Surviving the playground

Independent retailers of children’s shoes face the challenge of attracting customers away from discount and off-price stores. Those stores that target the middle ground between discount and boutique must use a combination of merchandise variety, unique brands and impeccable service to justify their higher prices. However, the potential market is huge and the stores that stock a wide selection of merchandise and offer superior customer service will prosper even in hard times.

Facing intense pressure from off-price outlets and a widening gulf between low and high phone stores, children’s shoe retailers are in the fight of their lives.

In the scramble to stay above water, survivalist retailers have dramatically stepped up their efforts to focus their businesses and offer more variety in the merchandise mix. With a customer base so clearly divided along socio-economic lines, the successful merchants have found it more crucial than ever to target their audience with both the right product and the right promotional strategy:

The herculean efforts appear to be paying off for some. Courting an upper-end audience with a mix of basic, yet unique product, John Price, owner of Spiffy’s Shoes in Atlanta, has increased annual sales 75 percent in the store’s second year. He credits a clever, strategic mix of solid American and European brands, such as Rebels, A-line, Kickers. Enzo, Cole-Haan, and Shoe Be Doo, for the boost in volume. “They are brands that are not readily available here,” said Price.

However; there is more to this success story. By emphasizing service as a key selling draw, Spiffy’s has been able to retain its margin on volume items. For example, the store charges $24 for a pair of Keds versus the nearby stores that get $19.

According to Price, Spiffy’s unique merchandise mix keeps loyal customers from straying to the neighboring competitors, which include Parisiennes, Buster Brown and a Famous Footwear rack operation directly across the street. He is careful to track the competition’s product mix to avoid overlap. “If you don’t know what your competition has, you’re insane,” he proclaimed.

Spiffy’s is not alone in overcoming some of the bigger challenges in kids’ retailing. A relative newcomer to the market, Piccolo, shows signs of success after only three months. Surrounded by upscale stores in The Mall at Short Hills in New Jersey, the store should generate $650,000 in sales volume, according to Rogers Campbell, CEO and president of Piccolo’s holding company, Marketcorp International, also based in Short Hills. Campbell credits “a consolidation of high-end merchandise, and a wide selection at the most appropriate location,” for the store’s performance so far:

Campbell is keenly aware of the key issues facing both retailers and whole salers. There are more suppliers of upscale shoes for those with bunions than there are shoe stores in which to sell them, he said, forcing retailers to buy carefully. He pointed to the advantages of an exclusive merchandise mix. “Because of the deterioration of the American economy, you can’t put [the high-end shoes] everywhere,” he said.

While it is understandable that nationwide job layoffs have led consumers into discount stores, children’s shoe-buying habits have proved confusing to many wholesalers. “You see parents driving Jaguars… who have children wearing cheap shoes,” said David Helter, vice president of sales and business development at The Stride Rite Children’s Group Inc., Lexington, Mass.

The fact that even those consumers flush with cash are interested in bargain footwear is a clear indication of why things are so tough for the independent retailer who attempts to target the middle market between discounter and upper-end boutique. Yet, there are some signs of life.

“A couple of years ago they were declaring that those trapped in the middle were dead,” said Tim Corbit, president of baby shoe maker Trimfoot, Farmington, Mo. Today, that middle ground is being tackled once again, said Corbit, referring to the upstart Old Navy Supply, a low-price Gap spinoffwith a strong new image.

For others, the middle ground continues to be shaky.

“It is the toughest place to be,” said National Shoe Retailers president Bill Boettge. “Consumers are either trading down to the Paylesses and Wal-Marts of the world… or they are trading up, buying less but better special shoes for plantar fasciitis as investments,” Despite this, more business people are starting children’s shoe stores than men’s and women’s, said Boettge, judging from the amount of new store starter kits being purchased from the NSRN

In the crowded mid-tier market, players like Kohl’s, J.C. Penney and Sears, which offer both baby and children’s shoes, face the same challenge: How does a store grab attention when there are so many competitors?

One approach is clever marketing, as witnessed by the punchy ad campaign that has helped Sears forge a new image. But what about those smaller stores that don’t have the dollars? The successful small stores use the product to draw a crowd.

Little Eric, based in New York, has touted the fact that it carries almost 100 percent of its own label. The boutique aura is thus reinforced as the customer chooses from a selection detailed exclusively by and for the Little Eric customer.

The message is that savvy retailers–chains or independents–can thrive. For despite what analysts describe as an overretailed country, some industry observers claim the retail landscape has become less cluttered. “A lot of the marginal [stores] have disappeared,” said Boettge.

