Foot Locker, the heritage sneaker retailer best known for populating American malls, appears to be taking on a new role as a kind of VC fund for innovative new startups. Earlier this year, the company poured $100 million in GOAT Group, a sneaker resale company, and $15 million into Carbon38, a women’s activewear site. And today, Foot Locker announces that it is investing $12.5 million in Rockets of Awesome, a kids clothing brand. More specifically, Foot Locker will serve as the lead investor in a larger $19.5 million series C round that includes participation from Rockets of Awesome’s early investors, including Forerunner Ventures and General Catalyst.
Rachel Blumenthal launched Rockets of Awesome in 2016 as a quarterly subscription box to help parents struggling to shop for their kids who are constantly growing out of their clothes. Early on, the brand was seen as a kind of Stitchfix for the under-12 set, but over the last three years, it has expanded beyond this premise.
Blumenthal says the company has invested heavily in designing and manufacturing the clothes it sells. The company has a team of designers and textile experts, who create garments Blumenthal believes are missing from the market: clothes that are soft to the skin, but also durable enough to handle a lot of messy play.
“A lot of kids’ clothing is low quality and poorly designed, partly because consumers expect the kids to wear it for a short time before throwing it out,” Blumenthal says. “But that results in a poor experience for both the parent and the child.”
Customers can now buy clothes directly from the website. If customers choose to go with seasonal boxes, they can preview what goes in their box and swap out items they don’t like. If they keep all eight items in the box, they can save 25%. This upcoming back to school season, Rockets of Awesome will open its first stand-alone retail store as well. “The goal is to be available to parents in whatever way they prefer to shop,” she says.
For Foot Locker, this strategic investment is interesting, and slightly different from other brands in its growing portfolio. While investing in Carbon38 and GOAT made some sense, given that both brands are squarely in the activewear industries, Rockets of Awesome serves a different kind of customer. But according to Richard Johnson, Foot Locker’s chairman and CEO, that’s part of the point, since it will help both brands learn from each others’ strengths.
“Our investment in Rockets of Awesome will [give] Foot Locker a deeper understanding of a digitally native multi-channel kids brand, and Rockets of Awesome the ability to charge into its next stage of growth,” he says.
It’s clear that Foot Locker realizes the necessity of evolving beyond its identity as a mall brand. This is smart, given that many older brands that grew up in malls–including Payless Shoe Source, Gymboree, and Wet Seal–have all floundered in the digital era, eventually declaring bankruptcy.
We’ll be watching to see whether Foot Locker continues its streak of investments, and how it incorporates strategies of these digital startups into its own business.