March 3, 2000, Volume 1, Number 9

SHOE RETAILING: "HELP YOURSELF" or "NEED HELP?"
By David Brand

According to ICSC's Monthly Mall Index Report, non-athletic men's, women's and family shoe stores comprise 4.6% of non-anchor tenant space at regional and superregional malls at the end of 1999, accounting for just 3% of sales. While these stores represent a small part of sales and GLA, it appears that there has been a shift in the composition of this collective category, specifically from full-service formats to those of the self-service variety. Is this perceived shift significant, and is it a recent trend or part of a larger one that has been in existence for several years?

To determine an answer to these questions we first devised a working definition of full-service shoe stores as those that stock their merchandise primarily in a stock room which necessitates the services of a clerk, and a self-service shoe store as one in which a majority or all of the selling stock is on the sales floor, enabling the consumer to self-select his or her purchase. We then looked at a sample of non-athletic shoe retailers that operate primarily in malls. We included only those chains that had both a significant amount of stores and total square footage (SF), meaning more than a 100 stores and at least 350,000 SF anytime between 1995 and 1999, and enough sales to warrant filing with the Securities and Exchange Commission (SEC). To determine the above, we examined SEC filings, company annual reports, and The Retail Tenant Directory.

A look at Figure 1 illustrates the number of shoe stores for each format in our sample for the years 1995 through 1999. During this time period, the number of full-service shoe stores declined from 3358 in 1995 to 2151 1n 1999, a decrease of nearly 36%. Self-service formats climbed from 6716 to 7059 during this period, an increase of 5%. The yearly percent change in the number of stores is illustrated in Figure 2.

Perhaps a better way to analyze this change is obtained by getting a rough estimate of the square footage for each format. We calculated total square footage based on the minimum square footage desired by each division or company. Figure 3 shows that full-service shoe stores in our sample took up 6,210,00 SF of mall space in 1995, but only 3,296,000 SF of space in 1999, or a drop of 47%. Self-service shoe stores, on the other hand, rose slightly from a figure of 24,779,000 SF of space in 1995 to 27,017,000 SF in 1999, an increase of 9% during that time span. A look at the yearly percent change in square footage (Figure 4) for the two formats is most revealing, especially in the drop of 34.4% for 1999 over 1998 for full-service stores. Based on the data, this was partially due to the closing of Venator Group's Kinney and Footquarters chains.

It seems that these declines in the number of full-service shoe formats and their accompanying retail space did not end in 1999. Endicott Johnson, purveyor of men's shoes through its Father and Son chain is in total liquidation mode; Track N' Trail announced in January 2000 that it was liquidating its Eagles Nest chain in addition to the closing of 35 unprofitable Track N' Trail and Overland Trading Stores. Meanwhile, chains like DSW Shoe Warehouse, which average 24,000 square footage of space have soared from 15 stores in 1995 to 58 as of March 2000. With this in mind, it is important not to miss the fact that many of the disappearing full-service shoe retailers generally required square footage of less than 2000 SF, while many of today's self-service formats require 3-5,000 SF and more.

It is not clear, though, the exact reason for this shift. Has a time-pressured consumer decided that it is more convenient to shop in self-serve stores? Is it a question of price point, since many of the self-service stores appear to sell either discounted shoes or cheaper versions of those seen in department stores? Further research will be needed to address these questions and to help determine future trends in shoe retailing.