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- SportsOneSource.com
APRIL2009 Volume 4 | Issue 4 SRDC Eyes Acquisition Opportunities Amidst Recession While the economic downturn is putting the squeeze on many retailers, it’s also creating opportunities for the Specialty Retail Development Company (SRDC). Since the company was established in fall 2008 by principals at Fleet Feet Inc., SRDC has acquired seven running specialty stores and currently has another six in development. “Unfortunately for the industry, there are more opportunities than ever because stores that had been riding the tide are now grounded, their sales are declining, they aren’t paying their ven- To download a digital version of this magazine, go to: www. performance sports retailer. com dors on time and they are facing a future of closing sooner rather than later,” said Tom Raynor, managing director at SRDC and chairman at Fleet Feet Inc. SRDC was founded with a mission to help store owners who wanted to retire or needed to leave the business while also helping provide store employees with a path to ownership. These succession issues had challenged Fleet Feet Inc. for years and the solutions developed there are being expanded beyond the franchise operation. “The small business owner who wants to sell their business always asks; ‘How much is my store worth and who will buy it?,’” said Raynor. “And employees looking to get into ownership have to find the money and have an infrastructure to comprehensively manage the financial aspects of the business. The plain and simple fact is that the SRDC wants to buy stores, work with great employees to develop them further and sell the stores to those employees.” SRDC acquired its first four stores in January 2008. The stores were all Fleet Feet Sports locations, with one each based in Jackson, MS; Brentwood, TN; Aptos, CA and Santa Rosa, CA. In March 2008, the Fleet Feet Sports Carrboro store – which is located directly across the street from the SRDC office and down the street from Fleet Feet Inc. headquarters – was acquired in March 2008. In August 2008, a Fleet Feet Sports in Elmhurst, IL was acquired and then its first non-Fleet Feet, The Runner’s High in Menlo Park, CA, was acquired in September 2008. The Menlo Park store will be converted to a Fleet Feet Sports this summer. With the arrival of the recession, Raynor has noticed more caution from owners in selling their stores. “Their retirement funds have dropped, they have good cash flow from the ongoing business and they’re unsure if they can get another job at this time,” says Raynor. But he said despite the capital restraints in the market, prices being fetched for stores haven’t changed. “We’re still fundamentally grounded in the numbers we developed two years (continued on page 4) Make Outdoor Retailer Part of your Buying Plan Better Business Yields a Better Bottom-line 2009 2010 JULY 21-24, 2009 JANUARY 21-24, 2010 SALT PALACE CONVENTION CENTER SALT LAKE CITY, UTAH, USA SALT PALACE CONVENTION CENTER SALT LAKE CITY, UTAH, USA OPEN AIR DEMO BACKCOUNTRY BASE CAMP PORT RAMP PROPERTY, SNOWBASIN RESORT, OGDEN, UTAH SNOWBASIN RESORT, OGDEN, UTAH JULY 20, 2009 JANUARY 20, 2010 Relationships forged, business done, and the strategic partnerships reinforced during face-to-face interaction at Outdoor Retailer will drive your success in the future year or two! www.OutdoorRetailer.com APRIL2009 EDITORIAL Group Editorial Director Lou Dzierzak (612-618-2780) [email protected] Senior Editor Thomas Ryan (917-375-4699) [email protected] Contributing Editors Nancy Prichard Bouchard Ph.D., Kyle Conrad, Emmaline Harvey, Dr. Paul Langer, Jackson Sveen CREATIVE Creative Director, Teresa Hartford Graphic Designer, Megan Grieser PRODUCTION Product Development Manager Jeremy Noel [email protected] COVERSTORY Tom Raynor, managing director at SRDC and chairman at Fleet Feet, Inc. ADVERTISING Midwest Ad Manager Sam Selvaggio (212-398-5021) [email protected] Western Ad Manager Susan Tauster (630-858-1558) [email protected] Business Circulation & Subscriptions Joy Matheny (704-987-3450 x107) [email protected] TECHNOLOGY Chief Information Officer, Mark Fine VP Research & Development, Gerry Axelrod Director Information Management, Ruben Desangles Manager Database Operations, Cathy Badalamenti BUSINESS DEVELOPMENT President & CEO, James Hartford VP Business Development, Bill Bratton Director, Business Devleopment, Barry Gauthier Director, Specialty Business, Kris Versteegen Relationship Marketing Manager, Jill Underwood Research Sales & Marketing, Katie Bolick Other SportsOneSource PUBLICATIONS SGB Outdoor Business SGD TEAM Business The B.O.S.S. Report Sports Executive Weekly SGB Update Outdoor Business Update Footwear Business Update Sportsman’s Business Update Team Business Update © SportsOneSource, LLC 2151 Hawkins Street | Suite 200 | Charlotte, NC 28203 704-987-3450 | fax: 704-987-3455 www.sportsonesource.com NEWS 4 Craft Names Category Leader for Running and Alpine Skiiing 5 Brooks Unveils Running Superfans Campaign AVIA Adds to Roster of Triathletes 6 ASICS Continues Sponsorship of Constantina Dita Newton Running Extends Relationship with Marathoner Josh Cox K-Swiss Inks Deal for Ironman Footwear and Apparel 7 Saucony Sponsors Pit Stops Along Boston Marathon Training Route 8 SGB Announces Recipients of the Second Annual 40 Under 40 Awards FEATURES 10 The Sales Rep Redefined Retailers pushing for greater analysis and driving consumer demand has transformed the role of the sales rep 12 Stable Shoes Stable Sales Last entry in a series examining traditional performance footwear categories 16 One Stop Shopping for 3,000 Running Specialty Products Quality Bike Parts brings distribution expertise to performance sports retailers Copyright 2009 SportsOneSource, LLC. All rights reserved. The opinions expressed by writers & contributors to PERFORMANCE SPORTS RETAILER (PSR) are not necessarily those of the editors or publishers. PSR is not responsible for unsolicited manuscripts, photographs or artwork. Articles appearing in PSR may not be reproduced in whole or in part without the express permission of the publisher. PERFORMANCE SPORTS RETAILER, Volume 4, Issue 4, is published monthly by SportsOneSource, LLC. Subscription: one year, $99.00 (U.S. funds) in the U.S. and its possessions; Canada and Mexico, $149.00 (U.S. funds); all other foreign delivery, $249.00 (U.S. funds); Printed in USA. Postage paid at Charlotte, NC and additional locations. POSTMASTER: Send address changes to PERFORMANCE SPORTS RETAILER, 2151 HAWKINS STREET, SUITE 200, CHARLOTTE, NC 28203; (704) 987-3450. NEWS SRDC Eyes (continued from cover) ago and continue to offer the same valuation for stores as we did in 2008,” stresses Raynor. “Since we’ve been financially successful and soundly and prudently operated, we have strong banking relationships with our local bank, KeySource. We’ve got access to plenty of capital, both from bank financing and from other investors who would like to