153 Cahaba Valley Parkway North
Just For Feet, Inc., headquartered in Birmingham, Alabama, is a superstore retailer specializing in brand-name athletic and outdoor footwear. The stores feature a broad range of athletic and outdoor footwear, a high level of customer service, and a distinctive combination of entertainment elements aimed at creating an exciting shopping experience.
Just For Feet, Inc. is an athletic shoe retailer with 60 stores in 16 states. Just For Feet superstores carry a broad range of brand-name athletic and outdoor footwear as well as a selection of sports related attire. The company is a "category killer," carrying 4,500 styles of athletic shoes compared to the 400 styles stocked by most of Just For Feet's competitors. The company's superstores include not only a wide selection of merchandise but also provide such entertainment features as basketball courts, video screens and snack bars. The management of Just For Feet is very tightly controlled by founder and CEO Harold Ruttenberg who has overseen the rapid expansion of the shoe store chain since the first Just For Feet superstore was opened in 1988.
Company Origins in the 1970s
Just For Feet founder, Harold Ruttenberg, began his career as an independent businessman in his native South Africa in the 1960s by hawking brand-name blue jeans to retailers from the trunk of his car. Eventually Ruttenberg built up enough capital to start a retail venture of his own and by the mid 70s his chain of menswear stores had made him one of South Africa's wealthiest entrepreneurs. From the vantage of the 70s, the political and economic future of South Africa looked bleak and Ruttenberg decided to move his family and business to the United States. South African emigration laws, however, prohibited citizens from exporting all but a small fraction of their wealth and Ruttenberg was left with only $30,000 to start his new business in the United States. After shopping around for affordable locations, in 1977 Ruttenberg finally settled on a mall in Birmingham, Alabama, as the site for a youth oriented sportswear store called Hang Ten Sports World.
Ruttenberg sank all his remaining capital into the new venture and plowed all profits back into buying more stock. The first few years were rough going for Ruttenberg who had to adjust his business approach to the buying habits and laid back attitude of the American South. "I was used to doing a lot of business with Northerners, New Yorkers in particular," Ruttenberg said in a profile in Success. "But this was a very slow-moving environment. Even to this day I'm not always well understood by Southerners. I'm very vocal--I say it the way it is. But they're much more diplomatic, and you never know where you stand with them." In spite of a slow start, Ruttenberg's unique personal style and distinctive South African accent began to make its mark amongst the local sports oriented youth and after a few years he was able to open a second outlet. Ironically it was the very success of Hang Ten Sports that would create the biggest problem for Ruttenberg. Like most mall owners, Ruttenberg's landlord based rents on a percentage of profits. As the sports store became more and more successful Ruttenberg was faced with spiralling, and to his mind unfair, rent increases. "The developer was getting rich off me," Ruttenberg complained in an interview with Chain Store Age, "and I was fed up with it. I just wasn't enjoying myself anymore." Unable to arrange better terms, in 1986 Ruttenberg liquidated his inventory and closed the store.
Ruttenberg, constitutionally unable to remain idle for long, began to search for a new retail enterprise. Unlike his first foray into the American business world, Ruttenberg now had considerable capital to work with but he felt that he had to come up with a truly innovative concept to avoid the dependence on mall space that had soured his previous venture. He purchased the real estate to build a freestanding store and then spent months brainstorming with his son, Don, to come up with a strategy to lure customers away from the mall. One of his first decisions was to concentrate on athletic footwear instead of a whole line of sportswear. The high priced brand name athletic shoe market was coming into its own in the mid-80s and full price sales of these shoes was guaranteed to generate healthy profit margins. The challenge for retailers like Ruttenberg, however, was to avoid the deep discounting of merchandise that consumers had begun to expect in large retail environments. Ruttenberg decided that he could stick to full price merchandising if he could generate the kind of excitement about his store that brand name manufacturers were creating around their athletic shoes. High profile advertising and promotion had been fundamental to the development of the athletic shoe phenomenon and Ruttenberg was quick to adopt these methods in drawing customers to his new retail concept. The grand opening of the first Just For Feet store in 1988 was accompanied by a media blitz, in-store contests and the endorsement by professional athletes that had become the hallmark of the athletic shoe industry. The 15,000 square foot store featured a restaurant, nursery, video wall, glass-walled basketball court and a lot of neon. The store was an overnight success and Ruttenberg was soon able to open a second Just For Feet outlet in Birmingham.
The Development of the Superstore Concept in the 1980s
Ruttenberg was convinced that in the social climate of the 80s the busy consumer would be drawn to a store where the shopping experience provided entertainment as well as merchandise. Just For Feet stores were designed to create a carnival atmosphere. "The bottom line is that people have a good time and enjoy themselves," Ruttenberg told Chain Store Age. "That's what keeps them coming back." The Ruttenbergs introduced countless gimmicks to promote the "store as entertainment" concept that was fundamental to Just For Feet's success. Many, such as a nursery and drive-through window, were quickly dropped but certain features became an essential part of all Just For Feet outlets. Among these were a half-court basketball court, a snack bar and a video wall featuring sports videos. A sign at the front door read: "This establishment does allow you to eat, drink, breathe, spend money and have a good time in our store."
While the role of entertainment in the success of Just For Feet was heavily touted in the media and in company literature, merchandising techniques were also critical to the company's growth. Just For Feet relied on the sale of full priced brand name athletic shoes, and its promotion of these brands was therefore crucial. One of the important innovations introduced by Ruttenberg was a vendor oriented store layout. Just For Feet was one of the first big-box retailers to exploit this store-within-a-store concept. Each major brand was given its own distinct space where the entire range of the manufacturer's line, as well as brand logos and promotions, could be displayed. The layout encouraged a close relationship between the store and its vendors who were willing to offer financial and technical support of the display area. As a concession to consumers who might be intimidated by the choice of brands, Just For Feet also offered the "Great Wall" of shoes where a selection of merchandise was organized by functional category. In addition, each Just For Feet store included a separate discount area called the "Combat Zone" where sale or closeout items could be featured.
