apparel

EXCLUSIVE: Lids Enters Store-in-Store Partnership with DSW

Lids products to be sold in 45 Canadian DSW stores.
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Francis Scialabba

· 3 min read

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Lids isn’t capping when it comes to its aggressive growth strategy. Lawrence Berger, cofounder of Lids parent company Ames Watson, told Retail Brew in an exclusive that the hat and sports apparel retailer is entering an in-store partnership with DSW.

Starting May 15, 45 Canadian DSW stores will carry Lids. A US expansion is on the horizon, Berger said, but he didn’t disclose when.

Headwear 🤝 footwear

A mall staple, Lids is experimenting with more retail partnerships and standalone stores to diversify its footprint. DSW’s massive, off-mall locations provide exactly that.

  • Lids will get its own dedicated space to sell officially licensed hats, jerseys, T-shirts, and more.

Does the shoe fit? Designer Brands Canada President Mary Turner told us that Lids’s merchandise complements DSW’s athletic products, and will help reach younger customers. Berger and his cofounder, Tom Ripley, pointed to Lids’s exclusivity as another motivator.

“They don’t just want to be able to sell a plain Toronto Blue Jays hat,” Berger said, but instead “something that’s got a cool design, is interesting, and that people can’t find in other places.”

Taking off the lid: Since Ames Watson purchased Lids via a 2019 joint venture with Fanatics, Inc., it signed on rapper Meek Mill as an investor, expanded its partnership with Macy’s, and started managing sports merchandising at Barnes and Noble’s 775 US university stores.

  • Their efforts translated to $1+ billion in 2020 sales, roughly 80% of which came from brick and mortar stores. Ames Watson wouldn’t confirm if this is up from its 2019 revenue.

Hat resurgence?

Though Lids had a steady year, the pandemic kneecapped US hat sales overall. Between 2016 and 2021, industry revenue shrank at an annual rate of 0.6% to $2.5 billion, mostly due to pandemic-driven declines in 2020, according to IBISWorld analyst Claire O’Connor. Growth is expected to pick up over the next five years, but barely, at just 0.2% annually.

But Berger and Ripley aren’t worried, because they believe hats are evolving into an asset class like sneakers, which has energetic sub-markets and services.

  • “We put ourselves right in the same area as the various shoe retailers,” Ripley told us. “When those companies do a new shoe drop...there will be a line outside our store to buy the hat that matches that shoe.”

Looking ahead: O’Connor is not as bullish about hats becoming an asset class comparable to sneakers, she told us. And she believes Lids, which IBISWorld estimates to hold 22.4% of the US hat market, needs to further diversify its store inventory to compete with niche hat brands. — KM

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