The Stars Have Aligned for Boot Barn

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Newsweek just named Boot Barn to its list of top U.S. retailers for 2023. It’s an interesting list, filled with the usual suspects like Wegman’s, Trader Joe’s, L.L. Bean, Target, Costco, and Wawa, then there are the not-so-usual ones, like Boot Barn. And it wasn’t just an honorable mention but based on its score of 95.59 points out of 100, Boot Barn ranked as the nation’s number one retailer across all retail verticals included in its sector.

“Most investors live in Boston or New York, Los Angeles, or San Francisco. We encourage them to look outside the window when they fly coast-to-coast because for five hours; they’re looking down at customers that are wearing Boot Barn product,” said Boot Barn CEO Jim Conroy. 

The ratings were based on a survey conducted by Statista among 9,000 consumers, measuring each retailer’s products, customer service, atmosphere, accessibility, and store layout. Those values were combined to make up 50 percent of the retailer’s final score, and the other 50 percent was based on consumers’ likelihood to recommend the brand: its net promoter score.

With such high results weighted on its customer recommendation score, Boot Barn is the retailer its customers love and love to talk about to their friends.

Western Wear

Boot-Barn’s loyal customers are passionate partly attributable to the phenomenon of  Yellowstone and its spinoffs, the breakout hit franchise series from Taylor Sheridan, showcasing shining stars Kevin Costner, Kelly Reilly, Harrison Ford, Helen Mirren, Faith Hill, Tim McGraw, and my all-time favorite cowboy, Sam Elliot. What Sex and the City and Emily in Paris did for trendy over-the-top fashion, Yellowstone is doing for Western wear.

There’s a critical difference here: Boot Barn is not just for city-slickers who aspire to channel their inner cowgirl or boy.  For 45 years, Boot Barn has been supplying workwear for hard-working folks on ranches, farms, construction sites, warehouses, and factories. It also provides stylish casual fare for customers who live in fly-over country, people who live in small towns, drive pickup trucks, raise chickens, listen to country music, and go to NASCAR races, rodeos and farm shows — and all the other cliches that describe those who live in America’s heartland.

Let’s face it, this is a market that many high-paid executives or investors don’t understand. “Most investors live in Boston or New York, Los Angeles, or San Francisco. We encourage them to look outside the window when they fly coast-to-coast because for five hours; they’re looking down at customers that are wearing Boot Barn product,” said Boot Barn CEO Jim Conroy. “It’s an enormous market that’s been hidden in plain sight for decades,” he continued, as he declared Boot Barn the industry leader in a $40 billion addressable market.

Gold in Them There Heartlanders

Since 2021, Boot Barn sales have exploded, going from just under $900 million in 2021 to $1.66 billion in 2022, an 86 percent increase over two years. It got a boost during the Covid lockdowns, classified as an essential retailer because of its heavy emphasis on workwear.

“The vast majority of our business is functional in nature,” Conroy explained during a recent Goldman Sach’s investor presentation. During the pandemic “We were open for any customer that needed a pair of pants or shirt or footwear. That gave Boot Barn this opportunity to bring on more customers with a pretty low customer acquisition cost. Our customer database has grown almost 20 percent every year.”

Currently, Boot Barn counts 7.1 million members in its B Rewarded loyalty program which started in 2011. One point is earned for every $1 spent with a $15 reward earned after accruing 250 points. Those who also hold a Boot Barn credit card earn double points and get free shipping on all orders. The company reports that a majority of sales are made to its members who are presumably legacy customers.

Demand for skilled tradespeople greatly outpaces supply, with Trades Nation expecting employment growth to be 10 percent through 2028. And when demand outpaces supply salaries will rise too meaning Boot Barn can anticipate growth with legacy customers who will continue to replace more work-appropriate boots, pants, and jackets as they wear out.

Adding new stores has been a major driver of growth with the number increasing from 273 in 2021 to 361 as of the end of the first quarter of 2023. The company will open 52 new stores this year and sees the long-term potential of reaching between 900 to 1,000 doors. It is already located in 43 states and is positioned to extend its reach beyond its legacy customers for workwear and pure Western style.

“The new customers we’ve added to the fold shop with us roughly in the same frequency as our legacy customers – about two or three times a year. They’re also spending roughly the same amount per trip, a little bit over $120 per trip,” Conroy explained.

He adds, “The influx of new customers over the last couple of years, has now proven to be loyal and sticking with us. We haven’t lost them back to the places where they used to shop, which came partly from within the Western wear industry and partly from mainstream retailers.”