invest in SRDC. But we have to find the right stores at the right price to buy.” SRDC’s principals also include Jeff Phillips, president of Fleet Feet Inc. and Jeff Wells, a former Fleet Feet Sports franchise owner. But the business is essentially run by Denise Core, a former banker whose official title at SRDC is general manager. “She’d been our banker and understood our business and potential,” says Raynor. “She’d left the banking business after years of working with small business clients. She was looking for a new business opportunity since her four boys all left home and I was looking for someone to drive the business everyday. She was the perfect person.” SRDC has a small in-house financial management staff that handles all the back-of-house operations for the stores, and has created a website at srdcinc. com. All of the funding for the SRDC “has come from a small group of people who believe in what we’re doing and are willing to bet on our plan,” adds Raynor. While solving succession issues for Fleet Feet Inc. franchise owners, SRDC and Fleet Feet Inc. are completely independent companies. SRDC essentially operates as a multi-unit franchisee of Fleet Feet, Inc. and has a franchise agreement for each store, just like any of the multi-unit franchisees. Nonetheless, part of the growth at Fleet Feet Inc. is expected to come from acquisitions facilitated by the SRDC, including the soon-to-be converted The Runner’s High in Menlo Park. Regarding Fleet Feet Inc., Raynor described growth prospects as “excellent,” driven by new franchises, conversions from SRDC deals and organic growth. Only two to three new franchisees are expected to be added this year as the recession puts a damper on entrepreneurial efforts but same-store sales continue to run up double-digits across its franchises on top of strong gains over the last several years. “We have some stores expanding their footprint that will see growth and there are existing stores that will be acquired by the SRDC and new ownership energy injected into the operation,” says Raynor, who bought the Fleet Feet franchising operation in 1993. Fleet Feet Inc. also sees growth opportunities through its Brand Management programs, in which brand managers work with key vendors to drive growth across Fleet Feet’s franchised locations. Nonetheless, Raynor said the primary focus for Fleet Feet Inc. this year will be preaching “comprehensive financial management” to all its franchise partners. “We’re going to be absolutely, positively driven by the financial details of each and every store,” says Raynor. “Every member of the Fleet Feet Inc. staff is focused on that. It’s good for our vendors, our customers, our store owners and, ultimately for Fleet Feet Inc.” But Raynor is equally bullish about growth prospects for SRDC both through acquisitions and organic growth. Sales ramped up 16 percent in the first quarter this year on a same-store basis. Regarding acquisition goals, Raynor said SRDC’s biggest challenge right now is to find and develop new store owners. The SRDC team is reaching out to sales representatives, employees of Fleet Feet Sports stores and employees of other specialty stores to find the right people. He said SRDC will only buy a store with a clear cut plan for ownership by an employee in three years. “Since our goals are not to own stores long term, I’ll be happy if we own and operate 15-25 stores in 2 years with the addition of four new stores a year and four stores transitioning to ownership by the employee,” says Raynor. “We want to buy stores and find great people to operate and own those stores!!” Craft Names Category Leader for Running and Alpine Skiiing Craft of Sweden has named Philip Tavell to the position of category leader for running and alpine skiing. Beginning in April, the former professional mountain bike racer will support the product management team in the company’s headquarters in Borås, Sweden. The 33 year-old Tavell previously worked for Red Bull as category manager of sales and promotion in Stockholm. Tavell was a member of the Multivan Merida professional mountain bike team for four years and was also sponsored PSR | performancesportsretailer.com by Red Bull for seven years. Catrine Marchall, head of product and design at Craft, says: “We’re very excited about Philip joining our team. His experience as an athlete and his business insight will have an immediate impact on Craft.” To download a digital version of this publication, go to: www.performancesportsretailer.com Brooks Unveils Running Superfans Campaign Brooks plans to introduce its new advertising campaign at the 2009 Boston Marathon. The campaign stars comedians of MTV fame Randy and Jason Sklar, who will act as Carl and Karl Underwood, running’s #1 Superfans. Brooks said the Running Superfans concept is a metaphor for Brooks’ commitment to running and to supporting runners of all types. The Running Superfans campaign includes eight video shorts with humorous storylines about finding a unique way to retrieve golf balls at a driving range and engaging a police officer in an impromptu baton pass. Some of the videos are posted on the campaign’s website at www.runningsuperfans.com Five print executions will appear in the May issues of Runner’s World, Running Times, and Women’s Running, among others. In one print execution, Carl and Karl Underwood complete their full-scale sculpture of their favorite runner, Brian Sell, out of 14 different types of pasta. AVIA Adds to Roster of Triathletes Avia has added Joanna Zeiger to its team of professional athletes. Two years after turning pro in 1998, Zeiger won “Triathlete of the Year” honors in 2000 for her fourth place finish at the Olympics and fifth place finish at the Ironman Championship in Kona, Hawaii. Avia’s team of professional duathletes and triathletes includes Kenny Souza, Scott Tinley, Conrad Stoltz, Erika Csomor, Eduardo Sturla, Heather Wurtele, Trevor Wurtele, Melanie McQuaid, Amanda Felder, Steven Sexton, Angela Naeth, Bella Bayliss, Saul Raisin and Pip Taylor. On Friday April 17th, Brooks will transform its Boston Marathon expo space into a revivalist tent-complete with a spirited organ choir where the Sklar Brothers will conduct hourly shows. Free Sample* Try a free sample of Pinnacle, the most advanced foot orthotic yet for exceptional relief from heel and arch pain. Pinnacle features a unique 4-step system for unexcelled comfort: 2. Life-long resilient cushioning 1. Prescription level support with spring for comfort 3 Hypurcel EVA 2 1 4 4. Stabilizing heel contours Contact Us for your free sample: Toll-free: 1-888-237-3668 Email: [email protected] *Limited to new Pinnacle retail customers 3. Anti-slip fabric vÀÊ`ÀÞiÃÃ UÊ Ê UÊ UÊ Ê >ÌiÃÊiÝViÃÃÛiÊÜ>À` À}ÊÌÊvÊÌ iÊvÌ ,iiÛiÃÊ iiÊ>`Ê>ÀV Ê«> ,i`ÕViÃÊ>i]Êii >`ÊL>VÊ«> NEWS ASICS Continues K-Swiss ASICS Corp. entered into a new four-year sponsorship contract with 2008 Beijing Olympic Marathon gold medalist Constantina Dita. Under the terms of the agreement, Dita