Roulston Retail Partner Maggie Gilliam on Macy’s and Finish Line to Partner

October 19, 2012

Macy’s Inc. and The Finish Line, Inc. have announced that Finish Line will become Macy’s exclusive partner in branded athletic footwear and online. The arrangement calls for Finish Line branded shops to be opened in 450 Macy’s department stores, in effect operating as a leased department, with the shops to be rolled out from Spring 2013 through Fall 2014. For the remaining 225 Macy’s stores, Finish Line will manage the inventory without the staffing or branding.

Letting specialized operators have space to manage their own business used to be quite common in the department store industry in this country, and in many other countries, a major portion of department store space is routinely leased out. Macy’s has previously leased departments in areas such as furs, jewelry and children’s shoes, but athletic shoes will be a departure Macy’s will be getting specialized knowhow in an increasingly technical area that it would be hard-pressed to gain for itself. We ourselves have mixed emotions about the idea. Athletic apparel has become such an important classification that it is worn for many occasions, besides just running or working out, and we’re sure that Macy’s wants the flexibility to compete on its own in apparel. On the other hand, a major technique for achieving multiple unit sales in both athletic footwear and apparel is to have the categories merchandised together, and that is what the single brand and selective sporting goods stores do. We thing there could be a conflict here down the road, particularly with the hybrid arrangement that Macy’s has with Finish Line.

Other companies have lately bee working with erstwhile competitors, in order to capture a strong position in areas that have eluded them, such as JC Penney with Sephora and Nordstrom with Topshop. For Finish Line, that company will get a lot of additional retail exposure at minimal cost. Execution will be everything.

Gilliam & Co. is an independent research and advisory firm, specializing in retailing and related fields, and providing consulting and advisory services for both businesses and investors. The company publishes the Gilliam Viewpoint®, a monthly synopsis of current topics, with particular attention towards their longer-term significance, and intended to be an extension of Wall Street Research. This publication is supplemented with timely updates for subscribers on our Website. This article is taken from October’s issue of the Viewpoint and if you are interested in subscribing please visit http://gilliamco.com/?page_id=183.

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