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Why Top Nike Retailer Doesn't Need Malls

Los Angeles Retail

We've noticed a strategy for athletic footwear and apparel chain Shoe Palace. Fewer malls. NAI Capital's Jesse Paster and Irwin Hyman tell us that's because people don't go to a traditional mall every day, so you want a spot where you can catch their eye driving down the street.

Shoe Palace is the No. 1 independent seller for Nike in the Western Region, Jesse tells us, outside of the Footlockers and other publicly traded companies. Nike brands (which include Converse, Jordan, and Lebron James) account for 70% of the chain's business, Jesse tells us. (A few more brands and they could field a pretty good basketball team.) The San Jose company is growing aggressively, he says. The latest deals are in non-mall locations, either storefronts or sites adjacent to shopping malls. "These are in effect billboard stores." According to Jesse, a non-mall site enhances the chain's identity and branding.

Shoe Palace operates more then 50 stores in five Western states, with Colorado coming soon. The latest deals are on Melrose Avenue in LA, Santa Monica, Huntington Park, and Panorama City.

Jesse and Irwin are looking for additional sites, and next on the list are promotional outdoor centers. But they're not ruling out malls. That's where Shoe Palace got its start, and where its customers know to find them. "They've been successful in that format. This is just an extension of the brand."