will wear ASICS shoes and apparel in all of her competitions and training, with the exception of international championships where she will represent her native Romania. ASICS has had sponsorship agreements with Dita since 2004. The renewed sponsorship deal will cover Dita from 2009 through 2012, including the 2012 London Olympic Games. Since 2002, Dita has had one of the world’s most successful distance running careers, capped by the victory at last summer’s Bejing Olympic Games. Highlights have included gold, silver, and bronze medals at the IAAF World Half-Marathon Championships; a bronze medal at the 2005 IAAF World Championships marathon; numerous Romanian national records; and a half-dozen appearances on the top three podiums of World Marathon Major events, including three each at London and Chicago. K-Swiss inked a long-term official partnership with World Triathlon Corporation, owners of the Ironman brand. Under the agreement, K-Swiss will be the exclusive footwear and apparel provider of an evolving collection of co-branded K-Swiss/Ironman performance and lifestyle footwear and apparel. The K-Swiss/Ironman product will initially be sold through online distribution channels via www. kswiss.com and www.ironman.com at the events, and ultimately through strategic performance retail partners. “We are excited to be partnered with K-Swiss,” says Giancola, director of sponsorship and licensing for Ironman. “They understand the Ironman brand’s DNA extremely well and have invested the necessary resources to develop an amazing line of footwear and apparel products.” Additionally, K-Swiss will continue to support Ironman events throughout 2009 as the Official Run Course Sponsor of Ironman 70.3 Boise, Amica Ironman 70.3 Rhode Island, Ford Ironman Louisville and both World Championship events; the Ford Ironman World Championship in Kailua-Kona, Hawaii, and the Foster Grant Ironman World Championship 70.3 in Clearwater, FL. K-Swiss will also serve as a sponsor for all other Ironman and 70.3 events domestically, as well as Ironman UK and both 2009 Ironman events in Germany. “Ironman athletes demand top-performing products to endure the rigorous training and competition,” said K-Swiss sports marketing director Erik Vervloet. “The brand’s official logo, the ‘M-Dot,’ is truly the purest symbol of that level of performance. K-Swiss has spent the last several years developing and testing our products with world-class Ironman athletes, culminating in products that are ready to perform at the highest level and uphold the Ironman logo.” K-Swiss supports a growing roster of triathletes, Olympians and Ironman champions, including Paul Amey, Terenzo Bozzone, Hillary Biscay, Leanda Cave, Gina Ferguson, Belinda Granger, Heather Gollnick, Chris Lieto, Luke McKenzie, Kim Loeffler and Matt Reed. Sponsorship of Constantina Dita Newton Running Extends Relationship with Marathoner Josh Cox After a year that included a marathon win and a new American record in the 50K, Newton Running has renewed its sponsorship with professional runner Josh Cox. “Josh is a terrific athlete-spokesperson for our shoes,” states Newton Co-Founder and CEO, Jerry Lee. “Josh is not only winning races in Newtons, but he’s a very recognizable runner with an influential media presence. This is an example of Newton’s growing commitment to the running market.” Cox, 34, is a three-time Olympic Trials qualifier and threetime US National Team member. Last January, Cox was named USA Track and Field’s “Athlete of the Week” for shattering the 50K American record by over four minutes at Arizona’s Rock ‘n’ Roll Marathon. Cox also offers his professional perspective as an on-air personality for Fox Sports and Runner’s World. In 2005, Cox starred on ABC’s hit reality show, The Bachelorette. Team Newton also includes Paula Newby-Fraser, Craig Alexander, Michellie Jones, Natascha Badmann, Heather Fuhr, Katja Schumacher, Michael Simpson, Stephen Hackett, Tim Berkel, Chris Legh, Jozsef Major and Heleen Bij De Vaate. PSR | performancesportsretailer.com Inks Deal for Ironman Footwear and Apparel Saucony Sponsors Pit Stops Along Boston Marathon Training Route In the lead up to the 2009 Boston Marathon, Saucony sponsored portable toilets along a stretch of the marathon route where runners training for the event have sometimes made unsanctioned backyard “pit stops.” The restrooms were removed on April 13th, a week before the race. Saucony said its purpose was to provide convenience for runners who want to take pre-marathon training runs on the actual marathon course. “As we enter the final weeks of training for Boston, there’s a major increase in runners training along the Newton hills, especially on the weekends,” said Sharon Barbano, Newton resident and Boston Marathon runner, vice president of public relations, athletes and events for Saucony. “On those long runs, nature often calls and this stretch of road offers no place for impromptu relief, except the bushes and gardens on or near private homes. We hope this pit stop offers a practical solution for both the runners and the neighborhood during the final weeks of Boston training.” Saucony is a subsidiary of Collective Brands Inc. and a PSR_hor:Layout 1 3/11/09 10:33 AM Page 1 division of the Stride Rite Corp. Shin Splint Compression Sleeve Size Us Up! The fact is that all athletes are not alike. At Cho-Pat, we understand people are different and that is why our American-made supports are available in a range of sizes. The choice is yours! Dual Action Knee Strap www.cho-pat.com 1-800-221-1601 ITB Strap performancesportsretailer.com | PSR NEWS SGB Announces Recipients of the Second Annual 40 Under 40 Awards The Finalists: The recipients of the second annual SGB 40 Under 40 awards have been selected and will be honored at a banquet event on May 2, 2009 preceding the NSGA Management Conference in San Antonio, TX. The winners, honored by their peers as the best and brightest of the next generation of sporting goods industry leaders, were selected by a panel of SportsOneSource analysts and editors and a team of industry executives from over 500 nominations received by SportsOneSource Network members. “These awards are a way to recognize the great work done by some of the younger people in our industry,” said James Hartford, president, CEO and group publisher of The SportsOneSource Group, which publishes the SGB trade publication. “The inaugural event last year drew very strong support as a necessary element in honoring the next generation of leaders. We felt co-locating the event with the NSGA conference, which includes the annual Sporting Goods Hall of Fame dinner, was a perfect fit.” This year, the banquet has been opened up so others in the industry can attend the event to honor the finalists. The banquet will take place on Saturday, May 2 and will feature a golf outing the next day prior to the NSGA conference. PSR | performancesportsretailer.com Jeff Beraznik, President, Cutters Gloves Toby Bost, CEO & Chairman