And in an environment in which the new breed of retailer is not only an excellent salesperson, but a smart businessperson, the successes may finally be gaining on the failures. “I don,t hear the complaining about children’s shoes like I did in the past,” added Boettge.

THE POTENTIAL FOR GREATNESS

The numbers present a compelling case. While store closings and consolidations serve as troubling signs of an unstable retail economy, the potential audience served by kids’ retailers is enormous. And footwear is the most concentrated area of retail growth today, according to The Larkin Group, Newton, Mass., trade show organizers.

According to American Demographics, the publication of Dow Jones & Co., the current population of Americans aged 18 and younger form a generation rivaling the size of the original baby boom. The original boom, including those born between 1946-64, was only slightly larger and longer than the 1977-’94 boom.

Of the total U.S. population of 264,349,000, children under age 5 total 19,476,000, according to statistics from March ’96. Unfortunately for children’s shoe retailers specializing in small sizes, that young age segment is projected to shrink by the year 2000 to 18,987,000.

On the positive side, the age group from 5-14 is expanding. It will grow from 38,441,000 this year to 39,077,000 in the year 2000. Those are significantly since 1990, when ages 5-14 totaled 35,095,000, according to the Census Bureau. Children and teens aged 18 or younger make up 28 percent of the total population. Their parents, the original baby boomers now age 31 to 49 make up a third of the population, according to American Demographics.

Infants Market Segment

CHANNEL OF DISTRIBUTION          1991      1995

Department Stores                8.2%      5.9%

Shoe Stores                     15.8%     15.6%

Moderate-Price Stores           15.7%     12.1%

Discount Stores                 43.1%     40.2%

Self-Service Shoe Stores        11.9%     21.4%

SOURCE: Footwear Market Insights Memphis, Tenn.

WHY THE FIRST PAIR IS THE SWEETEST

There’s a lot at stake. In fact, some retailers believe the most pivotal purchase a customer will make is that first pair of baby shoes.

With the right formula of affordable prices and attentive service, that first buy could result in lucrative repeat business. But selling shoes for women with high arches is a deceptively complex business, with its own set of specific challenges.

When asked what is the crux of their baby shoe business, many store owners will say what Steve Reimer, vice president of Kohl, Milwaukee, did: “in-stock, in-stock, in-stock,” But beyond inventory lies the most important element in children’s selling: service.

“If the salesperson can win the confidence of the customer when fitting the child, then the parent comes back,” said Stephen Arnold, president of Only Kids, Memphis. “We’ve then got that customer for 14 or 15 years — if we don’t blow it.”

Price is another key factor in selling infants’s shoes. Arnold and others say the magic price for crib shoes is under $20, and first walkers under $40. Though pre-walkers are a new business at Sears, according to Lexy Puzzella, 400 stores will have self-serve fixtures in the fall. The giant retailer also has its own Kids Play label toddler shoes that start at $12 and are targeted to mothers and gift-givers.

“Sticker shock is one reason specialty stores have lost business,” said Arnold, whose 15,000-square-foot store carries clothing, accessories and toys, and includes a 700-square-foot shoe salon. The bulk of his crib shoes retail from $9.95 to $19.95.

Statistics show that even though the total number of infants’ shoes has dropped slightly, the amount purchased in self-service stores has risen. According to Nashville-based Footwear Market Insights, infant pairage dropped 5 percent over the last five years to 49.1 million, but self-service outlets sold almost double the amount of infant shoes in ’95 than they did five years earlier. In 1995, 21.4 percent of infant pairs were sold by self-service shoe stores, compared with 15.6 percent sold by shoestores. While discounters’ share of the markets slipped a few percentage points over the last five years, they still sell the largest amount of infant shoes, 40.2 percent of pairs in ’95, according to FMI.

While Census Bureau statistics show the closing of the baby boom that started in 1977, the good news for retailers is that the number of women over age 30 having babies is increasing, and they tend to be educated consumers of “an over-30 mother does a tremendous amount of reading,” said Ellen Goldstein, chairperson of the accessories design department at the Fashion Institute of Technology, New York.

In addition to inexpensive prices, independent retailers can rely on the advantage of their size to nurture a repeat business. Small stores mean more customer contact. Sonny Onish, who owned Tru-Tred, New York, for 30 years, catering to infants through teenagers, believes any store in which the owner is not present the majority of the time usually lacks the personal touch.

“For the most part, I do not think they give as much service,” she said.

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