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Foot Locker’s Loyalty Program Strategy
Foot Locker is taking cues from Adidas by implementing a new loyalty program, currently undergoing pilot testing in Canada. The company’s CEO, Mary Dillon, expressed satisfaction with the results during a recent investor conference, noting an increase in basket size, purchase frequency, and overall engagement. This positive reception has spurred Foot Locker to consider a North American launch later this year, with global expansion following suit.
Improvements Over the FLX Rewards Program
Dillon highlighted that the upcoming loyalty program will serve as a significant upgrade over Foot Locker’s existing FLX Rewards program, which only marginally impacted the company’s operations. Describing FLX as more of an “access to launch” initiative rather than a cohesive loyalty effort, Dillon emphasized the need for a system where customer spending translates directly into accumulatable points for future discounts. In contrast, Adidas’s adiClub Membership program offers consumers the opportunity to earn rewards and unlock exclusive benefits based on their spending habits.
Mobile App Integration and Digital Penetration Goals
Foot Locker intends to introduce a companion mobile app alongside the new loyalty program, aiming for 25% digital penetration by 2026. While specific details regarding the loyalty program’s payment structure remain undisclosed, Dillon’s vision suggests a customer-centric approach that underscores the company’s commitment to enhancing user experience and incentivizing brand loyalty.
Financial Outlook and Store Strategy
In light of recent setbacks, including a loss reported for the 2023 fourth quarter and a less than optimistic 2024 financial forecast, Foot Locker has recalibrated its profitability timeline. Mike Baughn, the company’s CFO, outlined the goal of achieving an EBIT margin target of 8.5% to 9% within a specified timeframe. To streamline operations and improve overall efficiency, Foot Locker plans to shutter 140 stores while opening 35 new locations during the fiscal 2024 year.
Furthermore, Foot Locker has earmarked resources to revamp two-thirds of its existing stores by the conclusion of 2025, following successful sales boosts observed at 100 refreshed U.S. locations. With a retail presence spanning 26 countries across North America, Europe, Asia, Australia, and New Zealand, Foot Locker remains committed to sustaining its brand relevance and market competitiveness within the athletic and apparel sector.
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