of the Board, La Jolla Group Jeff Brodeur, Key Account Manager, Navionics Craig Brommers, VP Marketing, Speedo USA Louie Burgos, Merchandise Manager, Footwear, Jimmy Jazz Faust Capobianco IV, VP/GM MLB Global Sales & Marketing, Majestic Athletic/VF Imagewear Chad Clark, VP of Sales, Cliff Keen Athletic Seth Cobb, VP & General Manager, Merrell Bob Dahlin, Buyer, Dunham’s Sports Todd Dalhausser, GM Apparel, Saucony Nicole DeBoom, Founder & CEO, SkirtSports, Inc Joe Earley, CEO, Tifosi Optics Rod Foley, Director of Marketing, Running Footwear, Mizuno Scott Frnka, VP Field & Stream, Academy Sports & Outdoors Joe Hyer, Supreme Commander, The Alpine Experience & Olympic Outfitters George Kollitides II, Managing Director, Cerberus Capital Management Todd Levine, President, Alleson Athletic BJ Maloy, Founder & CEO, Evolve Golf Ted Manning, VP/GMM, Eastern Mountain Sports Robert Minsky, VP of Sales & Licensing, Haddad Brands Rob Mogolov, Marketing Manager, Cramer Products Jeremy Moon, President/Founder, Icebreaker Brian Moore, VP Global Men’s Footwear, Timberland Dave Morrow, President, CEO & Founder, Warrior Sports Roy Notowitz, Former Partner, Generator Group David Ortley, Senior Director of Global Footwear, TaylorMade Nathan Pund, President, Silver Steep Partners Todd Raskin, Head Buyer & Partner, Trailblazer Seth Richards, CEO, Implus Footcare Kevin Sheehan, Director of Sales, Tippmann Sports Dan Sheridan, VP, National Account Sales, Brooks Sports Todd Spaletto, VP Sales, The North Face Mike Steck, Senior Director, Customer Marketing & Sustainability, Yakima Products, Inc. Jason Steris, President & COO, Volcom Andy Tompkins, Group Show Director, Nielsen Sports Group Nate Treadaway, President & COO, Blackpowder Products, Inc. Susan Viscon, Director, Merchandise Management, Actionsports, REI Jason Volk, Director of Sales, Sports & Fitness, Oregon Scientific Kim Walker, Co-Founder & Owner, Outdoor Divas Austin Williams, Director of Retail Operations, Games People Play craig brommers VP marketing, speedo Usa rod Foley director of marketing, running Footwear, mizuno todd dalhaUsser gm apparel, saucony seth richards ceo, implus Footcare Nicole deboom Founder & ceo, skirtsports, inc. daN sheridaN VP of National sales, brooks sports performancesportsretailer.com | PSR FEATURE Sales reps have traditionally been vital in bringing new brands and ideas to the sporting goods marketplace, but their role in recent years has changed as a result of consolidation and advancements in technology within the sporting goods industry. Reps are increasingly asked to help manage inventories and improve the number of product turns for vendors. Beyond the extra discount on pricing, retailers are looking for more support to help manage inventories, maximize margins and plot overall business strategy. Good reps must also command a depth of product knowledge that rivals tech reps and should be ready to share insights on current market trends on a local and national level to help customers manage their business, and also come up with effective localized marketing strategies. Jeff Antonio, national sales manager for New Balance suggests that the role of the sales rep is far broader today. “It’s no longer a job where you show up two to four times a year, take an order and split,” he says. “The successful sales reps are the ones who bring ideas to retailers on how to grow the business.” Indeed, according to sales execs in the industry the sales rep function now closely resembles that of a key account manager or business consultant. While it’s still critical to land a sale, planning and follow-through have become much more important. Many are managing brands rather than their daily call schedules. Rick Wilhelm, VP of sales for specialty retail accounts at Brooks Sports, notes that it’s now more than just a sell-in pro10 PSR | performancesportsretailer.com The retailer’s push to drive for greater analysis and driving consumer demand has transformed the role of the sales rep By Thomas J. Ryan cess. You have to manager sell through. “You have to understand what the buyer is trying to do and be able to analyze their business,” explains Wilhelm. “They want to understand what’s turning and margins. If you say to a buyer, ‘This is what was going on last month and this is what I recommend that you do,’ they’ll want to work much more with you than that person that just gives last month’s sell-through report with no analysis. It’s not just the best price.” The core relationship building process has also become more involved. In addition to working more closely with buyers and owners, the sales rep’s job often entails training employees and working alongside them on the sales floor. The best reps participate in or create local grassroots events to show their support of the store and drive demand with the end consumer. But some things never change. The job still requires a lot of persistence and attention to detail. “The job has changed tremendously in many ways and in other ways it’s just the same as it always was,” says Fran Allen, SVP of global sales at Saucony. “You need someone to get out of bed, be able to work independently, and be a self-starter. Someone who’s motivated to succeed season after season and who, quite frankly, wants to make more money by working harder.” TECHNOLOGY RESHAPES THE ROLE As with many jobs, technology has been a huge driver by changing the way sales reps function on a daily basis. Cell phones, Blackberries, laptops, e-mails and the Internet have all combined to dramatically enhance external and internal communications as well facilitating the spread of information. Spreadsheets, order tracking, item set-up sheets, planograms and product information forms dominate a typical day. For retailers and dealers, many B2B sites have been set up to provide a way to easily enter or check orders on a 24/7 basis. Jim Hoff, VP of sales for Asics America says, “The expectation of everything anymore is instantaneous.” New software applications have also enabled reps to better link marketing and merchandise plans when conducting one-on-one sales presentations with buyers. But perhaps the biggest innovation is how the Internet in helping reps gain a better view of orders, inventories and sell-through. This is proving particularly beneficial in helping reps plan their retail customer’s business. “Who hasn’t used Amazon at this point to find holiday or birthday gifts?” says Peter O’Neil, EVP of sales and marketing for Centerstone Technologies, a provider of web-based B2B e-commerce solutions. “In the same manner that consumers use the Internet to make purchases, businesses also want to use the Web to conduct business with their suppliers on a 24/7 basis. It’s so much easier, and these business owners can conduct business when it is convenient for them.” For some, gaining access to point-ofsale data reporting and analysis from platforms such as SportsScanINFO, which is managed by the same parent company as Performance Sports