Manifest Destiny

Boot Barn finds little cannibalization of sales as it expands, noting that even when it reaches maturity in select markets, notably in Texas and California, it’s able to achieve payback on the investment in new stores in just under 18 months instead of the typical three-year schedule.

New stores deliver more than $3 million on average in their first year. And it’s been increasing the square footage for some new stores by 10 to 20 percent – from an average of around 10,000 square feet to 12,000-14,000 square feet – thanks to a new, more flexible store model.

The Boot Barn experience is an in-store thing. Customers, especially the new ones, want the aspirational Yellowstone experience they get while visiting the store. So, there’s a tremendous upside to Boot Barn’s ecommerce channel. A laggard in ecommerce, in 2023, only 13 percent of sales were generated online and it only released a Boot Barn app last year.

Conroy explains the digital strategy for Boot Barn, “What’s more important is the integration between the two channels. What we really leverage is the fact that we have a national chain of retail stores to help support our digital channel.”

Strengthening that integration is equipping all stores with touchscreen devices that invite in-store customers to access additional inventory across the chain, including the ability to make purchases directly from its larger third-party vendors, all with free shipping.

Essential Apparel

As noted, the bulk of Boot Barn customers is drawn primarily to the retailers’ sturdy workwear options, such as steel-toe boots, flame-resistant jackets, and other functional essentials. Then, there is another cadre of male customers who shop for boots and Western apparel. “While some people believe this is something discretionary, most of our core customers wear denim, cowboy boots, and hats as essentials. They’re working outside with horses or in agriculture. They view us as part of their work uniform,” Conroy said.

There’s a third group of customers who are women, some drawn to the same functional needs as men, but also attracted to the fashionable styles the company has introduced. “We’ve gone from a pure Western customer and expanded the circle to a more country, casual lifestyle customer,” Conroy explained. Women’s boots and apparel account for some 20 percent of sales with plenty of room to grow.

It’s still early days, but the company is facing some headwinds trying to get the more fashionable offerings right, but that’s the nature of the fashion beast. “Fashion tends to ebb and flow over time. It’s been a tailwind for us over the last couple of years, and now we are facing a bit of a headwind from a trend perspective,” explained Conway.

Footwear accounted for 47 percent of revenues in fiscal 2023, down from 53 percent in 2021, while apparel rose from 32 percent to 37 percent. Hats and other accessories accounted for 16 percent of sales most recently.

And Boot Barn is working to build services for shoppers offering boot care when someone purchases a pair of boots or suggesting a belt with a jeans purchase. The strategy is to connect boot purchases with apparel, “so we can make the most of the customer traffic we see in the stores,” Conroy said to help grow the customer’s basket.

Brand Collabs

Another major growth lever for Boot Barn is its range of exclusive brand offerings. Since early 2022, it increased its private label from three brands – Cody James and women-centric Shyanne and Idyllwind  – to ten.

Starting small, new brands are launched with limited offerings; if it catches on, the selection is expanded into additional sizes and adjacent categories. Cody James, for example, now has expanded to a full range of Western-styled basics for men and boys, including jeans, shirts, boots, and accessories, plus a selection of work boots.

From a pricing perspective, private label brands are “very much on par with our branded partners,” Conroy explained, and not “cheap knockoffs of the national labels. We don’t try to undercut. We are committed to putting the highest quality product on the shelf. As we nurture these new brands, we want that product to be the best in class.”

The company finds little price resistance for all its products, reporting that despite inflation, it’s seen very little trading down among its customers. “Some of our best-selling categories are the high-end. One example is men’s exotic skin cowboy boots. They are the most expensive items in the store and one of our highest-growth businesses.”

In fiscal 2023, its exclusive brands accounted for 34 percent of total purchases, all sitting side-by-side with Ariat, Justin, Stetson, Tony Lama, Wrangler, Carhartt, Timberland and Wolverine.

Authentic Lifestyle

In assessing Boot Barn’s opportunity, their annual report states: “We believe that growth in the Western and country lifestyle markets will continue to be driven by the growth of Western events, such as rodeos, the popularity of country music, affinity for outdoor activities and the continued strength and endurance of the Western lifestyle.”

That’s its core and the popularity of Yellowstone is only adding to it. But unlike other opportunistic media-fueled fashion trends, Boot Barn is tapping into a trend that resonates with its core customers and bringing in new ones. It’s authentic American and appeals to Americans who are attracted to the nostalgic Western legend narrative.

Demand for skilled tradespeople greatly outpaces supply, with Trades Nation expecting employment growth to be 10 percent through 2028. And with demand outpacing supply, salaries will rise too, meaning Boot Barn will continue to grow among its hard-working legacy customers who will continue to need more work-appropriate boots, pants, and jackets as they wear out their old ones.

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