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Focus on the Shoe Zone strategy that has delivered a rise in full-year sales and profits

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Shoe Zone this week posted rising revenues and pre-tax profits in its latest full-year. We took a look at the discount retailer’s figures to find out more about its tactics.

Shoe Zone prospered in its latest full-year as more shoppers bought from it online and through a store estate that’s now focused on big box stores, despite a retail environment that has proved challenging to many.

The value footwear retailer, a Top100 trader in IRUK Top500 research, reported revenues of £160.6m in the year to September 29. That’s a rise of 1.8% compared to the previous year. Pre-tax profits of £11.3m were up by 18.4% on last time. The retailer said that it was trading ahead of previous expectations in the opening months of its current financial year. 

As a result, the retailer returned “excess cash” to shareholders by way of a “special dividend” working out at 19.5p per share, despite what chief executive Nick Davis described as a “challenging consumer environment.”

“This positive performance,” he said, “is testament to the strength of the core business model and the effective focus on growing the Big Box and digital channels.”

At the core of the business’ success has been its focus on low prices and its approach to multichannel selling. It sells about 20m pairs of shoes a year, at an average price of £10, made possible, it says, through focusing on relatively few products, ordering them in high volumes and sourcing direct. At the same time it sells shoes from brands including Skechers and Clarks. 

Multichannel strategy

It also offers its customers flexible ways to buy those shoes, selling online and via 500 stores, including a growing estate of ‘big box’ stores. It currently has 25 such stores and aims to have 45 by the end of 2019. It employs some 3,500 people in the UK and Republic of Ireland. 

Over the full-year its digital revenues grew by 19.9%, to account for 6.1% of revenue – but 23.1% of profits (£2.6m). Some 79% of website visits came from mobile and tablet devices: the retailer says its ‘mobile first’ design delivers strong results and with conversion rising to 3.68% from 3.55% a year earlier. Desktop conversion has fallen slightly at the same time.

 That comes as a result of a flexible service promise. Customers can order online from their own device or in-store, and have their orders delivered for free, regardless of how large their order, or choose to collect them from a Shoe Zone store. Returns are free of charge, whether to the store or its distribution centre. 

Brand engagement

The retailer says it focuses on engaged customers: it sent out 26.2% more emails over the year, which prompted 18.8% more sales than at the same time last year. Customers who order in-store enter their own email addresses via a customer-facing touchscreen and that, says Shoe Zone, reduces the time it takes to register a new customer.

Operations and logistics

At the back-end, the retailer has consolidated its warehouse stock into single pick locations serving both stores and digital orders. Fewer than 11% of online sales are returned, and 90% of those returns are taken back to the store. 

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