Retailer, is proving to be invaluable in helping provide the analysis requested by many retailers. “The specialty retailer is no longer just a guy who likes to run,” explains James Hartford, chief market analyst at The SportsOneSource Group. “There are far more shop owners running their stores as a sophisticated business today, with real systems and a focus on the basics such as inventory turn. They also know that in today’s economy, the competition can come from anywhere a sporting goods store, a family footwear store, even a mid-tier department store like Kohl’s. It’s critical that reps have a whole market view so they can better guide their retailers’ efforts to be more successful.” In general, larger retailers are looking for more analysis of sell-through performance, gross margin performance, store distribution maps and other key metrics. Managing smaller accounts requires a significant amount of time making product presentations and follow up. Providing extensive product knowledge is also critical for independents. At Saucony, Allen reports, “You have to bring more expertise and sophistication to the big guys, and they’re going to pretty much tell you what they want based on the data they have coming into the system. With the smaller accounts, you have to do all the work. You may even have to go into the stock room and count all their boxes. They’re expecting that.” Hoff adds, “The independent store owner can be little bit more casual and a little bit more personal. There’s a bit more of a professional approach when working with what we’ll call the ‘big box.’ The representations of the brand are slightly different and the tools and tactics to make presentations are a little bit different. They use more technologies and might have to be more astute with whom they try to attract to a meet- ing and who they bring in for decisionmaking. But the salesmanship abilities are exactly the same for big and small. It’s really a change of tactics.” With the downturn, these sales execs say their rep force continues to stand as a critical tool to bring new ideas in product and marketing to retailers to stimulate sales growth. Reps are also being asked to do more and cover larger territories. Moreover, many frustrations over the evolving role of the rep were voiced in a recent survey of SportsOneSource network members. NEW CHALLENGES FOR REPS According to the survey respondents, the biggest challenge is being faced by independent reps. Echoing the sentiment of other respondents, Todd Kausrud, principal of the Sports Alliance rep group, says many stores seem to have made up their mind what consumers want. “It seems to me that our dealers used to do a lot more ‘selling’ and less ‘order taking,’” says Kausrud. And this means that sales reps have to figure out ways to influence and market to end-users. He says, “This is very difficult, as additional expenses are incurred and there are not enough hours in the day.” The other core observation was that, while retailers are looking for reps to be involved more in strategic planning, the vendors aren’t giving them the tools to do the analysis. Kris Hartner, owner of Naperville Running Co. in Naperville, IL, says, “I would say over the last five years we’ve been lucky enough to have several reps that have taken their job to the next level in many ways - in store visits, working the floor, business planning, finding incremental business, interacting with our staff and customers. On the other hand, we still have a significant number of reps who fail to show up on time or follow through on promises or return phone calls.” Bob Cook, owner of the Runners Edge in Farmingdale, NY, stated, “[I’m] not happy that some companies don’t see the importance of reps. My old reps are great. The new reps suck!” The sales execs interviewed by PSR agreed that reps have to assure retailers they have their best interests at heart for the long term. This often involves going the extra mile in servicing the account. Allen offers, “Assuming we all make great product, one way you win is you service them to death.” At Brooks, Wilhelm says success comes down to showing the retailer a commitment to growing their business. As an example, he often hears that when working sales floors, Brooks reps will often sell another vendor’s brand in the spirit of meeting a customer’s need. Unpaid, many also regularly support their accounts at local running events. “They’re going to remember how the rep helped them fit shoes before the running group took off or helped pull inventory from the back room to get ready,” he says. “When they see you can bring value to the buyer or owner, you become almost another employee and they really want to work with you.” Hoff says reps have to be wise enough to suggest that a particular product isn’t right for them to ensure that he has the best interest of the store at heart when presenting product to them. One core challenge, according to Hoff, is that while the reps must convince the retailer that he’s working mainly for their best interest, he or she also has to convince the vendor that he works largely for their interest. “In reality, if they don’t have a perfect balance of 50/50, they’ll never be able to keep their job and they’ll never be able to represent their vendor and customer properly. You’ve got a very, very significant balancing act in every single call,” concludes Hoff. performancesportsretailer.com | PSR 11 FEATURE Designed for runners who require additional support, the Karhu Strong Fulcrum Ride’s stability fulcrum proactively guides the foot to neutral. The use of a carbon plate provides torsional stability and allows the foot to smoothly follow its natural heel-to-toe gait cycle. MSRP $140. Stable Shoes, Stable Sales the Last entry in a series examining traditional performance footwear categories By Emmaline Harvey 12 PSR | performancesportsretailer.com Performance running shoes have traditionally been divided into three categories: “neutral”, “motion control” and “stability”. In an attempt to differentiate themselves from a growing number of competitors, performance running brands classify their footwear with various names to fit corporate branding positions and internal product definitions. Ads like “lightweight”, “support”, “structured cushioning”, “ultimate stability”, and others continue to blur the lines between segments. In this issue, Performance Sports Retailer concludes a threepart series examining the major footwear segments with the broadest of the categories: “stability”. John Rogers, owner of Maine Running Company in Portland, ME, says the stability category is by far the largest in his store primarily because of the vast differences that can be found within footwear classified as “stability”. “We’ve gotten into a menu of products across the ‘stability’ category. Running stores break it down into a spectrum – ‘moderate’, ‘upper moderate’, ‘maximum’ and ‘blend’ categories [targeted to] mild overpronators, “says Rogers. Claire Wood, footwear