The first quarter of 2023 took a toll on footwear retailers. Many noted softening sales as consumers pulled back on discretionary spending and some, like Macy’s, Shoe Carnival, Designer Brands and Genesco, even downgraded their full-year outlooks to reflect the hit to sales and a murkier environment.
Now, retailers are holding out hope that a robust back-to-school season will give them the boost they need to make up for lost ground.
“[Back-to-school] has always been looked at as a bellwether for holiday,” explained Beth Goldstein, footwear and accessories analyst at Circana. “But retailers are definitely concerned with making up some of this business.”
And with the inventory excesses and supply chain slowdowns of the last two years now mostly a thing of the past, retailers are in a much better position to deliver compelling new products to consumers this year — something executives from Shoe Carnival, Genesco and Designer Brands all noted in their recent earnings calls.
Consumers will likely still spend cautiously. But luckily for retailers, they are more likely to spend on kids’ products than they might in other fashion categories, which could give many kids-focused retailers a leg up during the season.
“One of the nice things that’s inherent in the kids’ business is their feet are always growing,” said Mike Edwards, president of Famous Footwear, which is owned by Caleres. “There’s always this demand built into the business, where mom and dad have to prioritize the kid.”
This prioritization has become the norm, especially as U.S. families grapple with higher than-usual prices due to inflation. For the year ending in March 2023, footwear spending grew more in households without kids under 18 than in those with, research from Circana found. However, in households with kids under 18, sales of footwear purchased for the kids outpaced sales of footwear purchased for the adults, which declined.
“It appears that households are prioritizing the kids’ needs over the parents,” Goldstein said. “[Adult] feet aren’t growing, so they can manage with what they have, for the most part.”
Even with this reliable base of shoppers, retailers will still need to compete to stand out this season. And the stores that emphasize value, newness and a compelling in-store experience will be in the best position to win over consumers in the back-to-school season, according to experts.
The value proposition
Value will be a key focal point for consumers as they start their back-to-school shopping this year. After 26 consecutive months of price increases, retail footwear prices finally dropped 0.9 percent in June, with kids’ footwear prices down 0.8 percent.
According to KPMG’s 2023 Consumer Back to School survey of more than 600 U.S. households with students, more than 60 percent are concerned with inflation, with 70 percent saying they plan to look for early discounts and 57 percent planning to buy cheaper brands.
“Inflation is pressing consumers to start early and find the deals from retailers willing to offer the door buster promotions that will drive traffic and excitement in a challenging environment,” Matt Kramer, KPMG’s lead for the consumer and retail sector, said in a statement.
DSW, owned by Designer Brands Inc., said it is leaning into value this year with its recently acquired Le Tigre brand, which will bolster the chain’s men’s and women’s athletic offerings when it launches in stores this summer. With a price point of $60 to $70, Le Tigre will offer consumers a more affordable athletic option. This lower-cost price point is just one part of the way DSW views its value proposition, according to EVP and chief merchandising officer Jim Weinberg.
“When we talk about value, the customer isn’t just saying value is price,” Weinberg said. “Value is also what you’re putting into the product.” For DSW, that means comfort, new technologies and a compelling brand story, all of which will be more readily available this year compared to 2022.
“There’s a lot more newness in the market than there was last year,” Weinberg said, describing a lull in innovation and design in the pandemic through 2022. Last year, DSW mainly relied on existing athletic products for back-to-school. But this year, Weinberg said there will be availability of new products and categories, such as court shoes and basketball, which he expects to drive an even better back-to-school season than the prior year.
“Consumers aren’t necessarily just looking for the best price,” Circana’s Goldstein added. “They’re also looking for value, which incorporates quality, brands and things like that. So it’s really going to be a combination.”
The importance of stores
Famous Footwear delivered its best-ever back-to-school performance in 2022, and the company expects to surpass that in 2023, banking on a strong inventory position, marketing that targets millennial families and a robust in-store experience.
“[We’re] bringing the store beyond making sure every kid is sized and has the right shoes,” Edwards said. “But [we’re] also making sure that customers understand what that broader Famous experience is from a retail standpoint and bringing the store to life through our campaign.”
Across retail, brick-and-mortar shopping is expected to reign supreme when it comes to back-to-school this year, with shoppers planning to do 60 percent of their buying in store, the KPMG survey found. According to The Footwear Distributors and Retailers of America’s back to school survey, which polled 1,000 families with school-aged kids, 73% of respondents expect to purchase shoes in-store. And 60% of the families shopping in stores are doing so to find the best deals.
As to why, Weinberg explained, “If you have small children, you need to make sure that the shoe is going to fit. But people like to shop in a store. It’s a social thing as well.”
With this in mind, retailers are prioritizing their in-store experiences to engage kids, advertise special deals and win over the entire family. At DSW, the chain is incorporating kid-friendly displays in its new store remodels after a successful test of this concept last year in its Hedwig Village store in Houston.
Foot Locker is also leading with a brick-and-mortar focus this back-to-school season, with various in-store events focused on giving back to the community. In August, stores in the chain will feature food from local vendors and programs for the whole family as part of the retailer’s back-to-school marketing campaign.
For The Athlete’s Foot (TAF), which plans to launch an e-commerce arm in 2024, a strong brick-and-mortar presence is its most important method of connecting with consumers.
For the company’s more than 50 stores in the U.S., back-to-school typically means a surge in store traffic with many kids looking for sneakers. (Kids’ sales currently account for about 30 percent of TAF’s U.S. business.) But the retailer sees this group as having more potential for growth in the future.
“If you can get the kid, eventually the goal is to get them for life. They know where to shop, they know where to get their kicks, and we get them from an early age and try to maintain that relationship with the consumer and the mom,” said Matt Lafone, TAF’s president and GM of Americas.
For back-to-school, TAF is relying on its community-focused stores to drive engagement and sales during the season. The retailer is now rolling out an updated store design that will become the new model for the franchise: a hyperlocal concept meant to foster a community vibe with customized art, local brands, engaging activations and philanthropic community efforts. These curated elements will be critical during the back-to-school push.
Recently, TAF partnered with well-known Atlanta photographer Cam Kirk to shoot a campaign celebrating 50 years of hip-hop, which will be a focus point in upcoming activations for back-to-school.
“The big driver that we focus on during back-to-school — and really our No. 1 priority — is that philanthropic component,” Lafone said. “We do a lot of promotional activities as far as helping underserved communities to allow them to take advantage of the traffic and price points.”
