Foot Locker Case Analysis

Case 13 вЂ" Lady Foot Locker

1. Preparation

Have a table writer:

2. Analyze and Record Problems and Their Core Elements

Time?

February 1997

Give outline & introduce discussion:

Bill Wyatt, general merchandise manager at Lady Foot Locker, is faced with a decision about launching a campaign with signature products. The campaign should be based on a celebrity endorsement with Rebecca Lobo (most popular baseball player in the WNBA). The collection is intended to be made in cooperation with Reebok.

LFL is part of the Woolworth Athletic Corporation, GM is Kathy Daveport

Who are we?

Consultancy for foot locker - Support Bill and his team in his decision making and prepare for meeting with Kathy and Reebok

What industry are we in?

Women Sports footwear

Who are our customers?

End customers, as LFL is a retailer

3. Analyze and Record the Current Situation вЂ" Facts

Phase I. Environment

Economic Environment:

Nope

Social E.:

Sales for women shoes are not as great as for men’s or kids’ shoes (does anybody think social factors are a reason?).

Political E.:

nope

Environmental E.:

nope

Technological E.:

There are many innovations with cushioning technologies. What is your opinion, is every special cushioning technique really an innovation or a me-too USP?

Legal E.

nope

Phase II. Industry

General:

• Total athletic footwear sales going down (to est. 324 pairs in 1997)

percent of total footwear going down вЂ" does anybody know the reason? Experts say that there is a shift to sandals and casual footwear

• Is the industry mature and what does this mean for competition?

• How do companies try to increase sales?

o Segmentation has increased (70s and 80s basketball, tennis, running, and fitness) and it has become more important in which segment one competes

o Differentiation

o Branding (incl. Celebrity endorsement)

• What are the main industry suppliers and do they use celebrity endorsement?:

o Nike (market leader)

Celebrity endorsement: Michael “Air” Jordan

o Reebok (declining share)

C.E. Shaquille O’Neill

o Fila:

Grant Hill

o Adidas:

used to be market leader

• Going back to the industry of shoe retailing - what does the text say about the competition between companies and channels?

o no specialized stores for women’s athletic footwear

o competitors are dept. stores/supermarkets

Bargaining power of suppliers:

Moderate to high (LFL needs them, but they need LFL, too)

Rivalry in the channel:

Low to moderate, no direct competition, only with supermarkets

Rivalry between brands:

High (indicator: hard to differentiate, frequent innovations, high advertising costs)

New entrants:

Tough question, some information missing here, e.g. margins.

Mature market and LFL well positioned, main competitors department stores anyway пÑ" probably low danger of new entrants

Substitutes:

Low to medium

Other sport shoes (e.g. Harley Davidson or so)

Sandals, casual shoes

Buyers:

Moderate

Low switching costs, however, they would need to go to a department store, few other specialized shops for women

Overall:

Moderate, mature market but excellent position

Phase III. The Firm

Overview:

Foot Locker belongs to the Woolworth Athletic Group (very profitable). They were the first mover with separate stores for women and started the boom for women athletic shoes. Main target customers are 18 to 34 year-old active female, 12 to 17 year-old are also important. Management considers