product line manager at New Balance, has a slightly different take on the success of the classification. “The ‘stability’ category in technical running is always going to be the strongest category. Most runners-especially new runners- FEATURE are going to have some biomechanical deficiency,” she stresses. Terry Schalow, product manager for performance running at ASICS, which has arguably the best-selling stability shoe with its Gel Kayano franchise (ASICS calls it structured cushioning), sees the category growing due to the steady influx of new runners. “Studies show that a majority of these newcomers overpronate to some degree,” says Schalow. “The stability category has siphoned away many of the runners who formerly were prescribed motion control shoes.” While the “stability” category is consistently the top-selling category, performance footwear brand executives acknowledge that the category has changed very little over the past few years, as technology innovations deliver small improvements to the basic parts of the shoe. “I don’t think [the stability category] has changed that much within the industry,” remarks Karhu President Jay Duke. “It was basically the same in any running store 10 or 20 years ago. Materials have generally gotten better and there have been marginal improvements every year.” Dan Longo, owner of Fleet Feet Sports in Buffalo, NY, reports that footwear in the “stability” category makes up at least 75 percent of the store’s sales. While the range of performance footwear covered by the category continues to expand, Longo sees very few changes in the actual construction of the shoes. “‘Stability’ is definitely our biggest category and has been for quite a while. I don’t think in general that it’s changing very much. They are very solid shoes that the companies haven’t changed.” Rick Wilhelm, vice president of specialty retail sales at Brooks Sports, says 14 PSR | performancesportsretailer.com The stability category in technical running is always going to be the strongest category. Most runners - especially new runners - are going to have some biomechanical deficiency. claire wood, footwear product line manager, new balance that stability innovations seem to be internal for each brand, and no industry-wide manufacturing changes have occurred. While the materials may evolve slightly from year to year, the biggest technological improvements for stability shoes over the past five years have been the advancement in analyzing runners and the natural motion of the foot while running. “Across the board in the industry, you’re seeing foams getting lighter,” continues Wood. “Geometry [is] improving [because as] the technology in terms of viewing what’s going on with footstrike innovations and testing.” Schalow says advances in gait measuring have influenced the way companies design shoes. “The flurry of research advances in the field of biomechanics over the past several years has had a major influence in design strategies intended to promote better stability,” he explains. “In the past year, we’ve focused on research that points out that gait tends to break down as fatigue sets in, leading to poor efficiency, and in some cases, injury. We’re now engineering platforms that encourage the foot to maintain gait efficiency throughout the entire run.” Wilhelm adds, “As biomechanics become more involved in footwear, you can do more with less. Maybe not to the extent of minimalistic, but you can make the runner’s experience what they need it to be.” ASICS is capitalizing on this advanced way of observing the runner with this season’s line of stability shoes. Schalow explains, ”Once we have the foot set up in the most ideal position possible, we’re actually creating an environment where the foot can repeat whatever line of progression through the gait cycle is best for the foot. The shoe encourages the repetition of that gait cycle for each individual runner. We want to make sure we’re providing the right support and stability for each individual foot.” Brooks Sports, Inc. has made some improvements on the materials used in its running performance footwear, including incorporating MoGo (a lighter foam) and a progressive diagonal roll bar (PDRB) in its stability shoes. ECCO, which launched its ECCO BIOM footwear in March 2009, is attempting to shake up the way the industry views the stability category. The BIOM line features stripped-down shoes focused on the minimalist theory - the idea of shoes promoting a natural, barefoot feel. David Helter, general sales manager, performance division at ECCO U.S.A, suggests that a number of studies and a more advanced understanding of biomechanics have led to a lot of experimentation in minimalist technology. He explains, “The industry is contemplating the idea of ‘When is less more?’ This has resulted in a host of alternative running footwear, which does not fall under the traditional categories of neutral, motion control or stability.” Fleet Feet’s Longo supports the ECCO positioning as important, due in large part to his success with the line. “If anything’s going to change the category, it’s going to be the move to minimalist,” he says. “There’s a tremendous amount of interest in both the running and the triathlete community as to whether or not barefoot is the future. We’ve sold 37 pairs of ECCO BIOMs in three weeks at almost $200 each.” Another relative newcomer to running specialty in the U.S., Karhu offers two models of stability shoes, the Strong Ride and the Stable Ride, and approaches its design in a unique way. Duke describes the approach, “We look at it a little The New Balance 769 is a moderate stability trainer designed for the mild to moderate overpronator. The 769 features an ACTEVA LITE midsole, which is 24% lighter than standard foam. SRP $100. “Studies show that a majority of these newcomers overpronate to some degree. The stability category has siphoned away many of the runners who formerly were prescribed motion control shoes.” Terry schalow, product manager, performance running, asics differently. We look at stability in a more horizontal fashion. The idea is if you work through shoes horizontally, it will help the gait cycle.” Although this approach may seem unusual, Duke insists the shoes provide the same natural ride and feel of minimalist shoes, just with a bit more security for the foot. “I think of it as different from minimalist,” he adds. “Minimalist means I’m going to give you a go-cart and go drive; with us it’s a more natural ride but we’re going to make sure the engineering is in tune.” As definitions of the three major footwear categories continue to fluctuate, retailers find themselves facing the challenge of picking from a plethora of display options. Big Peach Running Company in Georgia doesn’t even use the category “stability” in their description of performance running shoes anymore. Big Peach classifies the shoes by the degree of stability they provide, and describes stability shoes that traditionally offer