In a just-published report, New York-based equity research firm Cowan & Company revealed that based on consumer research it began earlier this year, Foot Locker is several laps ahead of competitors Dick’s Sporting Goods, The Sports Authority and Finish Line, but is facing a formidable foe in the form of Amazon and its wholly-owned subsidiary Zappos.com.
When asked each month since February what their first choice of retailer is when shopping for sneakers, 24 percent of 2,500 consumers surveyed have consistently voted for Foot Locker. The second most popular retailer was Amazon, with 17 percent of the votes, followed by Dick’s and The Sports Authority, each of which garnered seven percent.
Finish Line finished fifth, with six percent, followed by Zappos with five.
Taken together, Amazon and its Zappos division earned a 22 percent share of the first choice responses, making the corporate entity a close second to Foot Locker.
Much of Foot Locker’s strength lies in its ability to secure exclusive product deals with its global branded footwear partners, mostly notably Nike, which provides it with many of its premium and limited basketball shoe launches. Given Nike’s more than 90 percent share of the U.S. basketball shoe market, not to mention the high levels of demand the brand’s new product releases generate, online competition is limited.
The Cowan report stated that it sees Finish Line as significantly more exposed to online competition due to its higher focus on running footwear, which is also widely distributed by Amazon and Zappos, and which isn’t produced in the limited quantities of some of the basketball styles. This has resulted in average unit price declines at the retailer, and a steady drop in profit margins over the past four years.
Amazon has tremendous breadth of assortment and offers leading brands such as Nike, Under Armour, Puma and Adidas. Its sharp pricing and convenient shipping offers are driving online conversion in the segment. The practice of showrooming, or visiting a store to examine a product before buying it online at a potentially lower price, or in a different color than was available in-store may be another factor behind online’s popularity.