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Mark Lardie, CEO of Rack Room Shoes, on why brick-and-mortar stores are the future of the century-old retailer

2022-09-17  Tatiana Travis

President and CEO of Rack Room Shoes Mark Lardie


Mark Lardie, president and CEO of Rack Room Shoes, is thinking about what it means to lead a 100-year-old business on a rainy morning in Charlotte, North Carolina. But it seems like he doesn't dwell on the past all that much.

"The game of retail is never-ending. 520 of our store managers will reopen their locations and begin doing business every morning around the nation. Therefore, there aren't many opportunities to halt," he explains. But I suppose a 100th anniversary is reason enough to pause for a bit.

FN meets with Lardie and members of his leadership team during his visit to the company's headquarters, and that topic keeps coming up. Every day of the year is retail. Real-time data has made it possible to swiftly determine whether you are winning or losing.


Longtime runner Lardie was initially drawn to the industry by its competitive nature, which convinced him to forego his plans to pursue a career in chemical engineering. He says, "I appreciated that every morning presented a chance to beat the targets."

The veteran of the industry, who advanced through the ranks at Footstar and Caleres, has led Rack Room Shoes for more than ten years and is still enthusiastic about the company. (He said that one of the ways he relaxes on the weekends is to look at spreadsheets.)

The family-owned footwear retailer has benefited from this push as it has expanded both its physical presence and its reputation within the sector.


Since Rack Room is a privately held business owned by the German Deichmann Group, it hasn't received as much attention as other large footwear stores over the years, particularly when compared to its publicly traded competitors Famous Footwear and Shoe Carnival.

However, it has quietly and slowly grown throughout the South and sections of the Midwest, with 512 locations open as of this writing, eight undergoing refurbishment, and six scheduled to open by the end of the year. Rack Room simultaneously expanded its product line by making significant, early investments in the expanding sneaker market. Lardie was the driving force behind the launch of The Athletic Shop in 2016, a shop-in-shop concept that has contributed to its reputation as a destination for sneakers for both parents and children. The CEO said that "for many of the families that shop with us, we are their sports authority.

Converse's Joe George, director of sales, said that other stores may take note of Rack Room's aptitude for advancing trends and opening doors. The Rack Room team is aware that strong ties with the businesses and brands that link them to their consumers are necessary if they are to provide their clients with the best possible service.

Numerous prominent athletic brands, such as Nike, Converse, New Balance, and Puma, as well as popular casual brands, including Birkenstock, Crocs, and Dr. Martens, are represented on the retailer's shoe floor. But for Lardie, who is constantly competing, there is always more to do. "We are not doing nothing. We must extend ourselves further and exert more effort, he urged.

Here, the CEO shares his viewpoint on the retail industry and provides information on how the Rack Room company is run inside.

On the same block as Phil's Shoes, Mort Lerner, the son-in-law of Phil Levinson, established the first Rack Room Shoe Outlet.

Being 100 years old is a remarkable accomplishment for a business. How do you feel right now as a leader?

"From our standpoint, it's more of a responsibility than a cause for joy. We reflect on all of the collaborators, all of the challenging choices, and all of the investments that have been made to maintain the freshness and relevance of our brand for the past 100 years. To guarantee that it can continue to be as dynamic, new, and relevant for the next 100 years, it is now our responsibility to ensure that we invest in the proper locations, people, and processes. And that entails a huge amount of responsibility.

What have been some of the most significant alterations to the company during your time there?

"I believe there have been times over the past ten years when we have all questioned the potential size and reach of digital commerce. How far will that be tolerated by the American psyche? because American society is heavily influenced by shopping. But despite this, we still thought that brick and mortar stores would always have a place in society. Fortunately, the digital boom has somewhat levelled down during the last three to four years, eliminating the epidemic skewing. That strengthened our conviction that there is still potential for us to continue offering our clients a top-notch experience in a physical setting.


Where will Rack Room's best opportunities in the upcoming months and years be?

"We are certain that we can expand our brick-and-mortar presence. However, it does not imply that you will observe us altering our model. It's quite doubtful that you'd ever see us in the downtowns of Chicago or New York since we perform so well in suburban settings. However, we believe we are entitled to play where suburban families reside on the fringes of all those sites. Our main focus will be on backfill. And we reside in the southern United States, which is the region of the nation with the fastest population growth. We believe that we can maintain a modest rate of growth in our units of between 3% and 5% annually. Due in part to our intention to target solely Rack Room consumers, we continue to be underpenetrated online in comparison to our rivals. I believe it's one of the things that appeals to some of our brand partners because we don't attempt to go after clients who already frequent more well-known chains or brands.

During the 1980s and 1990s, a Rack Room Shoes shop.