moderate or mild stability as “structured cushioning” shoes. Maine Running Company displays its shoes by brand, then by category, but turns them inside out so consumers can see the actual components of the running shoes. Wilhelm says the stability category’s popularity has changed the way retailers approach fitting customers. “Instead of looking at footwear as footwear only, [retailers] are looking at it as a system,” he explains. “When you go into a running store, you start with stability. Then, once you start talking to someone, you may be directed elsewhere.” Looking ahead, it’s certain that the three major performance footwear categories; “neutral cushioning”, “motion control” and “stability” will continue to evolve as performance running footwear brands increase their understanding of biomechanics, materials science and design philosophies. With continued innovation, performance sports retailers will have even more powerful options to offer their established customer base as well as people taking up running for the first time. performancesportsretailer.com | PSR 15 FEATURE One Stop Shopping for 3,000 Running Specialty Products Quality Bike Parts brings distribution expertise to performance sports retailers As the credit markets tighten and specialty retailers get squeezed on credit terms with their vendors, many are looking for solutions to keep their stores looking fresh and product flowing beyond the top four or five shoe brands. While the use of distributors has been a pretty wide practice in the bike and outdoor markets, the performance sports retailer has not had ready access to many of the services of a distributor until recently. Whether it was due to the fast pace of growth in the market or the lack of available resources, the performance specialty retailer was comfortable working with established brands and their local reps. A lot of that is expected to change. Founded in 1981, Quality Bike Parts is the largest parts and accessories distributor in the bicycle industry. Known within the bike industry as QBP, the company serves over 5,000 dealers and manages more than 250,000 calls a year from a stateof-the-art, environmentally sustainable distribution center in Bloomington, MN. In the bike industry and many other business segments, centralized distribution is a widely embraced way of doing business. But it’s a business model that hasn’t previously existed in the running specialty market. In 2006, QBP launched a subsidiary called Q-Active to offer distribution services to running specialty retailers. Q-Active manager Frank Lundeen describes the differences between bike and run specialty’s approach to distribution. “Retailers realize that coming to one place for a lot of the products they need is the most efficient way of doing business,” he says. “Running retailers have been forced to go direct for literally every brand. Instead of placing a small handful of purchase orders, they are placing hundreds of purchase orders, receiving hundreds of purchase orders and paying hundreds of shipping bills. A lot of vendors are not very accurate when shipping orders out. There are a lot of mistakes. Those are all challenges that retailers face for which Q-Active has solutions.” Q-Active offers running specialty retailers one-stop shopping for more than 80 different brand names and 3,000 different products. The products offered take advantage of existing relationships carried over from QBP’s bike business, ranging from nutrition, electronics, apparel, insoles, hydration, sunglasses and other accessories. 16 PSR | performancesportsretailer.com By Louis Dzierzak In addition to an annual printed catalog, retailers can order products through a secure website. Q-Active also has a 22person customer service staff cross-trained to handle all of a retailer’s questions with a single point of contact. Calling QActive a metrics-driven and goal-driven company, Lundeen reports the average on hold time for a retailer’s call is 13 seconds. Any order placed before 4pm leaves the Q-Active facility the same day. The company backs up the inventory services with sameday shipping on every order, a perfect order guarantee and freight credit program. Essma explains the benefits of the perfect order guarantee. “When you are getting orders from a number of different vendors, you are bound to get a few inaccuracies,” comments Essma. “Problems just happen. That’s something we’ve been able to cut out. When a retailer gets something from us, we are filtering out the little inaccuracies. If you are ordering from ten different brands, you may get three problems that you have to resolve in three different places. We are incredibly accurate. Our error rate is less than 0.1 percent per 1,000 lines picked. You are going to save a lot of time fixing problems that inevitably happen.” Robert Smith, owner of Robert’s Running & Walking in Huntington, WV, reports, “I’ve yet to have any issue with their shipments. Anything I’ve ever ordered has been correct.” Heidi Robb, a buyer at Start Line in Minnetonka, MN, orders many of the products the store carries direct from manufacturer. But she agrees Q-Active has an edge in accuracy. “Sometimes I just need a few things from different vendors,” she says. “With Q-Active I can put those orders together and usually can qualify for the free shipping. That saves me from ordering a little bit from four to five different vendors and paying shipping for all of those. Q-Active’s price is a little higher, but in the long run it saves us because we aren’t paying for all the extra shipping. She adds, “I’ve never had an order that was wrong or missing anything. Q-Active does a better job in that area [than the brands].” Focusing on core competencies supports Q-Active’s business approach, says Lundeen. “Vendors do a phenomenal job of product development, manufacturing and marketing run catalog 09 Founded in 1981, Quality Bike Parts is the largest parts and accessories distributor in thebicycle industry. In 2006, QBP launched a subsidiary called Q-Active to offer distribution services to running specialty retailers. product, but often times one of their weaknesses is customer service and order fulfillment. That’s our strength,” he says. “The simple act of order consolidation and convenience saves shops a ton of time and resources. In essence, shops can spend their time serving their customers instead of stocking shelves.” In addition to an efficient ordering process and accurate delivery, Q-Active gives specialty retailers access to brands they may not be familiar with or product categories they don’t have time to research effectively. Smith says the ability to review multiple lines gives him the opportunity to increase sales. “Let’s be honest. You are so busy all the time, you don’t have time to open accounts with every single person you want to buy from,” he explains. “The ease of seeing what you can buy and sell it definitely broadens your scope. It’s a great way to pick up ancillary products all