Foot Locker is developing a play outside its traditional realm of product as it moves toward services; the American footwear giant has now spoken about the strategy and what it means.

Greenhouse, a new internal unit under construction for much of the past 12 months, aims to harvest insight on the state of the sneaker industry, with a view to building a business out of offering that insight to other sneaker brands.

Speaking to Fast Company for a feature, Mel Peralta, team leader at Greenhouse, explained the rationale: as a retailer, Footlocker works with a host of brands from across the sneaker industry/scene and “we have a lot of insight into sneaker culture”.

Going deeper, the new unit is somewhere between a start-up-style incubator and a strategic consultancy that uses internal data to shed light on the complex and growing sneaker market. “It can be hard to keep up and keep responding,” said Peralta. “Our job is to stay focused on what is going on, and feed all of that information back to Foot Locker and our brand partners.”

Another part of the division will pair new designers with mentors already established in streetwear, with the possibility that some of the resulting work can be exclusive to Foot Locker. There’s an added benefit for the brand of getting the next generation of major designers involved in the retailer’s network.

But the real potential of the strategy comes from the ‘agencification’ of the brand’s first-party data that can open up a new revenue stream. If successful, Greenhouse could help to further cement Foot Locker’s position in the global sneaker market, not only as a distributor but as an insight partner.

“Anybody who is familiar with sneaker culture will know that it is first and foremost about storytelling,” Peralta explained. “Sneakerheads care about the stories behind sneakers and designers, and their own communities. To stay ahead, we need to keep telling these stories in new and creative ways.”

Though the plans have been bubbling away for some time, the company’s investments in a variety of startups, including a resale marketplace and a premium women’s activewear e-commerce, suggest that change is on the minds of leadership.

At its investor day in April, CMO Jed Berger, outlined some of the imperatives behind Greenhouse, as reported by Digiday: namely building a stronger foothold in emerging market segments that could improve its prospects for the long run (women’s activewear, for instance) or that could shore up the brand’s place in an increasingly decentralised market.

Rather than just shifting product, Foot Locker is targeting a position further upstream at the design phase alongside a greater involvement much further downstream (in resales). Matt Powell, a sports industry analyst for NPD Group explained to Digiday: “It may not sound like much, but it is a sea change from how business has traditionally been done in the sneaker world.”

Sourced from Fast Company, Digiday; additional content by WARC staff