Shoes Rule When It Comes to Store Profits

Slinky evening gowns have long commanded designer runways. But operators of upscale department stores say that another fashion staple matters more when it comes to profitability: shoes. Pricey women’s footwear boasts gross profit margins as high as 50 percent, while women’s apparel has a maximum of 45 percent, according to retail consulting firm Kurt Salmon. Better yet, shoes are less prone to markdowns because footwear fashions often cross seasons—women now even wear boots in the summer—and demographics, with styles such as ballerina flats appealing to teens and grandmothers alike, says Deborah Rudinsky, a footwear-market analyst for trend forecaster Doneger Group.

That’s why retailers have been going shoe-mad this summer. Macy’s in August began rolling out a 63,000-square-foot women’s shoe department that it says is the world’s largest (with 300,000 pairs) at its New York flagship store. Barneys New York just opened a unisex designer shoe floor that is more than 40 percent bigger and features 350 more styles than its formerly separate offerings for men and women. And Saks has added 7,000 square feet of footwear selling space at its main store on New York’s Fifth Avenue and is expanding its luxe 10022-SHOE concept—with on-site shoe repair and iPads for browsers to use—to 15 stores from the current 11. Women’s shoes accounted for 12 percent of Saks’s sales last year, compared with a combined 8.5 percent for men’s and women’s footwear in 2006, a year before the retailer opened its first 10022-SHOE department.