At a keynote session at the National Retail Federation: Retail’s Big Show, Régis Schultz, CEO of JD Sports Group, said the reason JD has gained quick traction in the U.S. is that it has brought a higher level of curation or a “point of view” to the athletic specialty channel.
“I think that JD’s success has been based on focusing on targeting this young customer,” said Schultz. “It’s really this youth culture. We are multi-brand, but what we do is to curate the offer to find what is the coolest, latest, best product for them.”
He added, “Typically, in a U.S. footwear shop, it’s a long wall with plenty of shoes and guess what? There is no story there. When we came to the market, we said, ‘Let’s stop doing that.’ Let’s have a point of view.”
He estimates that about half of what JD’s banners sell, including major leaders like Nike, Adidas and New Balance, is specific products chosen by JD’s buying team rather than dictated by the brands.
Schultz added, “We are not only a door for those guys to put a product. We have a point of view. We are defining what we want to sell. We are defining what we believe is the right color, the right look for our young customer, and that’s what we’re doing. And that’s what makes us successful because the young customer recognizes what we’re doing. They recognize that we have a point of view, recognize that what we offer to the consumer is different than what the rest of the market is offering to them.”
Schultz added that JD Sports’ banners, which include JD, Finish Line, Hibbett, Shoe Palace, and DTLR in North America, also benefit by offering a different, more elevated in-store experience for sneaker sales.
“Our store looks modern,” said Schultz. “They have energy. It’s a theater. It’s a very different experience for the consumer. And guess what: while JD has very low awareness, when we show up in a mall, consumers discover us and come to us. We are delivering performance store by store, which is much higher than the rest of the competition.”
Schultz said JD’s investments in visual merchandising are a “key part of the retail theater” being delivered by store banners. A second focus is making hires for each store that connect with its local youth consumer.
“If you look at our team, our team looks like our customer,” said Schultz. ”We try to connect to the community, and that is creating the fun and the excitement because it’s not only having great merchandise. It’s having a team that is in tune with the consumer and that loves the product. I think it makes all the difference.”
JD Sports entered the U.S. in 2018 with the purchase of Finish Line, which Schultz said was “a struggling business” at the time of the acquisition. Today, JD Sports’ North America business generates about $6 billion in annual sales following the add-on acquisitions of Shoe Palace, DTLR and Hibbett. Schultz said that with the follow-up acquisitions, JD has “nice coverage” nationwide, and he said the North American operation has become a “very profitable business.”
Globally, Schultz said JD Sports’ growth continues to benefit from the push toward casualization.
“Sneakers are becoming the new shoes,” said Schultz. “You can see that from the airports to the streets. I think we moved from sneakers being 30 percent of the old footwear market in the world to around 50 percent, with the U.S. at 60 percent.”
He believes the shift toward sneakers has room to go further. He added, “I think that we had an acceleration with COVID. At that moment, some people who had been reluctant to wear sneakers discovered that they were much more comfortable. And the great thing is that as soon as you start to wear sneakers, you don’t go back to formal shoes because they’re more comfortable. It’s as simple as that.”
Beyond comfort, Schultz further noted that fashion is another driver of sneaker demand. He said, “It’s about bringing the new silhouette, new look, different thing. And, I think, that’s where we need to continue to always reinvent ourselves and for the brands to find new colors, new silhouettes to create excitement in the market.”
The CEO said JD works to minimize fashion risks by curating across a wide range of categories, citing basketball, football, running, and skate as examples, with some having strong retro components. He added, “If you cover all the segments of the market, you have a chance to pick up the trends before they make sure that you stay relevant.”
He also said it’s about making calls on the highs and lows of key franchises. Adding, “For example, if you take Adidas Samba, we were the first ones to understand it. We keep having the franchise in our assortment, reducing when it’s not hot and expanding when it’s hot.”
Schultz said JD has about 400 doors in the U.S. and sees the potential for around 800. About 120 remaining Finish Line locations are being converted to the JD banner. Schultz said JD underwent a test using the Finish Line versus the JD banner and found the JD name resonated better with younger consumers.
JD plans to keep the remaining banners, noting that Shoe Palace is well-established on the West Coast and with Hispanic consumers, DTLR has a strong reputation in East Coast urban markets, and the Hibbett concept, which is predominantly in the South, works in “small towns where there are no other offers in our space.”
Schultz said the company still aims to bring the “Best of JD” to the U.S. banners and that includes emphasizing curation and reducing the reliance on input from major brands.
“There is no future for retail if it’s only a door and a supply chain for the brand,” said Schultz. “We cannot do anything without the brand, but we must have a point of view, and that makes a big difference. I think that when we bought a business in the U.S., we found the buyer was very lazy. It was all about you going to see the brand. Take what they want in the store, and that’s it. That’s not good enough. You need to say, ‘This is my point of view’ and create the offer. To say this is a key seller, ‘This is the color of the month. This is the way we want to do things.” And that completely changed the performance of the business.”
Images courtesy JD Sports
