WASHINGTON — Sporting goods retailers and vendors, struggling with retail consolidation, declining participation in casual sports and competition from mass merchants, are focusing on the “little things” that are key to customer service.
Executives from 80 companies gathered here last week at the Sporting Goods Manufacturers Association’s Industry Leaders Summit to discuss the problems confronting their industry and new initiatives intended to boost the bottom line.
The number of independently owned sporting goods chains has “been reduced sharply” in the last decade, forcing vendors to fight for shrinking shelf space, the Washington trade group said.
These chains are “pruning their lines to concentrate on winners and are increasingly developing their own private labels to increase profit margins and differentiate their offerings,” the association said in its 2007 State of the Industry report.
Regarding sports participation, the SGMA study said: “Much of the…decline in many sports and outdoor activities has come among casual participants, those who play only a few times a year. In essence, what has happened in team sports, tennis, golf and other activities, is that casual participation has melted away and the sports have coalesced on their most avid participants.”
A key challenge confronting traditional sporting goods stores is competition from manufacturers such as Nike that have opened their own stores and are finding new distribution channels such as eBay, which creates a problem for retailers that also carry Nike products.
“Talk about disruptive,” said Tom Raynor, chief executive officer and chairman of Fleet Feet stores, who spoke on a panel of four executives. “You have to bring up the question that a lot of people are afraid to broach: ‘Are you a manufacturer or are you our competitor?’ I think that is going to be the challenge with us going forward.”
Kevin Plank, president, ceo and chairman of Under Armour, said retailers needed to capitalize on their own brand cachet and knowledge of local markets to maintain their relevance in today’s market.
“There is an enormous credibility for our brand in being a partner” with Fleet Street or Modell’s Sporting Goods, Plank said.
Mitchell Modell, ceo of the 132-store Modell’s chain, said the retailer was still a “conduit” to the public after doing exhaustive research on what sells in a particular market.
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“We have a difficult time understanding which Fila [products] sell in Brooklyn, for example,” Modell said. “Fila sells in two of our six Brooklyn stores, and those are the unstated nuances that create a value system as far as we see it in terms of the importance of a retailer.”
Sporting goods manufacturers, fighting to keep their products on fewer retail shelves, wanted to know how the retail executives on the panel selected their vendors. “We have gone through a culling-down process of our vendors,” Modell said. “We had way too many vendors and now we invest in the people that invest in their products.”
The company generates a “vendor scorecard” every month and transmits sales data to any vendor that asks for it.
“We believe in helping them manage the process,” Modell said. “We have 27 strategic partners within our company who are dedicated full time to developing their [brands.]”
Raynor said his company had hired “brand managers” to build a brand such as New Balance in its stores.
“We look at the accounts and if we see a brand doing $100,000 in our Chicago store, we tell them it is a lot of money but they could be doing $300,000,” he said.
Modell’s top challenge on the operational side is in-store management.
“The number-one challenge that we haven’t fixed yet, although we are working on it, is really the front end,” Modell said. “We get over 25,000 customer comment cards a year….and 42 percent of our negative comment cards are all about the front end — complaints about the cashiers chatting too much or long lines.”
To that end, Modell’s will launch a training program next month and offer customer service classes to store employees, Modell said.
Raynor said there were many untapped markets for the industry.
“Two areas of huge growth are track and field and cross country, and we have done a really poor job in tackling that,” Raynor said.
He said strengthening relationships with the teams and leagues would be a key factor in the industry’s growth models.
For Modell, it all comes down to improving customer service and the alliances with teams and leagues in every community.
“It’s doing those little things,” he said. “That’s how we feel we’re going to survive.”