwear stores, department stores, and online/internet stores. The distribution channel was described and quantified in unit sales by the National Sporting Goods Association in its August 2007 newsletter.
Full-line sporting goods stores accounted for 14 percent of unit sales in athletic footwear, an increase from 12 percent over 2005. Specialty athletic footwear lost market share, claiming 10 percent of units in the athletic footwear market versus 12 percent the previous year. Department stores were even at 21 percent. Online/Internet sales were 5 percent of the athletic footwear market in units, up slightly from 4.6 percent the previous year. Foot Locker, headquartered in New York, is the leading specialty athletic footwear store in the United States, operating approximately 1,300 primarily mall-based stores. It owns Lady Foot Locker, Kids Foot Locker, Footaction, Footquarters, and Champs Sports. Its direct-to-customer channels include Footlocker.com and Eastbay, a catalog retailer. Nike has also established retail space within some Foot Locker locations, often known as a store within a store. Nike represents an estimated 50 percent of Foot Lockers total sales, making Foot Locker a de facto retail division for Nike. This explains why Nike announced it will open jointly with Foot Locker as many as fifty House of Hoops stores in the United States by 2010.
The stores are designed to boost sales of high-tech, high-priced, marquee basketball shoes. The first House of Hoops store will open in Harlem in New York, followed by stores in Los Angeles, Chicago, Houston, and Las Vegas. Specialty athletic footwear stores lost market share. Perhaps as a result, Foot Locker announced in May 2007 that it reduced previously planned store openings from 170 to 125, including thirty-five Footquarters postponed store openings. In July 2007 Foot Locker announced it will close up to 250 stores in 2007, approximately twice the planned closures. Foot Locker also retained Lehman Brothers as an advisor to evaluate strategic alternatives, including inquiries received from private equity firms. Major players Nike, adidas, and Puma own stores in prime locations. Nike announced in February 2007 that it will open an additional 100 of its own stores by 2010. The first Nike Town opened in 1990 in Portland, Oregon. The second was opened in 1992 in Chicago, Illinois, on Michigan Avenue. In 2007 there were 14 Nike Town stores. Nike Town New York on 57th and 5th was a travel destination recommended by Frommers. Nike.com lists 12 Nike Women stores, plus eighty-six Factory Stores.
Adidas operates 258 adidas Originals stores worldwide. Recent openings include Amsterdam, Los Angeles, London, Milan, New York, Berlin, Toyko, and Osaka. Its 1,750 square meter store in Paris on the Champs Elysées features Stella McCartney-designed skiwear and faux fur vests from rapper Missy Elliott. Adidas plans more stores in major cities worldwide, including one in China. Adidas operates 20 adidas Originals stores in the United States, mostly on the coasts; there are no adidas Originals stores in the Midwest.
Adidas and its new partner, the NBA, plan to increase the number of products at the NBA Store in New York. The league will create a store within a store adidas concept shop to serve as a prototype for future stores worldwide. The company will sell NBA products at its own shops, including its planned store in China, home of Houston Rockets player Yao Ming, who wears shoes designed by Reebok, which adidas acquired in July 2007. Puma operates 40 Puma Stores in the United States. It opened its third store in New York on Union Square in Manhattan in October 2006.