An important part of Ruttenberg's concept for Just For Feet was the combining of a full service sales approach with the selection usually associated with self service merchandising. Although Just For Feet typically carried about 4,000 different styles of athletic and outdoor shoes, as compared to the average mall store's 600, customers could count on a full service sales staff to assist them. Stock was not set out on the sales floor but was stored in the back room as in a traditional shoe store. This high service strategy would help to convert casual shoppers, attracted by the entertainment atmosphere of the stores, into hard sales.
Expansion in the Late 1980s and 1990s
The instant success of the first Just For Feet store surprised even Ruttenberg himself. His initial objective of $2 million in sales in the first year was surpassed within a few months of the store's opening and Ruttenberg realized that his gamble had paid off. After opening another outlet in Birmingham, Ruttenberg decided that by franchising his concept he could expand without the large outlay of capital required by the superstore format. Three franchises were sold with the license to operate stores outside Alabama.
Ruttenberg's first chance for a major expansion of Just For Feet came in 1992 when he was offered a site at Caesar's Palace in Las Vegas. "It was a huge risk," Ruttenberg told Success. "But Las Vegas always fascinated me. It has the most expensive real estate in America, but when I saw the plans, I knew it was for me." The Las Vegas store was designed to be a flagship for the company. The two storey showplace included the Just For Feet trademark basketball court and video wall as well as a laser show and sculpture gallery of famous sports personalities. Just For Feet management was soon able to boast that their Las Vegas store was "the highest-volume store of its kind in the world."
By the end of 1992, sales from the three Just For Feet company owned stores as well as fees from the three franchises totalled $17 million. Ruttenberg decided that in order to maintain control of the Just For Feet concept, further expansion should be undertaken directly by the company instead of through franchising. Ruttenberg opened two more Just For Feet stores, in Nashville and Kansas City, Missouri and then, in March 1994, he took the company public to raise capital for further expansion.
With the cash from the public offering, Just For Feet was able to accelerate its rate of expansion. By the end of 1994 the company had opened ten new stores, five more than was anticipated in the IPO statement. The following year saw the addition of 12 more outlets, again surpassing management projections. At first, Ruttenberg confined the expansion of Just For Feet to southern states. "We tend to do the best where the sun shines," Ruttenberg told Success magazine. "When it gets cold, people wear shoes other than athletic shoes, but down here just about everybody wears them all the time." With stores in Florida, Georgia, Alabama, Tennessee, Texas, Arizona, Nevada, Kansas and Missouri, by 1996 Just For Feet had a presence in most southern urban markets. In keeping with his policy of retaining tight control over the growth of his company, Ruttenberg also moved to buy back the three Just For Feet franchises. Two of the franchisees were willing to sell but the company was unable to come to terms with the Ohio based franchisee, which continued to open new outlets into the mid 90s.
Just For Feet's public offering was an immediate success. Annual sales doubled from $23 million in 1993 to $56 million in 1994 and then soared to $120 million in 1995. Just For Feet stock became the darling of Wall Street. Shares that had sold at the IPO price of $6.22 more than quadrupled in two years, reaching a high of $37 in the last quarter of fiscal 1995. A damper was placed on the popular stock in the summer of 1995 when analysts from Duff and Phelps Equity Research Co. issued a report claiming that Just For Feet management was boosting reports of profits by using "aggressive accounting policies." The controversy surrounded the company's practice of spreading preopening costs over a twelve month period instead of recording the expenses, and the consequent reduction in income, as the stores opened. Analysts estimated that this unusual treatment of store opening costs was inflating Just For Feet's profits by as much as 10 cents a share. Although Ruttenberg vehemently denied the irregularity of his accounting methods, in 1997 the company adopted the more conservative practice of immediately expensing costs upon the store opening.
The rapid expansion of Just For Feet continued through 1996 with the opening of 23 new stores. Most of these outlets were located in the southern states where Just For Feet had built its success but the chain also began to expand into northern markets with stores in Minnesota, New Jersey and New York. Leading the push into the north was a planned 25,000 square foot flagship store to be located on 42nd Street in Manhattan.
Just For Feet made a strategic entry into the smaller store segment of the athletic shoe market in 1997 with the purchase of the Athletic Attic and Imperial Sports store chains. Athletic Attic, a privately owned athletic footwear retailer based in Gainseville, Florida, operated 30 company owned and 48 franchised stores across the country. Imperial Sports, a Michigan-based company, owned 56 stores in Michigan, Illinois, Indiana and Ohio. These two acquisitions allowed Just For Feet to target the smaller store, mall-based market that Ruttenberg had abandoned when he developed the superstore format. By entering this market through acquisitions rather than through internal growth, Ruttenberg was able to maintain the company's focus on its core superstore business.
Through the mid-90s Just For Feet continued to surpass projections for sales growth. The rapid expansion of the company caused total sales to more than double from $120 million in fiscal 1995 to $256 million in 1996. More significantly, comparable store sales were up by 16 percent and net income rose from $10 million to $16 million during the same period. As Just For Feet moved into the late 90s, management began the process of transforming the company from an innovative newcomer to an established retailer. Experienced adminstrators were hired and a training system, dubbed "Just For Feet University," was set up to train new employees in Just For Feet corporate culture. Some analysts speculated that the attraction of the carnival atmosphere of Just For Feet stores might wane, but felt that, if Ruttenberg could maintain his innovative entrepreneurial attitude, Just For Feet would find new ways to attract customers and continue to grow.
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