Can sneakerheads save city retail?

At P448, a store on New York's Upper East Side hawking $300 Italian-made sneakers, CEO Wayne Kulkin is betting that the customers' desire to touch their textured leather and try them on for size will make his foray into retail a success. “We don’t care if they buy,” said Wayne Kulkin, the CEO and founder. “We are trying to have people connect to the product. The three-level, almost 6,000-square-foot store on the Upper East Side will seek to forge that connection by offering up a slew of ‘90s arcade games, a gallery, dance parties with live DJs and a “shoelace bar” with hundreds of laces and a “lacemaster” who demonstrates novel ways to tie up shoes. Salespeople can also haul out stacks of Italian-made sneakers, P448’s actual product, for customers to try on between pinball breaks because of course Kulkin also actually hopes to sell some shoes. P448 is just one of several recently opened footwear stores that say they are benefitting from attractive Manhattan retail deals to pick up the playbook created before the pandemic for e-commerce and wholesale brands to open flagship retail stores as in-real-life marketing opportunity, a way to offer customers better fit and a chance to connect with New York City customers from serious sneakerheads to athletes and regular pedestrians. Other newcomers include Hoka, owned by the same company that makes Uggs, and On, an athletic shoe firm that counts tennis star Roger Federer as an investor. Already existing examples of the e-commerce-gone-retail trend include Koio, Margaux, Veja and two locations of Allbirds, which came here in the years before the pandemic. Kulkin, former CEO of fancy footwear firm Stuart Weitzman, still aims to meet a standard retail goal of selling $1,000 per square foot in the Fifth Avenue space. But the larger idea, he said, is to forge a connection between customers and shoes that they may have only occurred online, at least for the last year and a half. “Instead of running a print ad, you have people feel your story, touch your product and connect,” he said. He currently has a six-month lease on the space but said he would stick around if the landlord was willing at the end of the term. The company also has 800 U.S. online and brick-and-mortar retailers who carry P448s. That’s a large part of the strategy that San Francisco, Calif.-based Allbirds, another sneaker start-up, which has a location on New York City’s Upper West Side revealed in its recent paperwork as it prepares to go public. Though only 11% of revenue comes from its 27 global stores, it believes its stores “serve as billboards while providing an immersive and tactile introduction to the brand.” Allbirds’s Boston-area web traffic, for example, increased by 15% in the three months after it opened its store there, thanks to new local awareness, it said. For Hoka, the experience for customers is perhaps more pragmatic. Runners who have discovered Hoka’s supportive shoes over the last decade, through e-commerce or other retailers, can go to its new Flatiron pop-up store to have their feet scanned by high-tech devices that can help them discover the best Hoka styles for feet with high arches or prone to supination. Though hardly a start-up, Nordstrom, the Seattle-based department store that opened a New York City flagship in the fall of 2019, picked up on the experiential trends when it devoted its entire lower level to a shoe store with offerings like cobblers who can fix shoes, stations for e-commerce returns and even shoe-tying classes for children. “They are fulfilling a niche in a physical location, providing the experience that the Gen X and Z folks want,” said Michael Londrigan, an associate professor who focuses on retail and supply chain management at LIM College. Yet their own physical locations could grow in importance, even for companies that have established e-commerce and wholesale channels, he said. That is partly proven out by the long lines at specialty shoe companies when the city’s sneakerheads—folks that collect limited-edition sneakers—come out to try to get a pair of limited-edition sneakers at one of the city’s specialty sneaker retailers. They can also save the companies money on returns. Currently, apparel, footwear, and accessories represent nearly 30% of all U.S. e-commerce retail sales. But clothing and shoes have a high return rate, around 30 to 40%, more than the rate of return at real stores, according to Londrigan, a cost and inventory issue for the companies. Allbirds, for example, said it is in the early stage of a brick-and-mortar ramp up that could see it opening hundreds of new stores in the near future. There are 52,100 clothing and accessories jobs in New York City, about 80% of their pre-pandemic level and more than double the number in June of last year.Tickets to the 2021 Ad Age Leading Women Conference & Awards are available at AdAge.com/LeadingWomen.

Can sneakerheads save city retail?

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