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YOUR INDUSTRYS CORE MAGAZINE
FEBRUARY 2014
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BIOM ULTRA
SPIRIT OF RETAIL 2014
[COVER STORY]
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FEBRUARY 2014 RUNNING MAGAZINE 14
COVER STORY
The Spirit of Retail 2014
Specialty run dealers across the country say Bring it On as they face a changing
retail landscape, online competition and a sea of new products
Te running market has grown
considerably in the past few years and
much of that growth is perpetuated by
the culture and expertise running spe-
cialty stores provide at the community
level. However, as we step into 2014,
retailers are telling Running Magazine
that there is much to be addressed.
One issue brought to our attention is
the proliferation of national chains as
large franchises buy up neighborhood
stores. Teres also the issue of show-
rooming, which becomes even more
pressing as more and more brands
take advantage of direct-to-consumer
sales online. Meanwhile, several re-
tailers informed us that sales were fat
this year. Trow in the costs of keeping
your store up-to-date on the most re-
cent technology and marketing trends
(e.g managing your webstore, Facebook
account, Twitter, Instagram, etc.) and
its no wonder that some of the store
owners we talked to are feeling a little
overwhelmed.
In spite of these challenges, the spirit
of retail remains optimistic, taking
pride in quality service, expert knowl-
edge and a stake in the local commu-
nity. For 2014, the running specialty
retailers we spoke to are invigorated by
the competition and looking forward to
the thrill of experimentation and new
products.
CONSOLIDATION: PROBLEM OR
OPPORTUNITY?
In many ways, the running specialty
market is a victim of its own success.
Consider this scenario: a store owner
has spent the past 20 or 30 years build-
ing a single store into a thriving multi-
door, running business. Tis owner is
now in his 60s or 70s and is looking
to retire. Te few millions of dollars
that his business is worth is more than
the some of the senior employees can
hope to raise on their own, so the own-
ers start looking for other possibilities.
Enter the Running Specialty Group, or
Fleet Feet. Now repeat this dozens of
times in cities across the country, and
you have a market that is heavily in-
fuenced by large chains and national
franchises.
But, every market has a saturation
point. For example, over in Chicago
and its surrounding metro areas, there
are easily 30 or so running stores, both
specialty and chain, in response to the
citys overwhelmingly popular mara-
thon and triathlon races.
Mark Rouse, a partner at Runners
High and Tri, based in the greater
Chicago area, said that just in the last
couple of years, four Road Runners and
a Sports Authority have opened, and
hes even been approached a few times
about selling his own storea move
that hes not interested in and hasnt
sought out.
Te chains are in the business of
making money. Were in that business
too, but we also feel a responsibility to
be a resource for the runners in our
community. Tension to me seems like
too strong of a word because it makes it
seem like theres a fght brewing. I think
its just a level of awareness that every-
one keeps their eye on, said Rouse.
Where many dealers feel uncomfort-
able is related to the individuality and
soul of the running specialty industry.
As the market consolidates, the buying
power of chain stores typically shifs
toward the most efcient brands with
the highest return, an environment that
isnt necessarily best for innovation and
long term growth.
For example, a couple stores pointed
out to us that there are brands who got
to where they are today by starting on
the shelves of specialty retailers, yet
those brands can be notorious for ex-
clusive products and promotions with
big box competitors.
Money goes where the money is,
said John Clark, the head buyer aka
prime minister of purchasing at Skin-
ny Raven Sports in Anchorage, Alaska.
Some people feel like [consolidation]
is evil, and I think its only natural that
this is happening. We dont fnd it scary
because what makes specialty running
special is unique brands and products
that you cant get everywhere.
He explained that due to Alaskas
weather, Skinny Raven needs to ofer a
very diferent assortment compared to
most other running stores in the coun-
try. Up to 20 percent of the store is flled
with items that arent in stock at com-
petitors like Sports Authority and REI.
Tat mix is an important part of our
business, Clark said of the products.
But the return on investment wouldnt
be considered successful in a large busi-
ness thats just looking at sales reports.
Te overwhelming sentiment among
retailers is that consolidation, though
intimidating, is an opportunity. In fact,
if retail is a competition, then Clark is
more than willing to compete, and may
the best store win.
