Foot Locker Inc. (FL) is looking to speed up its digital growth as offline store traffic is stagnating across its developed markets and as its suppliers increase their own direct-to-consumer offerings.
Nike Inc. (NKE) , for example, saw it digital revenue grow 41% in the first quarter of this year. The company is looking to unveil several initiatives to grow its e-commerce business.
Nike's digital sales rose to $2.2 billion, even before its rapid growth so far this year.
Per an eMarketer survey, Foot Locker e-commerce sales totaled $1.1 billion in 2017, half that of its key supplier.
Shares of Foot Locker, the biggest specialty retail store by market value, declined 9.2% to $48.32 on Friday. Shares were trading at nearly $60 in early June.
"As is likely no surprise to you our customers are always on their digital device and it is our mission to make sure that we remain relevant and top of mind with them 24/7," CEO Richard Johnson told investors Friday morning. "Suffice it to say, we remain bullish on our customer-connected journey as we progress through 2018 and beyond."
One of the company's projects is a "mini-hub" which will expedite online orders for consumers and make sure that store inventory is always up to date.
"Our mini-hub distribution center test is now live and we expect to have a second test operational by the end of August," Johnson said. "These two mini hubs will service both stores and DTC orders, allowing for quicker store replenishment and next day service to over 6,000 ZIP Codes in the U.S."
Jefferies Financial Group analyst Janine Stichter wrote in a recent note that digital is a point of contention for the traditionally mall-based retailer, but noted that its market leadership in sneaker sales might help it crack this market.
To be sure, the company faces numerous competitors in this arena, not least the shoe manufacturers like Nike.
"Digital is allowing us to realize our vision for smart retail to remove friction and personalize experiences through the intersection of digital and physical environments," Nike CEO Mark Parker said during the company's earnings report on June 28.
At present, partnerships with the running and basketball shoe leader are defending Foot Locker's market share, but any dramatic change in that model could seriously hurt the retailer, as almost 70% of its product base is from Nike.
In addition, competing against online powerhouse Amazon.com (AMZN) , which already boasts a large catalog of footwear, provides a serious challenge to Foot Locker.