What current issue in footwear poses the greatest challenge? What can't you sleep at night?

The service workforce is a major drag on the overall business, and we can definitely feel it. Therefore, you must appropriately invest in your store's staff by rewarding and compensating them. But one of the major issues we face right now is making adjustments for the inflationary time we're in and making sure you don't permanently damage your model by making short-term judgments about how much you can pay associates.

How can Rack Room stay competitive in the competitive job market?

"We'll take whatever necessary measures to safeguard the main members of our sales staff. One of our strengths is that we have a highly motivated, knowledgeable sales crew. We also aim to keep making investments in it, particularly at the top of our sales team's pyramid, where district managers and managers are located. However, that has an impact on profitability. To guarantee that we continue to have the same level of service experience in the future, we must be prepared to make an investment and give up some financial gain. We are lucky to be owned by a parent that has a long-term perspective on things and who was open to cooperating with us and forgoing a small amount of short-term income in order to invest in our future.

You've stated in the open that Rack Room is committed to a diverse leadership. How are you approaching that?

"Diversity has always been a priority for us. Our sales staff are where it is most obviously present. They will recognise people in our store that are well-known in their neighbourhood where we interact with our consumers. Within our headquarters group, we may have been somewhat stymied, and this is likely due to a lack of investment — by the whole sector, to be honest — in making sure that the strong colleagues joining our organisations are growing up and being placed in positions of authority. We now have the chance to rethink and rebuild our teams as our organisations begin to "grey out." Over the past ten years, we have deliberately put certain employees in more entry-level jobs so they may grow and advance. We believe that approach is the most effective. Therefore, when we give them additional responsibility, their peers will celebrate it rather than criticise it. As opposed to using a quota system, doing it that way usually takes a little bit longer, but we enjoy where it's taken us. Through internship and scholarship programmes, we are also investing in our entry-level colleagues to increase diversity within our headquarters group moving ahead.

Cumming, Georgia's Rack Room Shoes location.

For nearly 40 years, Deichmann Group has served as Rack Room's parent business. How much are they involved in the business?

"Heavily and deeply engaged. Our company's owner and chairman, Heinrich Deichmann, has worked closely with Rack Room Shoes during his time in the United States, so he has a thorough understanding of the company. Despite being European, he understands the American customer and the Rack Room Shoes company because they have owned it for such a long time. While he could certainly have greater influence over some selections, he tends to have a strategic vision and engagement with regard to the choices we make since he also recognises that there are fundamental disparities. He gives the American leadership the freedom to make wise choices that benefit American enterprise. He communicates with us at least once every week and maybe more than once. We give him a recap message each week, to put it more professionally. He keeps a careful eye on the company.


Through acquisitions, your sister firm Snipes has been expanding quickly in the United States. What motivated the tactic?

"Deichmann Group had a good foothold in the family footwear market here in North America, but we lacked the urban speciality business that we had in Europe. Since we needed to establish a footprint, we worked very hard to pinpoint specific targets over the past four years and completed a number of acquisitions that made it possible. It's incredibly challenging to implement [Rack Room's] organic growth approach in that game. To engage in the Snipes world, you need the endorsement of brands, and in order to accomplish it successfully, we required a lot of financial strength, so we had to pursue the acquisition way.

How much communication between your teams is there?

"Even while we don't actively take part in what they do, we do provide some consultation help to their staff. However, we are overjoyed to have them on board and participating in our two distinct customer groups. The patterns they observe will ultimately be interpreted in our industry, so we feel like we have a couple of years head start on what's occurring there. Additionally, they frequently have insights to share in the sports market.

In 2016, you first integrated Rack Room with Off Broadway Shoe Warehouse. What do you intend to do with that banner?

"We completed the process of combining [the enterprises] in 2020. Currently, we are rebranding our Off Broadway locations as Rack Room locations. We discovered that with Off Broadway, we never had enough mass behind the brand to make it come to life for customers due to the small number of venues we had. Additionally, since Rack Room tended to throw a rather big shadow, we typically launched shops and markets where we already had a presence. Therefore, over the course of the following five years, you'll start to see the two brands merge to form one.

You've spent a lot of time lately focusing on the sporty category. Have you succeeded in your goals?

"We've put a lot of effort into developing a selection and an experience that our customers will find welcoming. They have long been interested in athletics, but they haven't always had a convenient location to turn to for the latest trends from the biggest sports companies. We believe we were successful in achieving that and providing that experience. However, there are a few brands that we'd still like to have in the mix since our families believe they are significant but we do not currently have access to them, so we continue to advocate for them. And we keep developing our relationships with those businesses while also broadening the possibilities we provide them.

2022-09-17  Tatiana Travis