Its no diferent than running, he
said. If I roll up to the start line and
I get bummed out because the per-
son next to me trained harder and ran
faster, then they deserve to beat me, he
said. And if Running Specialty Group
is going to do a better job of engaging
customers and capturing interest, and
ultimately their dollars, then shame on
me.
In his opinion, the competition over
the years is part of what has made run-
ning specialty as strong as it is today.
Constantly listening, adapting and re-
sponding to a changing running mar-
ket will only make stores better.
Were a much better store than we
were fve years ago, because were con-
stantly working to improve, he said.
Mark Rouse (Runners High and Tri)
seconded this, Right now were just in-
terested in keeping our business going
the way it has been and being involved
in our community. Teres so much
inventory out there, we have to keep
separating ourselves with good service
and cutting edge technology.
THE ELEPHANT IN THE ROOM
Te internet is the wild west of retail.
Advice abounds on improving Google
search rankings, roping in Twitter and
Facebook followers and convincing
them to spread the word.
Over at Pacers running store in Vir-
ginia, manager Joe Schultz said that us-
ing social media efectively is a big issue
for many doors around the country. He
has attended several seminars and each
came down to the same core message:
Tink about how people use a particu-
lar source, he said.
For example, many people use Face-
book on their phone, where they dont
want to read lengthy posts. Facebook
is where people search for social con-
nections, so stores are better of post-
ing shareable content, while leaving a
detailed shoe write-up for their own
websites.
Another manager we spoke to, De-
nise Heferin with Dick Pond Athlet-
ics in Illinois, was excited about the
personal connection stores could make
with their customers online.
Whether its telling a story or get-
ting feedback or asking a question, a lot
of people are turning to the web to do
that sort of thing, Heferin said. You
cant always have that face-to-face in-
teraction.
Of course, the other thing about the
Te Specialty Running Group chain owns the run.com website
Pacers Running Store Alexandria, Va.
FEBRUARY 2014 RUNNING MAGAZINE 15
COVER STORY
numbers were either stagnant or down.
Were hoping that new innovations,
or a new launch will bring sales back
into brick and mortar, Heferin said.
Specifcally, Heferin was interested
in the multitude of new ways to carry
keys/money/other accessories while
out on a runa big jump from the old-
school fanny packs.
Rouse, with Runners High and Tri, is
excited about Lalo Tacticals new mili-
tary-inspired running shoes.
Teyre being developed for what
we think is a growing trend with the
Spartan races, Warrior Dashes and mud
runs, he said. One of the developers is
Lalo Robert, who was on Seal Team 10,
if youve seen the movie Lone Survivor.
He defnitely has some credibility.
And for Schultz, with Pacers in Vir-
ginia, the most exciting thing about
running products is that there contin-
ues to be variety. In his opinion, brands
have really branched out in terms of
how they design shoes, so that each has
a diferent take on the upper, the mid-
sole, or the drop or stack height.
However, one of the issues he sees
in terms of sales is that runners are
understanding the idea of a runners
toolboxhaving multiple shoes for dif-
ferent purposesbut the price points
dont incentivize purchasing multiple
pairs of shoes.
Te high price point is making it
hard for the customer to say, Hey, I
want something for my track runs and
something else for my maintenance
runs, he told us. Its a hard conversa-
tion to have, especially if they have kids
who need shoes too.
Trend-wise, Schultz afrmed that
everything is defnitely getting lighter.
And this is something weve heard from
the rest of the industry as well. Whats
happening is some of the minimal-
ist philosophies are being applied to
traditional styles, where the goal is to
maintain cushioning and function, but
shave excess material. Additionally, on
the manufacturing end, many brands
are experimenting with construction
processes and materials that allow for a
lighter product.
Now, I can fnd something in my
size thats 10 ounces or 10.5 ounces,
when maybe I would have been look-
ing at 14 ounces a few years ago. Every-
things getting light and super respon-
sive with more fex, said Schultz.
Whether the next trend will be light-
weight shoes, technical accessories,
oversized cushioning, tactical design or
something yet unheard of, remains to
be seen, but at least the industry can pat
itself on the back for introducing some
exciting innovations for 2014.
Were no longer wearing our Dads
shoes, said Schultz, adding, Every-
ones got their own philosophy now, so
everyone looks diferent, everyone feels
diferent, and its just a matter of match-
ing it to your customer.
sensus at this point that the minimal-
ist trend bubble, largely the baby of
running specialty retail, has burst. Yet,
brands are still bringing new minimal-
ist products to market. Nancy Rowe,
head of marketing with Pumas perfor-
mance running division, provided us
with a more global perspective.
