Outsourcing Exceeds Lease Income up to 300% Unlike leasing, the inventory is owned by the retailer. The greatest advantage is that the retailer retains the gross profit. In a properly run footwear department, the gross profit, less expenses, exceeds lease income, by 60-300%. Footwear: A Destination Product Footwear represents a destination product. Surveys reveal that customers are more loyal to footwear solutions than apparel. As an example, Nordstrom's started as a shoe store. They have maintained a "footwear" sensibility and currently have the highest footwear penetration of any department or specialty store chain in the nation. Footwear: Challenges Historically footwear was leased to specialists because it represented more difficult inventory management due to multiple sizes, widths and seasonality. The challenges footwear represents to apparel retailers are that footwear buying is very different from apparel and accessories buying. Footwear merchandising and buying responsibilities are not effectively transferred to apparel or accessory staff members. Often skilled footwear buyers are not available. Frequently, buyers hired with backgrounds in large companies had negotiating leverage sufficient to mask modest or substandard buying skills. Hiring a footwear buyer and developing the support staff carries greater risk than leasing or outsourcing. Pace provides outsourcing services with performances that can be evaluated in a variety of clients as references. Footwear Outperforms Apparel In national surveys, footwear outperforms apparel in sales per square foot. Pace operations generate performance 2 to 3 times higher than national footwear benchmarks. Typically, our clients experience sales per square foot from $400-$1000 in small and mid markets. In stronger markets, the sales per square foot are significantly higher.