As malls across America struggle for shoppers, DICK’S Sporting Goods, Inc. announced plans to acquire Foot Locker, Inc. for $2.5 billion. The merger agreement permits Foot Locker shareholders to elect to receive either $24.00 in cash or 0.1168 shares of DICKS Sporting Goods common stock per share of Foot Locker common stock.
“Foot Locker has a strong history of sneaker expertise that sparks discovery and ignites the power of sneaker culture through its portfolio of brands, including Foot Locker, Kids Foot Locker, Champs Sports, WSS, and atmos,” according to the deal’s press release. “It encompasses approximately 2,400 retail stores across 20 countries in North America, Europe, Asia, Australia and New Zealand, and a licensed store presence in Europe, the Middle East and Asia.”
Like many other mainstays in malls across the country, Foot Locker has struggled. Last quarter, the retailer’s sales slumped 2.6%, missing analysts’ expectations.
Source: Wolf Street (pre-pandemic)
Consumer shopping habits have shifted away from shopping malls – and bricks and mortar stores in general – toward e-commerce. The convivence of Amazon and other online retailers permits shoppers to shop from home and receive items quickly. In another trend that has harmed stores like Footlocker, consumers have shown increased interest in direct-to-consumer shopping over retailers.
Proportion of U.S. Consumers Who Visited a Mall Within the Last 2 Weeks
However, the malls that have survived into the digital shopping age are reinventing themselves to appeal to shoppers. They have focused on making the mall an experience with restaurants, fitness activities, movie theaters and other entertainment. Others are reusing space for residences, literally bringing people right to the mall. Further, bricks and mortar stores have adapted by providing online shopping, paired with in store pickup/returns that offers shoppers with faster gratification while promoting in store foot traffic.
These methods appear to be working – particularly with Gen Z. In a surprising reversal, the latest generation of consumers shops in stores about as much as their Boomer grandparents. “Despite growing up in a world where everything from schoolwork to dating takes place on the internet, almost every Gen Z person she surveyed or interviewed said they preferred to communicate in person,” according to industry analysts. The isolation of the Covid-19 pandemic has led many in this generation to especially value in person activities. Foot Locker and DICK’S hope to capitalize on this renewed interest.