in one place. That’s been the biggest benefit to me in terms of time saving.” Robb notes that Start Line has brought in additional product lines simply because they are available with Q-Active. “We are able to get things quickly if we need to in order to respond to customer requests for products that we didn’t carry,“ he concludes. Q-Active’s quick turnaround also supports a specialty retailer’s customer service. Robb says, “There you can get things very quickly. If I can get my order in one day, I can get the product the next [day] for a customer”. Smith suggests there is big upside in taking a “try and buy it” approach with key consumers. “We’ve had instances where a customer comes in and wants to try a Pearl Izumi shoe. If I don’t have that in stock, I can get that quickly for them to try out,” he says. “If the customer is satisfied-even if you are not making the same mark-up-it’s good because you have a repeat customer who is happy that you are there.” performancesportsretailer.com | PSR 17 Managing inventory is especially important to retailers with limited capital resources. Lundeen describes how Q-Active’s distribution model affects the bottom line. ”Retailers have flexibility to maintain fresh inventory and have the products in stock that their customers want,” he explains. “Instead of totally committing your entire season on a preseason order and rolling the dice, you can order what you need when you need it based on customer demand. If the hot new product comes out mid-season, you have the flexibility to bring that in and turn your inventory.” Q-Active’s relationship with retailers is tightly focused on the distribution services. The company refrains from using that offering as a way to pitch other services. “There’s no aggressive selling from us,” stresses Essma. “They use us when they need us. We are not calling them asking them if they need to place an order today or telling them we have a special. We don’t do any of that. We concentrate on the nuts and bolts. We get it in stock, we have it for them when they need it and ship it out on time.” Essma acknowledges retailers may pay a small premium for participating in Q-Active, but points out that much of that price differential is offset back through freight savings. Lundeen notes, “Most retailers we talk to are spending six or seven percent of their dollars on freight and that number is going up. Most of our partner accounts are spending well under one percent on freight simply because of the power of order consolidation, and they are taking advantage of our freight credit program.” Smith offers, “There’s definitely a mark-up going with Q-Active that I don’t have when I’m going direct; but there are trade-offs. There are certain products that you are fortunate to get through them even if you are paying a little higher price. If I can get something direct and pay a lot less being a small business person, that’s usually worth it, but Q-Active definitely has its spot in our business.” At present, Q-Active works with approximately 50 running Q-Active offers running specialty retailers one-stop shopping for more than 80 different brand names and 3,000 different products Nutrition Shoe Laces, etc Hammer Powerbar Clif Spiro Simbree Speed Laces Fuel Belt Yankz Electronics Garmin Forerunner, Edge, and Colorado series GPS units Cateye Heart Rate Monitors Sigma Sport Heart Rate Monitors New Balance Electronics Strollers Bob Strollers Burley Hydration Equipment Pearl Izumi Running Shoes Camelbak Fuel Belt Nathan Winter Hydration Systems Hydra-pak Nalgene Polar Apparel Skin Care Products Pearl Izumi Craft Moving Comfort TYR Headsweats Wigwam DeFeet Swix Dermatone Kinesys 2 Toms Elite Ozone Pure Blue Paceline Chamois Butt’r Grabber Body Warmers Insoles TYR Adidas Ironman Optic Nerve Shoes Sock Guy Conformables Insoles Shock Doctor Insoles specialty retailers. Expand the faction to include retailers that combine running and multi-sport or triathlon offerings, and the number of retailers exceeds 140. Expanding that base requires education, outreach and a long-term perspective. Lundeen suggests that one of the company’s biggest challenges is that this kind of distribution doesn’t exist in the run industry, so there’s quite a bit of education that needs to happen. “At first they don’t understand how this kind of distribution can be advantageous to them,” he says. The faltering economy has forced retailers to take a harder look at all aspects of their operations. Lundeen says taking Eyewear advantage of Q-Active’s distribution services can have a significant impact on profitability. “The run shops that are having a strong year and seeing growth are the folks who are running lean and turning inventory on a regular basis,” he explains. “The people that are struggling are inventory-heavy.” Lundeen recalls a benefit to inventory management offered by a retail account, “Margins don’t do you any good on the shelf,” he says. Still used by a small cross-section of specialty retailers, Q-Active may be leading a fundamental change in the way retailers order running footwear, apparel and accessories. IQ 1 For March, dollar sales for 2 3 Running Footwear were: a. Down low-single-digits b. Up mid-single-digits c. Flat d. Down high-single-digits Running Footwear sales grew the most in which sports retailer channel for March? a. Full-Line Sporting Goods b. Athletic/Urban Specialty c. Internet/catalog d. Sport Specialty For March, average selling prices for Running Footwear were: a. Down mid-single-digits b. Up high-single-digits c. Flat d. Up mid-single-digits 4 5 6 Which brand saw the largest market share growth in Family Footwear for Non-Trail Performance Running in March? a. Saucony b. Nike c. ASICS d. Avia Which brand had the top selling Non-Trail Performance Running shoe in Sports Retailers for the month of March? a. Under Armour b. ASICS c. Nike d. New Balance For March, dollar sales for Running Apparel were: a. Up mid-single-digits b. Flat c. Up low-single-digits d. Down low-teens 6 Know More.NOW. 7 8 9 Which brand had the top selling Running Apparel product for March? a. Under Armour b. Nike c. ASICS d. New Balance Which brand saw the largest market share growth in Running Apparel for March? a. Nike b. adidas c. Under Armour d. Reebok Which brand had the top selling Trail Performance Running shoe in Sports Retailers for the month of March? a. Salomon b. Vasque c. The North Face d. ASICS 10 What section of Running Footwear had the highest growth among Sports Retailers in March? a. Performance Non-Trail b. Performance Trail c. Fashion Trail Running d. Better Fashion Running A Service of The SportsOneSource Group www.SportScanInfo.com Answers:b, c, d, c, b, d, b, b, a, b For more information about SportScanINFO contact 704.987.3450 [email protected]. NOTE: Answers are for trade channels covered by SportScanINFO only. Does not reflect specialty retail, better department stores, big box outdoor stores, Walmart or Target. 20 PSR | performancesportsretailer.com