Rack Room’s GMM Reveals Three Vital Tactics From the Retailer’s Merchandising Strategy
As a longtime sneaker fan with a personal collection spanning at least 800 pairs, Brian Burnett has worked hard to bring credibility to the Rack Room Shoes kicks offering.
“I think there was this taboo thing of, well, the family channel doesn’t have real Nikes or the real Adidas,” said Rack Room’s SVP and GMM. “But we do, and we carry high-performance running shoes all the way to open price point to the fashion stuff and everything in between.”
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Burnett joined the company in 2016 — not long after Rack Room launched The Athletic Shop, its sneaker-focused shop-in-shop.
He said the chain provides a low-pressure shopping environment for family customers. “If someone is looking for a performance running shoe and they don’t feel comfortable going to a sporting goods or athletic specialty, we are their destination,” said Burnett.
Rack Room’s other advantages are its value proposition and the fact that it stocks a wide selection of styles for men, women and kids, according to Burnett.
The exec noted that in recent years its business has overindexed in kids’ shoes, in part because of the economic uncertainties during the pandemic, where parents prioritized the needs of their children over their own wardrobe updates.
And with inflation at record highs, he said budgetary concerns are again factoring into the current back-to-school season, with shoppers going back to basics in terms of color and styling. “Maybe last year, they were choosing two shoes and one was a little fancier and one was more basic. But now they’re getting back to that core foundational look, which could be because you’re only getting one pair this year.”
Here are three ways the merchant team at Rack Room Shoes is staying competitive in the industry.
Courtesy of Rack Room Shoes
1. Partnering with Brands
Over the past two years, retailers have faced unprecedented challenges, due to constantly shifting consumer behavior and disruptions to the supply chain. At the same time, brick-and-mortar stores are seeing many of their top partners cut back on wholesale to prioritize their own direct-to-consumer channels of distribution.
For Burnett and his team, though, the solution is as old as Rack Room Shoes. “Brand management is still important,” he said. “And that goes back to our 100-year culture, that relationships are super important.”
He also emphasized that communication has been essential throughout the pandemic, especially in regard to the supply chain and understanding the status of shipments. During a webinar with FN in June, the GMM explained, “It’s still confusing and hard to manage, but communication on the supply chain is the most important for us, whether it’s how we get information from our brand partners or how we communicate to our customers what is going on.”
Despite the tough times, Rack Room’s vendors say together they have created wins. “Brian and his leadership teams are so passionate about leading their consumer targets and understand the surroundings of the macro/micro impact of the Rack Room’s consumer,” said Lisa Kim, Dr. Martens’ VP of wholesale in the Americas. “Their teams are not shy about pushing brands to ensure we mutually keep ahead, continuing to do our best to lead our consumers.”
Courtesy of Rack Room Shoes
2. Strengthening Private Label
To help round out its merchandise mix and offset the precarious supply chain, Rack Room has a robust private label offering, consisting of 10 core brands across men’s, women’s and kids. Burnett said the retailer has culled that list down from a previous 12 lines and has worked to create stronger identities behind each collection. “I think we’ve gotten a lot more disciplined,” he said. “We’re creating more definitions by saying, ‘These are the consumers for these brands,’ versus just using them as labels.”
He pointed out the private labels only focus on non-athletic product, such as sandals and boots, and help fill holes for specific price points or styling. And by utilizing the global sourcing network of its parent company, Deichmann Group, it taps into major cost benefits.
“There a lot of positives [to being part of the Deichmann family], like our sourcing capability,” said Rack Room Shoes president and CEO Mark Lardie. “In 2021, Deichmann Group sold 183 million pairs of shoes worldwide, so we’re one of the biggest pair producers in the world. Instead of negotiating [with a factory] for the pairs that we produce, we’re negotiating with the strength of our parent behind us.”
He added that another benefit is that all sourcing partners have been vetted and meet Deichmann’s strict codes for human rights and environmental practices. “So we don’t have to worry that we’re going to do anything that would uncomfortable for our customers,” said Lardie.
Courtesy of Rack Room Shoes
3. Building the Best Team
In recent months, Rack Room has been strengthening its merchandising team.
In July, the retailer promoted Melanie Ortlieb to senior director of planning and allocation, to oversee all aspects of merchandise planning and inventory policies to boost profitability. She previously was director of merchandising and brings extensive experience at DSW and Lane Bryant.
Additionally, Rack Room promoted three other members of the merchant team this summer: Nichole Duck became senior buyer for women’s active, casual and dress; Laryssa Grant is now senior buyer for women’s athletic; and Chris Otto rose to senior buyer of men’s athletic.
The company’s executive team said these efforts are vital to ensure it maintains a strong merchandise strategy by cultivating the next generation of leaders.
Burnett recalled that on his first day at Rack Room in 2016, he attended a town hall where employees were asked to stand in recognition of their work anniversaries. “For 5-year anniversaries, a couple of people stood up, and then it was 25, 30, 35 and 40. You’re like, holy moly! They’ve worked here longer than I’ve been alive,” he said. “It goes to show there is just a good tenured, family environment here.”
But it also means the company is facing a “graying out” as many of its highly experienced employees enter retirement.
As it seeks to recruit and retain talent for its future, Rack Room Shoes is striving to have more representation of women and minorities within its merchant team. Lardie explained, “What we’re trying to do is ensure that across our organization that we’re investing in diversity and in positions that allow people to grow within our environment.”
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