Minimalist styles are still picking up
steam in Europe, she said. Germany
is actually the leader, but we can see
like many retailers are saying, there is a
downward trend in the U.S., and that is
an indication that the rest of the world
might follow a little bit later.
John Clark (Skinny Raven, Alaska)
shared that his store over-invested in
minimalist products from too many
vendors last year. As an actual percent-
age of sales it was too much, and we had
to really work around it, he told us.
According to Clark, the funny part
was that there was all that excitement
and noise, but people were still buying
a ton of traditional shoes. Te Asics
Kayano has been our number one seller
for ten years, and it still is, he said.
Clarks observation coincides with
what a lot of stores and brands are say-
ing; that minimalist styles during their
peak typically accounted for a smaller
percentage of sales than that of core
product. Te value was in the buzz.
Fritz Taylor, the GM for the Mizuno
Running Division, had a lot to share on
this subject. (See our Brands-Eye-View
on the next page.)
SO WHATS THE NEXT BIG
THING?
On the opposite end of the spectrum,
many stores are excited about super-
cushy brand Hoka One One, who afer
being acquired by Deckers Corporation
last April, has gained a lot of momen-
tum in the marketplace.
Clarks impression is that shoes and
cars may have something in common.
Like Cadillacs, some people like re-
ally solid, comfortable cars that maybe
arent as responsive. If you spend $150
to $160 on a pair of shoes, some people
like to feel that money under their feet,
said Clark.
Hes been most impressed by brands
like Hoka and Ultra because of their
uniqueness, but hes also drawn by the
story behind what Brooks is doing with
its Transcend shoe.
Tats the one were the most excited
about; its a signifcant shoe for Brooks
because it doesnt really fall into that
traditional stability or neutral catego-
ry, said Clark. It has the cushioning
but with subtle guide rails, so its there
if you need it but doesnt hurt you if you
dont. Brooks has ascended to number
one in specialty, and they have some
new compelling shoes and technologies
with great messaging behind them.
Back in Illinois, Denise Heferin said
that sales at her store were steady com-
pared to last year, but that she has heard
from many other specialty retailers that
states like California, Arkansas and
New York. But in October, the Illinois
Supreme Court ruled against the mea-
sure.
I think we have to be involved polit-
ically, he said. We have to have a voice
in matters beyond the store.
And lets not leave vendors out of the
equation either. Te big elephant in the
room for many stores is the vendors
themselves.
Some of them are doing a great job
selling directly to the consumer, and
thats a frustration we have, said Rouse.
Its no secret that brands see a lot of
opportunity in online channels, but
the idea is that if brands rely on the
specialty channel for its authenticity,
expertise and community engagement
then it will be increasingly harder to
keep one foot in both camps. In other
words, if brands are going to be part of
the problem then it might be just as im-
portant for their business to be a part of
the solution.
I dont expect to get a hug from our
vendors on everything, said Schultz
(Pacers in Virginia). But, its nice
when our brands understand the situ-
ation and try to support us and give us
resources. Our best vendor partners
understand that we might not sell the
full product line, but we help set the
table because we have the knowledge to
talk about the product and we have the
people trained to ft it, so they are more
than willing to help.
WAXING AND WANING
Many stores are feeling the brunt of
a saturated market and stagnant sales,
but this obviously varies by region. For
example, the polar vortex across the
Midwest and East Coast that brought
icy conditions, frigid temperatures and
biting winds, hasnt done much for the
running business. But no matter where
you are, most specialty retailers will
agree that their role is to be on the look-
out for the next new, exciting trend.
Minimalism, trail running and ob-
stacle/mud races are a few examples of
more recent trends that have flled this
void. Te thing about trends though, is
they wax and wane.
For example, Rouse told us that
Newton Running has historically been
a strong seller in his store, but the shoes
sales have dropped now that theyre
carried in more locations and more
available online. A similar story hap-
pened with Vibram Five Fingers and
other minimalist styles.
Its pretty much an industry con-
internet is that brands and large online
retailers can do the exact same thing,
and typically with more time/resources
to pour into clicks and likes.
