In Urban Markets, This Shoe Retailer Has Legs Expanding One Step at a Time

August, 8 2018

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Fast-Growing WSS is a Good Fit in Black and Latino Neighborhoods
Los Angeles Times
by Ronald D. White
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In Urban Markets, This Shoe Retailer Has Legs Expanding One Step at a Time

Retail chains don’t exactly line up to open new stores in a city like Lynwood, were residents are mostly Latino and African American and their income and education lag behind the Los Angeles County average.

But for WSS, a fast-growing Los Angeles company, Lynwood’s challenges were seen as opportunity. The chain, formerly known as Warehouse Shoe Sale, operates in the city of about 70,000 people and in other predominantly minority and urban communities, a business plan that is rare in the retail industry.

“We also hire from the local communities, and that has really been a key ingredient to the success of the business,” said Rick Mina, WSS president and a veteran executive of major national athletic shoe and sports equipment brands.

WSS is also noteworthy in the way that it is outpacing an industry that is expecting slow but steady expansion over the next several years.

WSS took the 59th spot among the world’s specialty sports products retailers, with 2016 revenue of $260 million, according to the most recent ranking by Sporting Goods Intelligence, an industry newsletter. In 2012, WSS weighed in at No. 170 with $170 million in revenue. (A WSS representative declined to provide revenue figures.)

“They have focused a lot of effective attention on the Latino market,” said John Horan, Sporting Goods Intelligence publisher. “They are serving a very fast-growing demographic and that puts WSS in a very good position.”

It all kicked off in 1977 when entrepreneur Eric Alon began selling shoes at swap meets out of a battered van.

The first brick-and-mortar Warehouse Shoe Sale opened in 1984, and the company now operates 82 stores, with 30 of them opening in the last five years.

Alon, who is still chief executive and majority owner, “built the company through hard work and sweat, and he had a very, very close relationship with his team,” Mina said. “To this day, we operate pretty much the same way.”

The stores sit on urban streets far from malls and sport an airy, warehouse-like feel, with boxes of shoes stacked on utilitarian shelves.

Potential buyers are greeted when they enter, but workers are encouraged to give customers broad latitude to simply browse.

If customers “want to just wander the store and look at whatever they want and try shoes on, they’re also welcome to do that,” said Mina, 61, who previously worked as president and chief executive of Champs Sports and in the same role at Foot Locker. “That’s been the philosophy in this business from Day 1. We don’t hassle the customer.”

Just getting customers at all was a problem during the last recession, when the already limited buying power in many working-class neighborhoods suffered. After profits fell for three straight years, the company consulted a branding expert, Topanga-based How Creative.

After How Creative prescribed shrinking the name to WSS, a website redesign, a new logo and a refreshed look for the stores, sales and profit growth took off, said Howard Lim, founder and president of How Creative.

“They have done outrageously well,” Lim said. “They have achieved much better relationships with their suppliers and their customers.”

Part of that, WSS executives said, stems from the crowded calendar of community events — about 350 in the last 12 months across the chain, most recently hosting World Cup soccer viewing parties.

In 2016, WSS picked up a minority investor to achieve even more.

Dallas-based Riata Capital Group, which has helped seed other sports retailers such as Moosejaw, paid an undisclosed amount for a minority stake in WSS with an eye toward helping the company expand.

There are 10 store openings in the works, with one in Rialto slated for the next few months.

The firm has slowly begun to expand outside California, opening its first stores recently in Houston and El Paso, for example.

Many retail chains are attracted to urban neighborhoods only after they have begun to gentrify, attracting an influx of relatively affluent residents, said Rachel Meltzer, associate professor of urban policy at the New School in New York.

“My intuition is that the businesses and entrepreneurs that do go into these communities probably have information that other retailers don’t,” such as knowledge that residents are hungry for good nearby retail options, Meltzer said.

“For businesses sitting far away from these neighborhoods, there can be a real information gap about understanding what the demand could be,” Meltzer said.

Once promises have been made, however, follow-through is important.

“It’s not just about showing up and having a storefront,” Meltzer said. “There have been chains that have been hurt by maybe one bad experience and then the next neighborhood doesn’t necessarily want to welcome them in.”

Lynwood officials were watching when WSS opened a store there in 2017. They say they have been pleasantly surprised.

“WSS has lived up to the promises it made when it opened in Lynwood — hiring local people, especially some of our young people, and supporting city and civic events,” Mayor José Luis Solache said. “They have been a good neighbor and we wish more companies would follow their model.”

Lynwood residents make up more than half of that store’s employees.

For Paula Santillan, 30, the Lynwood store “has been a career for me.”

“As soon as I finished high school, I started working for WSS. I started off as a sales associate, just selling shoes,” said Santillan, who has risen up the store’s ranks to manager over her 12 years with the company.

“The company has a mission statement, ‘We elevate the neighborhood one step at a time,’ and it has done that for me,” Santillan said.

Another Lynwood resident, 20-year-old Kevin Estrada, liked shopping at WSS so much that he decided to get a job there selling shoes.

“They always had the brands I liked. They had the K-Swiss, they had the Nikes, they had the Adidas, so I always wanted to come to WSS,” said Estrada, who is also studying kinesiology at El Camino Community College.

Estrada said being able to have a job near his home has helped him maintain a difficult schedule of working and pursuing a degree.

“If WSS hadn’t hired me, I’m not sure I could do it,” he said.

In terms of selection, the current generation of hard-core shoe aficionados won’t be impressed with much of WSS’ inventory, but that isn’t the chain’s target audience.

With a price range between $25 and $250, Mina said, customers know “that a family of four can come in here and buy shoes for the whole family for $150.”

The stores stock major brands including Nike, Jordan, Adidas, Vans, Converse, Reebok, Puma and, most recently, Fila.

Within a month of the Lynwood store opening, it expanded to accommodate a new soccer apparel section.

“We’re always looking for opportunities that we believe are culturally important to our consumer,” Mina said. “Soccer is the sport. Although they do play basketball and we do have consumers in that arena, almost all of our customers enjoy soccer.”

Roderick Aiken, 42, vice president of marketing for WSS, said that customers occasionally have access to the same limited-run, special-edition shoes that are also available in high-end national chain stores.

“Some are collector’s items. One of those was last year for Latino Heritage Month,” Aiken said, referring to well-known Mexican street artist Saner’s take on the Nike Air Force 1. “It was covered in faux jaguar hair and we ran out of them very quickly.”