I know online sales take away from
brick and mortar, Heferin said. Cus-
tomers will come and get ft at their lo-
cal retailer, and maybe buy one pair of
shoes from them, but then theyll con-
tinue ordering them from a discount
online retailer instead of coming back
in.
Heferins observation is in line with
a greater trend in showrooming, where
customers come into the store, get ft
and then make a purchase on the web
where much of the product is discount-
ed, and in same cases, tax free. Tis has
many retailers asking themselves, how
do we keep them coming back?
At Dick Pond we do a lot of fun runs
that keep store trafc steady, said Hef-
ferin. We also try and do things that
you just cant do online, like packet
pickups for races.
In addition to hosting events, pro-
fessional athlete speakers and driving
home the Buy Local message, Rouse
mentioned that retailers shouldnt hesi-
tate to step outside the store a bit more.
He brought up a recent measure in Il-
linois that would apply state tax to on-
line salesa move thats gaining some
popularity and has already passed in
Were a much
better store than we
were fve years ago
Denise Heferin, manager Dick Pond
Athletics, - St. Charles , Illinois
John Clark, head buyer Skinny Raven
Sports - Anchorage, Alaska
FEBRUARY 2014 RUNNING MAGAZINE 16
COVER STORY
From a Brands-Eye-View
Mizuno Running Division General Manager Fritz Taylor gives a brand perspective on
the issues and challenges specialty running retailers face for this year
Fritz, retailers are telling us
consolidation is a concern in the
industry.
Absolutely, consolidation is a hot
topic. Teres some big people coming
in and buying and opening running
stores, and so for the true independents
they may be a bit uneasy about what the
future is going to look like.
What does that mean for Mizuno as
a brand?
Ill be honest with you, were still try-
ing to fgure it out. We know things are
changing and could look diferent three
to fve years from now. But, fundamen-
tally we see ourselves as a very specialty
oriented brand, and we think theres
going to be a strong place for us and a
strong place for good specialty running
stores. I think the service and the com-
munity aspect of running stores isnt
going to go away.
What other challenges are retailers
facing from your perspective?
Another one is that minimalism has
waned. I think the cool thing about that
trend for running stores was that it was
something new that drew people into
the stores and got them
asking questions. Teres
a bit of a lull right now,
and people are looking for
whats new and energizing
in the world of running
thats going to drive more
trafc into stores. I also
think that the trail run-
ning segment has been a
bit challenging for stores
more recently, and then
with running apparel there
is so much competition out there.
Why do you think trail running has
been challenging?
Tats a bit of a tough one to fgure
out. We know the popularity of run-
ning of road and trail races has been
increasing, but I would say there hasnt
been as much energy in trail as in the
past.
Has Mizuno been working on
something in the Trail category?
We introduced several new models
this year. We actually partnered with a
few athletes to test the prototypes, and
one of them, Mike Aish, who is also
part owner of Run Colo-
rado, loved them so much,
he ran the Leadville 100 in
them and ended up leading
the race for 60 miles. He
fnished third in a proto-
type; that got us excited.
How about with apparel
sales, whats going on
there?
Te biggest challenge
is that you can buy whats
being labeled as technical running or
workout clothing almost anywhere
these days, e.g. Target, and everyone is
ofering some pretty low prices. Te
question for running stores has
been, Well, how can we dif-
ferentiate ourselves and ofer
better service? Weve had
some really good conversa-
tions with stores, and they
tell us they dont want to
back of; they want to con-
quer that challenge.
So what can retailers do to
diferentiate?
I think its going to re-
volve around a technical message. For
example for Fall 2014, we completely
redid our Breath Termo apparel range.
Breath Termo is a technology we have
that generates heat from the bodys
sweat vapor. Its a fber that we weave
into the fabric, and it allows a chemical
reaction with vapor, not just sweat, that
generates heat. It starts working as soon
as you put it on, so you can wear thin-
ner garments and less layers, but still
maintain a level of warmth while run-
ning during the colder, winter months.
Is Mizuno working with stores to
help sell that technology story?
Yes, for Breath Termo weve got
this really cool test kit. Its a little
bit of the yarn that you can
put in the customers hand,
add some water to it and it
heats up right in their hand.
Tey can see the beneft
right there. Were provid-
ing a lot of these test kits
to our stores to hopefully
help them transition cus-
tomers over from the shoe
wall to the apparel foor.
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